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The Honolulu Advertiser
Posted on: Saturday, November 12, 2005

GM workers OK costlier healthcare

By Dee-Ann Durbin
Associated Press

General Motors clutch assemblyman Tracy Robinson is among workers who will have to pay more for their healthcare under an agreement between the United Auto Workers and GM.

ASSOCIATED PRESS LIBRARY PHOTO | October 2005

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DETROIT — General Motors Corp. got some relief from its healthcare costs as autoworkers agreed to pay more of their health costs, but analysts said the ailing automaker must do more to turn around its North American operations.

The United Auto Workers said yesterday that its members agreed to a tentative proposal to make retirees and hourly workers pay more for healthcare. GM asked the UAW for the concessions last spring as healthcare costs rose and it lost U.S. market share to Asian competitors. GM lost more than $3 billion in the first nine months of 2005.

Hourly workers approved the proposals by a 61 percent majority, UAW President Ron Gettelfinger and chief GM negotiator Richard Shoemaker said in a statement.

GM pays for healthcare for 750,000 U.S. hourly employees, retirees and their dependents, including about 110,000 active workers.

GM expects to spend $5.6 billion this year on healthcare for all its workers. The company says the new agreement would cut annual healthcare expenses by $1 billion after taxes and would shave $15 billion, or 25 percent, off its $60 billion in long-term retiree healthcare liabilities.

Under the proposed deal, GM retirees will pay up to $752 annually for families and $370 for individuals for healthcare. Right now, retirees pay no monthly premiums and a fraction of other healthcare costs.

Erich Merkle, senior auto analyst with the consulting firm IRN Inc., said the deal is significant but GM faces many other challenges.

"A billion a year is a nice chunk of change, even for GM, but it's really not even close to being enough in terms of what they have to do," Merkle said. "This is the easy part."