General Motors (US) strikes deal with unions

[4.9 EF Futura]

Absolutely incredible. Who would have thought the unions would agree to this....

Will be interesting to see if the workers ratify the proposal.... would you?


http://business.timesonline.co.uk/ar...830583,00.html

GM’s $15bn union deal transforms carmaker landscape
From James Doran, Wall Street Correspondent


GENERAL MOTORS, the world’s biggest carmaker, reached a landmark deal with its biggest union last night that cuts $15 billion (£8.5 billion) from its workers’ healthcare plan and is expected to set a precedent for its US rivals Ford and DaimlerChrysler.
The agreement, which includes a further 25,000 job cuts in GM and a series of factory closures, came as the company disclosed that it was seeking to sell its controlling stake in the lucrative GMAC finance unit to shore up its future.

The US motor industry has undergone a steep decline in the past decade as it has struggled to meet the multibillion-dollar annual cost of its defined-benefit healthcare and pension plans. The healthcare plan at GM alone takes care of 750,000 past and present employees and their families at a cost exceeding $3 billion a year.

But yesterday GM reached a tentative agreement with the United Auto Workers Union (UAW) — also the main union at Ford and DaimlerChrysler — to scrap the defined-benefit healthcare deal in favour of a defined-contribution plan. In return for the sweeping concessions by the union, GM agreed to fund the new healthcare plan with $3 billion, between next year and 2011. The plan will cut GM’s healthcare liabilities by as much as $15 billion, the company said, and set it on course for annual cost savings of as much as $5 billion by 2007.

The pact, struck in principle with UAW leaders, must still be ratified by the union’s membership at GMs.

The deal marks a turning point in US industrial relations, which were recently marred by a machinists’ strike at Boeing and, previously, by a major strike in GM in the 1990s.

Rick Waggoner, chief executive of GM, praised the union’s leadership. “These negotiations were done in a positive, co- operative, problem-solving spirit,” he said. “While it may have taken some time to reach this co-operative solution, I think it was time well spent.”

Mr Waggoner also sought to reassure the thousands of GM workers who face losing their jobs in the restructuring plan.

“We will do our best to minimise this impact on each of you and your families,” he said. “We hope you will understand that, with these difficult actions, we will help to ensure a viable and growing GM for the future.”

GM also disclosed that it is looking for a “strategic partner” to buy a controlling stake in its lucrative GMAC finance unit.

The finance unit has propped up GM’s books for years and is the only part of the carmaker that turns a profit. However, even GMAC has fallen on hard times, with its credit rating downgraded by the major agencies. Analysts interpreted the GMAC announcement as a signal to the markets that GM would seek to survive on its car and truck manufacturing business alone. The restructuring plan came as GM announced a record $1.6 billion quarterly loss for the three months to October. The latest losses compound the multibillion-dollar losses recorded earlier in the year, which led analysts to believe that the company could make an annual loss of between $3.5 billion and $5.5 billion, depending on the outcome of further talks about cost-cutting with the unions.