IE 11 is not supported. For an optimal experience visit our site on another browser.

UAW, GM will work to cut health care costs

The United Auto Workers union will work with General Motors Corp. within the framework of its current contract to help the automaker cut its mounting health care costs, a union official said Thursday.
/ Source: Reuters

The United Auto Workers union will work with General Motors Corp. within the framework of its current contract to help the automaker cut its mounting health care costs, a union official said Thursday.

GM’s health care costs, which it expects to rise to $5.6 billion this year from $5.2 billion last year, and a surprising warning last month of its worst quarterly loss since 1992 led to some speculation that the automaker could ask the union to renegotiate parts of its current contract.

“They haven’t asked us to reopen the contract,” UAW President Ron Gettelfinger said following a closed-door annual meeting with GM. “As long as we work within the framework of our agreement, we will make joint efforts to lower costs wherever its possible, whether it pertains to health care or whether it pertains to other measures,” Gettelfinger added.

GM chief executive Rick Wagoner briefed UAW union leaders on the state of the automaker’s business, union officials said.

GM has been steadily losing market share to foreign rivals, while rising gasoline prices have dented demand for its high-margin sport utility vehicles. The union health and pension benefits it pays amount to more than $1,500 per vehicle that GM sells in the United States, costs that its nonunion foreign competitors don’t have to shoulder, analysts said.

GM needs more
The current contract with the UAW, which expires in September 2007, includes language making it difficult for GM to close plants and cut jobs. It also includes what analysts consider to be generous health and pension benefits.

“Within the (union) agreement there is a lot we can do, but there is also a lot we need,” John Buttermore, GM’s North American vice president of labor relations said after the meeting.

“We need to keep working on this with a strong sense of urgency,” he added.

GM vice chairman Bob Lutz said at the New York auto show last month that the health care benefits currently enjoyed by GM’s UAW workers are “way, way richer” than those received by its salaried workers.

“Salaried health care benefits” should be shared by all GM employees, Lutz said.

GM shares on Thursday tumbled 6 percent to a 17 1/2 year low in part on what one Wall Street analyst called “unsubstantiated bankruptcy concerns.”

The concerns were likely tied to Wagoner’s comments to the union regarding the company’s need for healthcare concessions, which “have been twisted into an imminent bankruptcy possibility,” said JPMorgan analyst Himanshu Patel in a note to clients.

GM said it has no plans to file for bankruptcy.