Facing their worst financial outlook in years, executives at General Motors said yesterday that they wanted union workers to accept the same health benefit cuts already taken by white-collar workers. þþÿWe need a competitive plan for all of our employees,ÿ said Gary Cowger, G.M.'s head of North American operations, in a speech at the New York International Auto Show. ÿAn across-the-board competitive health care plan for salaried and hourly employees could save us billions of dollars a year.ÿþþThe statements were the starkest indication yet that G.M. plans to make a concerted pitch to the United Auto Workers union to help the company out of its deep financial hole. þþBut making such a concession before the union contract expires in 2007 would be unprecedented and difficult to sell to union leaders and rank-and-file members. And it would still be difficult to sell in 2007, since concessions would essentially end the generous health benefits that have made jobs at the Big Three automakers among the most sought-after blue-collar work in America. þþPaul Krell, a spokesman for the U.A.W., said the union would not comment on Mr. Cowger's remarks. G.M. and union leaders are scheduled to meet next month to discuss a range of issues facing the company. þþExecutives said yesterday that G.M. was taking a number of steps to right itself. They said that the company was reallocating engineering resources to rush the next generation of large sport utility vehicles, like the Chevrolet Suburban and the Cadillac Escalade, into production by the end of the year. G.M. is also planning to hasten introduction of its new large pickup truck models and midsize sport utility vehicles like the Chevrolet Trailblazer, and abandoning some planned small and midsize sporty cars.þþÿWhen you hit a rough spot, you have to decide where the real priorities are,ÿ said Robert A. Lutz, G.M.'s vice chairman, adding that the S.U.V.'s were ÿwhere the company makes, frankly, high margins.ÿþþMr. Lutz dismissed concerns that volatile gas prices would mean that large S.U.V.'s may not be the savior they have been in the past.þþÿEverybody thinks high gas prices hurt sport utility sales. In fact they don't,ÿ he said, adding that buyers of big S.U.V.'s like the Suburban, GMC Denali and Cadillac Escalade were well-off enough to be insulated from rising gas prices. þþÿRich people don't care,ÿ he said. þþExecutives at other automakers have disagreed with this view. Phil Martens, the Ford Motor Company's vice president for product creation, said in an interview yesterday that when it comes to buyer concerns, ÿfuel economy has gone from not being in the top 10 to being in the top 5.ÿ þþLast week, G.M. said the first quarter would be its second consecutive losing quarter. The company sharply lowered earnings projections for 2005, sending its stock to its lowest level in more than 10 years. Large S.U.V.'s and pickups have been enormous contributors to G.M.'s earnings, but the company's share of the market for large sport utilities has eroded in recent years. þþÿThe real part of the earnings problem is what is going on in S.U.V.'s, particularly mid- and large-sized S.U.V.'sÿ said Scott Sprinzen, an analyst at Standard & Poor's, in an interview last week. þþG.M. is also deeply burdened by health care costs. The company covers 1.1 million Americans, or about 0.4 percent of the population, and is the nation's largest private health care provider, with annual costs of over $5 billion. þþBig Three autoworkers have health care benefits that are the envy of many Americans, with no deductibles or monthly premiums. Salaried workers at the companies, however, pay both deductibles and monthly premiums, with the amounts varying depending on the plan. Altogether, G.M.'s salaried workers pay about 27 percent of their health care bill, while hourly workers pay about 7 percent, according to company data. þþÿWe have a very outstanding health care plan for salaried employees,ÿ Mr. Lutz said. ÿWe have a different one for U.A.W. members and retirees.ÿ If union workers had a health plan that was ÿequally excellentÿ to that of salaried workers, ÿthat would represent substantial, substantial savings,ÿ he said.þþAny significant renegotiation of the terms of the labor contract before it expires in 2007 would be highly unusual. And Ron Gettelfinger, the president of the union, has made preserving health care benefits his top priority, declaring before contract talks in 2003 that he would not ÿshare costsÿ with automakers. þþThat said, with the domestic auto industry, and particularly G.M., in dire straits, the union appears to be willing to give some ground. þþIn the last round of labor talks in 2003, Mr. Gettelfinger did concede modest increases in co-payments for drugs and some doctors' visits. And this year, the union agreed to let Chrysler have its workers who use preferred-provider plans start paying the first deductibles charged to Big Three workers. The concession to Chrysler is expected to be adopted in some form at G.M. and Ford. þþThough many workers are aware of the troubles faced by the union and are expecting some cuts, significant reductions in benefits would be difficult for union leaders to sell to members. þþÿIf they believe the company numbers, they need management's help to convince the rank and file that the change needs to be made,ÿ said Sean P. McAlinden, director of the economics and business group at the Center for Automotive Research, an independent research firm in Ann Arbor, Mich.þþMr. McAlinden estimated that costs for union members could increase $1,500 to $1,700 a year. þþMr. Lutz said the company would keep talking to the union. ÿThey know it's a critical issue for the company and we know that they know,ÿ he said.þþÿIt's very difficult to say how or where this is going to go, but we have to maintain the dialogue and impress upon our partners how important this is.ÿþþ
Source: NY Times
