Gm Seeks Concessions From Unions

General Motors Corp. will try to reduce its staggering employee and retiree health care liabilities in the forthcoming contract talks with the United Auto Workers (UAW). This information was divulged in the Securities and Exchange Commission filing which happened last Thursday. GM said its obligation for post-retirement health care and other benefits was $68 billion at the end of last year and could still grow on a global basis. In the United States, the largest automaker spent $4.8 billion on health care last year. It is expected to drop this year to $4.7 billion. The automaker said its internal financial controls are ineffective and that it is working to fix them. It is known that federal authorities are investigating the financial reporting of the automaker. And the company has this to say: “We must continue to make structural changes to reduce our U.S. health-care cost burden, the source of our largest competitive cost disadvantage.”GM said it needs to continue to reduce structural and material costs, and its production must become more efficient in order to return to profitability. But it said that restrictions in labor agreements could limit cost savings. “Our current collective bargaining agreement with the UAW will expire in September 2007, and we intend to pursue our cost-reduction goals vigorously in negotiating the new agreement,” the company said. Moreover, GM added that a UAW strike or threat of a strike could affect its business and impair further cost reductions.GM provides extensive pension and retiree health care benefits to over 400,000 American retirees and surviving spouses. In the filing, GM noted that the UAW agreed to retiree health-care cost sharing in 2005 that reduced its post-retirement health care obligations by $17 billion, and it capped salaried retiree health care spending levels effective in January. The spokesman of the UAW declined to comment on the mentioned filling.The filing said the automaker has continued to improve its internal controls, but if it cannot fix them permanently, “It may adversely impact our ability to report our financial condition and results of operations in the future accurately and in a timely manner, and may potentially adversely impact our reputation with stakeholders,” the filing said. It further added: “A negative outcome of one or more of these investigations could require us to restate prior financial results and could result in fines, penalties or other remedies being imposed on GM.” Early this year, GM said it had hired financial advisers to help restructure its corporate controller’s office. On Wednesday, the company reported a profit of $950 million for the last quarter, but the company still lost $2 billion for the entire year. The company also recorded a $10.4 billion loss in 2005. It is now in the midst of slashing thousands of jobs and closing plants to implement its restructure plan to compete better with Asian automakers, mainly Toyota Motor Corp. GM might need the aid of a Volvo fuel pump to accelerate its adrenaline to fight for its throne in the industry.