GM pressuring UAW for health-care concessions (April 25, 2005)

Seeking relief from its annual multi-billion dollar health care bill, General Motors is setting the stage for a showdown with the UAW over health costs for its hourly workers. Last week, GM’s chief financial officer cited resolution of the company’s health care cost crisis as the main reason behind the automaker’s decision to withdraw its earnings guidance of profits between $1 and $2 per share for this year, following a first quarter net loss of $1.1 billion.
Financial analysts believe the decision indicates GM is intent on ratcheting up pressure on the UAW to open up the current contract before it expires in 2007.
GM currently pays about $5.6 billion a year to cover the health care costs of 1.1 million current and retired workers in the U.S. GM’s hourly workers pay about 7% of their own health care costs, compared to 27% for GM’s salaried workers and 32% for the average worker in the United States. Changing health care coverage terms would require the union to agree to reopen the contract ahead of its expiration in September 2007. After meeting with GM official behind close doors last week, UAW president Ron Gettelfinger said he thought that GM and the union could work within the framework of the contract to cut some costs.