updated 11/11/2005 1:16:29 PM ET 2005-11-11T18:16:29

General Motors Corp.’s hourly workers have agreed to a proposal that would increase the amount retirees and active workers must pay for their health care, the United Auto Workers said Friday.

The world’s biggest automaker had asked the UAW for the unusual concessions this spring. GM lost more than $3 billion in the first nine months of this year as its labor costs rose and competitors ate away at its U.S. market share.

Hourly workers approved the proposals by a 61 percent majority, UAW President Ron Gettelfinger and chief GM negotiator Richard Shoemaker said in a brief statement. Retirees couldn’t vote on the proposal.

GM spokesman Stefan Weinmann said hourly workers would see changes in their health care immediately. Changes for retirees must still be approved by the U.S. District Court in Detroit, he said. That approval isn’t expected until early next year.

GM said it was pleased that the agreement was ratified. GM pays for health care for a total of 750,000 U.S. hourly employees, retirees and their dependents, including around 110,000 active workers.

“The agreement allows GM to continue to provide excellent health care benefits to our hourly employees and retirees while at the same time significantly reducing the cost to GM,” the company said in a statement.

GM expects to spend $5.6 billion this year on health care for all of its employees and retirees. GM says the new agreement would cut its annual health care expenses by $1 billion after taxes and would lower its retiree health care liabilities by 25 percent.

Auto workers voted through their local unions for a week starting Nov. 3.

Under the proposed agreement, GM retirees would have to pay up to $752 annually for families and $370 for individuals for their health care. Right now, retirees pay no monthly premiums and a small fraction of other health care costs.

The agreement would require GM hourly workers to contribute $1 per hour in future pay increases to a new fund to help pay for retirees’ coverage. GM would contribute $3 billion to that fund over the next six years.

David Healy, an analyst with Burnham Securities, said the deal was significant but only part of the work GM needs to do to return to profitability.

“It’s a major step but there’s a whole lot more they need to do,” he said.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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