DETROIT (AP) -- Despite intensified negotiations, General Motors Corp. and the United Auto Workers union likely won't agree soon on a deal that could substantially cut the automaker's health care costs, analysts and union members said Thursday.þþ''Meaningful concessions will take more time and will probably not be achievable until the 2007 contract,'' Deutsche Bank Securities analyst Rod Lache said in a note to investors.þþGM shares, which had rallied in recent days as rumors circulated about an imminent deal, fell 72 cents, or 2 percent, to $35.62 Thursday on the New York Stock Exchange.þþGM, hurt by sluggish sales and declining market share, posted a $1.1 billion loss in the first quarter. The automaker has been pressing the UAW to help it control health care costs, which could rise to $5.6 billion this year.þþGM's contract with the UAW expires in 2007, and so far the union has said it is unwilling to reopen that contract to negotiate lower health care costs. The union has said it will work within the contract, which could mean accepting higher co-payments or higher prices for prescriptions.þþBut the amount the UAW could save GM without reopening the contract might not even be enough to cover inflationary increases. In a research note, JPMorgan Chase & Co. analyst Himanshu Patel said the UAW could only save GM around 5 percent of its health care costs without reopening the contract. GM's health care bill could rise as much as 12 percent this year.þþThe amount GM wants to save is unclear. The Detroit Free Press and Wall Street Journal reported Thursday that GM wants $1 billion in cuts this year and $1 billion in 2006. GM spokeswoman Toni Simonetti wouldn't confirm those numbers.þþ''We have not shared these numbers publicly, and I wouldn't comment on any exchange of information we've had with the UAW,'' Simonetti said. ''Frankly, any outcome is highly uncertain right now.''þþA message left Thursday for the UAW was not immediately returned.þþOscar Bunch, the longtime president of UAW Local 14 in Toledo, Ohio, which represents 3,500 workers, said he didn't know how much GM was seeking. But he said a rumor that GM set a June 30 deadline to reach an agreement on health care is unrealistic. The UAW would have to get the approval of local leaders before accepting cuts, Bunch said, and the union hasn't scheduled any votes.þþ''We don't have time to do that,'' Bunch said.þþGM spokesman Edd Snyder also said there is no deadline for making the changes GM is seeking.þþIn a speech to shareholders last week, GM Chairman and CEO Rick Wagoner said the company hoped to reach an agreement soon with the UAW. But Wagoner also left open the possibility that GM could act on its own. GM doesn't have to get UAW approval to cut retiree benefits.þþBunch confirmed that GM has requested cuts in retiree benefits, a move the UAW vehemently opposes.þþ''That puts the UAW in a position that they have to fight,'' Bunch said.þþStill, Bunch said the union is a long way off from striking over health care issues, in part because members know a strike would hurt sales and deepen problems for the world's largest automaker.þþIf workers at his plant went on strike, ''it would take us another 25 years to get back to where we are today, in terms of people having faith in the company,'' Bunch said.þþ''There's a lot of mistrust out there, but I can't believe that GM would get themselves backed into that. I'm hoping that they're a lot smarter than that,'' Bunch said.þþBunch said GM needs to do a better job of explaining its financial burdens to members if it wants concessions on health care.þþStandard & Poor's Ratings Services, which downgraded GM's debt to ''junk'' status last month, said Thursday the rating will remain unchanged for now. But it warned that further downgrades could come if the UAW goes on strike.þþ''If GM's actions were to lead to a costly and disruptive work stoppage -- particularly if substantial reductions in health care costs were not achieved -- this could ultimately jeopardize the ratings,'' the agency said.þþ
Source: NY Times
