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Monday September 17, 10:32 AM UAW locals told to expect deal in GM talks DETROIT, Sept 16 (Reuters) - Contract talks between General Motors Corp and the United Auto Workers union showed signs of progress on Sunday, hours before tens of thousands of GM factory workers were due to return to work at the top U.S. automaker in the absence of a new contract. Several UAW local officials said they had been told to stand by for updates from union negotiators late on Sunday, amid rising expectations a contract agreement was near. The outcome of the contract talks is seen as crucial to efforts by the three Detroit-based automakers -- GM, Ford Motor Co and Chrysler LLC -- to recover from combined losses of $15 billion last year and sales difficulties that have driven their slice of the U.S. market below 50 percent. "We're not leaving until we get it," a UAW international representative said in an update on negotiations, which were in their ninth hour. "We are going to stay until it happens." The UAW local official, who asked not to be named, provided access to the update on the private negotiations to Reuters. A further update was due around 11 p.m. EDT (0300 GMT), he said. Earlier on Sunday, a union local representing workers at GM's Saturn plant in Spring Hill, Tennessee, said it had been informed by UAW negotiators that the union hoped to have an "acceptable resolution" to the talks by Sunday evening. A tentative contract between GM and the UAW would have to be ratified by a majority of GM's 73,000 hourly workers. The union also has the option of declaring an impasse and setting a strike deadline. Representatives for both sides bargained until 9 p.m. Saturday and began again at 11 a.m. EDT (1500 GMT) Sunday, two days after the expiration of the UAW's existing contract. The resumption of the closely watched talks on Sunday came after a conference call between GM Chief Executive Rick Wagoner and his counterparts at Ford and Chrysler, both of which have signed contract extensions with the UAW. Wagoner, Ford CEO Alan Mulally, Chrysler CEO Robert Nardelli and Chrysler President Tom Lasorda joined the conference call on Saturday, a person familiar with the call told Reuters. GM, Ford and Chrysler are seeking sweeping concessions from the UAW to close a cost gap with Toyota Motor Corp they say amounts to more than $30 per hour for the average worker. The UAW agreed to extend its contract with GM on an hour-to-hour basis late Friday, just as it was due to expire. While substantial progress has been made on some areas of the GM contract, major issues also remained unresolved as of late Sunday morning, a person close to the talks said. GM SETS THE PATTERN As the UAW's strike target, GM is expected to be negotiating a contract that will be used as a pattern for the union's talks with Ford and Chrysler. The early stages of the labor talks focused on a complex plan to allow GM to cut billions of dollars in expenses for retiree healthcare by paying into a new UAW-aligned trust fund, according to people close to the talks. The weekend of continued negotiations between GM and the UAW was taken as a sign by analysts and many UAW workers that the two sides were nearing a deal after eight weeks of bargaining that would avoid a strike. Despite the signs of progress, the talks have taken some unexpected turns since last week. After hitting an apparent snag in talks, the UAW singled out GM as its "strike target," a term it had avoided in more collegial negotiations in 2003. Rival automakers Ford and privately held Chrysler quickly signed contract extensions with the UAW, clearing the way for their factories to keep operating. The last major UAW strike against GM was in 1998, when a walkout at two parts plants shut down assembly plants and caused sales to plummet. GM never recovered its pre-strike U.S. market share of 31 percent and has lost about 7 percentage points since. This year, Wall Street analysts have been optimistic GM would clinch a deal to slash healthcare costs totalling $4.8 billion in 2006. GM's unfunded liability for such costs has been estimated at more than $50 billion. GM and UAW have sparred over how fully GM should be required to fund a special trust -- known as a voluntary employee beneficiary association, or VEBA -- in exchange for clearing that overhang from its balance sheet. Ford and Chrysler have also been in talks with the UAW to establish such a trust, sources have said. (Additional reporting by Kevin Krolicki and Poornima Gupta)