To no one's surprise, the ground-breaking negotiations between General Motors (NYSE: GM) and the United Auto Workers are going well into overtime. The contract, which expired six days ago, is being extended hour by hour as the two sides attempt to hammer out an agreement that the UAW will then use as a template in negotiations with Ford (NYSE: F) and Chrysler.

According to an AP report, both sides are on the same page in establishing a Voluntary Employee Beneficiary Association (VERA) along the lines of that established by Goodyear Tire and the United Steelworkers last year. The VERA would turn over responsibility for retiree health care to the union. The two sides do not, however, agree on the amount of the contribution GM would make to the fund. GM's obligations for retiree health care is currently estimated at $51 billion, and the company reportedly proposed paying 65% of this amount into the VERA.

This is not the only contentious issue on the table, however. The UAW wants GM's assurance that it will keep building cars in UAW plants in the U.S., while GM is asking for a drop in hourly wages, larger worker contributions to health care program, a reduction in guarantees of work for UAW plants, reduced vacation time, and other cost-saving measures.

However, with 64% of UAW members eligible for retirement in next five years, until the VERA contribution is settled, no agreement can be reached. According to the Detroit Free Press' Tom Walsh, the delay works to the advantage of the union, especially if the market begins to lose confidence and GM's share price declines.

I suspect that as long as the union believes that it is making progress in the negotiations, it won't rattle the strike saber. If you start hearing its officials throwing around the "S" word, though, take that as an indication the two sides are closer to stalemate.