staff and news service reports
updated 10/5/2005 10:45:44 AM ET 2005-10-05T14:45:44

General Motors Corp. and the United Auto Workers union appear to be nearing a deal to cut the automaker’s annual health-care costs, The Detroit News reported on Wednesday citing people familiar with the talks.

The deal under discussion likely would shave at least $1 billion from GM’s annual health-care bill, meaning the changes would impact active UAW members as well retirees nationwide by increasing co-pays for prescription drugs and perhaps instituting cost-sharing of monthly premiums, the newspaper said. Phone calls to GM and UAW were not immediately returned.

The world’s largest automaker, which lost $2.5 billion in North America during the first half of 2005, expects its health-care costs to total nearly $6 billion this year.

GM began talks with the UAW in April to slash some of the union benefits that it blames for hurting its ability to compete with Asian rivals.

The UAW has stressed that any benefit cuts would be made within the confines of the UAW’s existing labor contract with GM.

Talks between both sides intensified last weekend in advance of GM’s board meeting Tuesday, partly because GM officials signaled they wanted a framework to present to GM’s directors the newspaper reported, although it noted that individuals familiar with the discussions have cautioned a deal is not certain.

The deal, if reached amid relatively good times for auto sales and the economy, would be historic for Detroit’s tough labor-management relations and would signal that the UAW recognizes that the troubles weighing on GM and other Detroit automakers won’t be easily solved.

Reuters contributed to this report.


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