The Big Three automakers' massive pension liabilities are well known. To remove that burden, a fund called a VEBA -- voluntary employee beneficiary association -- has been mooted. Automakers would put an agreed upon sum into the VEBA, after which they would be free from further pension obligations. The UAW would be responsible for administering the fund. Goodyear used that exact setup last year to end a strike with the United Steel Workers.

Goodyear, though, put $1 billion cash into the fund. The automakers have suggested using cash and stock. It's been speculated that GM could need to throw $30 billion into a VEBA to be free and clear, and that's a burden that would be more easily handled with cash and stock. Goodyear's stock increased by 25% after the steel workers agreed to the VEBA, but there are no guarantees that that would happen again with GM, Ford, or Chrysler stock.

To get any of this to work, the UAW will have to agree to the VEBA at all, and then convince members to take the cash and stock option, which would require getting everyone to believe that the stock will appreciate quickly enough and steadily enough to keep pace with disbursements. It is the automakers, however, that are really under the gun. To avoid any chance of a strike, automakers need to come to an agreement with the UAW by September 14. That's the date the current agreement expires, and a strike could occur any time afterward.

[Source: Just Auto, sub req'd]