"The bargaining involves complex, difficult issues that affect the job security of our US work force and the long-term viability of the company," GM said in a statement.
 
"We are fully committed to working with the UAW to develop solutions together to address the competitive challenges facing General Motors," the company said.
 
It is the first strike since 1998, when GM plants across North America closed for 53 days, costing GM some two billion dollars.

Tense negotiations had been extended on an hourly basis since the contract expired on September 14 but the union warned early on Monday that it would go on strike if an accord were not reached by 11.00 am (1500 GMT).

Sharp statement

Ron Gettelfinger, UAW president, issued a statement in which he blamed the breakdown on the talks on GM, which has been seeking to reduce its labour costs to become more competitive with Asian rivals.

"Since 2003, our members have made extraordinary efforts every time the company came to us with a problem: the corporate restructuring, the attrition plan, the Delphi bankruptcy, the 2005 health care agreement. In every case, our members went the extra mile to find reasonable solutions.

"And in this current round of bargaining, we did everything possible to negotiate a new contract, including an unprecedented agreement to stay at the bargaining table nine days past the expiration of the previous agreement," he said.

GM has been pressing the UAW for significant concessions, including two-tier wages and moves to make it easier to lay off workers.

But the chief stumbling block was a proposed voluntary employee benefit association that would assume responsibility for the health-care benefits of more than 460,000 GM retirees.

Vital issue

David Cole, director of the Center for Automotive Research, said: "We sat down with [GM executives] several months ago and they told us the top issues were health care, health care and health care. Nothing else came close."

Harley Shaiken, a labour expert from the University of California at Berkeley, said that while the union has accepted the idea of a health-care trust, the details of its operation are critical.

"These are not minor details," he said. "It's like buying a house: If you can't agree on all the other terms like ... who pays for the new roof, you don't have a deal."

Union bargainers have reservations about funding the trust with blocks of company stock.

"The idea of building the trust company stock in the post-Enron world just isn't workable from the union point of view," he said.

Cole, however, said using company stock to finance the health-care trust could actually work to the union's benefit and help ease the financial burden on GM and its US rivals, Chrysler and Ford, which have lost a combined 25 billion dollars since the start of 2005.

"It would be transparent. You wouldn't have any of the chicanery that characterized Enron," Cole said.