DETROIT (Reuters) - The United Auto Workers union on Thursday said it was not close to a cost-cutting agreement with bankrupt auto parts maker Delphi Corp. (Other OTC:DPHIQ.PK - News) and auto maker General Motors Corp. (NYSE:GM - News), dimming investor hopes that a quick deal to avert a risk of a costly strike was near.
Nothing could be further from the truth," the UAW said in a statement on its Web site. "The parties are not close to working out such an agreement.
"There are many, many, significant issues to be resolved," the UAW said. "Overall the situation has changed very little since our last meeting."
GM shares fell back from early highs after the union statement, but still rose about 4.5 percent on Thursday.
The stock has rallied almost 10 percent since the start of the week on signs that the struggling auto maker is making progress in cutting pension costs and freeing up cash for a potential settlement with the UAW.
Several newspapers including the Wall Street Journal reported that the three parties were nearing an agreement that could help Delphi cut its unionized staff, pay those remaining a lower wage and encourage thousands of workers to take early retirement.
The UAW confirmed that the three groups had been discussing a retirement incentive program, but said there was no guarantee an agreement could be reached.
"While those discussions have been constructive, there are significant issues still to be resolved," the statement said. "There is no agreement on the retirement incentive program and only time will tell if we will be successful in this regard."
UAW leaders have called a meeting with local Delphi unit chairmen and presidents next Wednesday in Detroit to provide an update on the talks, a spokesman said. Notices for the meeting were circulated on Tuesday.
"The suggestion that we have an outline of an agreement to review with you is unfortunately, just not true," the UAW said in the statement.
Delphi spokeswoman Claudia Piccinin declined to comment. "We are not providing any updates on our discussions other than to say we remain very focused on reaching a consensual agreement," she said.
In December, Delphi chief executive Steve Miller said the parts maker would refrain from commenting on discussions with UAW and GM until it had an agreement to announce, as long as there was progress on the talks.
GM, which spun off Delphi in 1999, could face as much as $12 billion in contract obligations to its former employees as Delphi demands deep pay and benefit cuts from the union.
The world's largest auto maker lost $8.6 billion in 2005 and has been trying to reverse market share losses and cut the high labor and benefit costs that put it at a disadvantage compared to Asian rivals.
Delphi's initial demands to slash wage and benefits of hourly workers in the United States angered union leaders, who focused their response on Miller and a proposed executive compensation plan.
Delphi is GM's largest supplier and a strike could shut down GM plants, causing the auto maker to burn through billions of dollars a week, analysts have said.
Delphi has said it would file court motions to void its existing labor contracts on March 31 if it could not reach a deal. Delphi has delayed taking that step three times to date.
GM shares rose 92 cents, or 4.51 percent, to $21.34 Thursday on the New York Stock Exchange.
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