Union sets strike deadline at GM

NEW YORK (CNNMoney.com) -- The United Auto Workers union set an 11 a.m. ET Monday strike deadline for its 73,000 members at General Motors late Sunday night, although talks between the union and the company were still ongoing.

The union has kept its members on the job at the automaker on an hour-by-hour contract extension since the previous pact with GM (Charts, Fortune 500) expired Sept. 14. But Sunday, as talks were reportedly making progress, the union leadership felt the need to call for a strike.

The company said in a statement that it was still hopeful of reaching a deal to avoid a shutdown. A company official told CNNMoney.com at 5:20 a.m. ET that the talks were continuing.

"The 2007 contract talks involved complex, difficult issues that affect the job security of our us work force and the long-term viability of our company," said GM spokesman Dan Flores. "We are fully committed to working with the UAW to develop solutions together to address the competitive challenges facing General Motors. We will continue focusing our efforts on reaching an agreement as soon as possible."

The strike call does not affect operations at Ford Motor (Charts, Fortune 500) or Chrysler Group. The union has granted those companies more formal extensions that require a three-day notice to end while they focused their efforts on reaching an agreement with GM.

Neither side would comment on the sticking point in the talks, although GM has been seeking to close its cost gap with nonunion automakers such as Toyota Motor (Charts) and Honda Motor (Charts) by shifting $51 billion in future retiree health care costs to a union-controlled trust fund.

Chris "Tiny" Sherwood, president of Local 652 in Lansing, Mich., said he got a call with the strike deadline just before 11 p.m. ET Sunday. He had not had any signal that there were problems before that call.

"They just said unless we're told otherwise, we're on strike as of 11 a.m.," he said "I guess they hit some kind of impasse. We'll be ready."

Sherwood's local about 3,000 of more than 4,500 members working at a GM plant in Lansing.

While most analysts have said that a long strike at General Motors would be a crippling blow for the automaker's efforts to return its North American operations to profitability, the automaker is probably in relatively good position to weather a short strike.

David Healy, analyst with Burnham Securities, said he believes GM could take a strike of up to a month without a significant problem.

"It's sort of an odd thing, the first thing that happens with an automaker in case of a strike is their cash increases, as their payroll stops, and they still keep collecting cash for the cars that have been shipped," said Healy.

He believes the two sides are close enough that a strike, if it does in fact start, will be a short one.

"Days, not weeks or months, that would be my guess," he said.

If there is a strike, it would be the nation's largest since 87,000 workers at Verizon Communications (Charts, Fortune 500) walked off the job in August 2000, but that action did not shut down the company.

GM was last hit by a strike at its Flint, Mich., locals in 1998, a work stoppage by only 9,200 workers that was felt across most of GM's North American operations since they couldn't get the parts they needed to keep making cars and trucks.

The last strike by more than 70,000 workers that shut down a company's operations was the 1997 strike by 185,000 Teamsters at United Parcel Service. (Charts, Fortune 500)