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Union's response to GM on healthcare....

GM Hasn't Made Case for Health Cuts, Union Chief Says

July 1 (Bloomberg) -- General Motors Corp.'s first-quarter loss of $1.1 billion hasn't convinced United Auto Workers President Ron Gettelfinger that employees should agree to demands by management to reduce health-care benefits.

``Are we expected because of one quarter's loss to make major, major changes?'' Gettelfinger, 60, said in an interview yesterday at the union's headquarters in Detroit. ``We're not going to jump out of a plane without a parachute.''

GM Chief Executive Rick Wagoner in April announced the company's biggest quarterly loss in 13 years as it ceded market share to Asian rivals such as Toyota Motor Corp. Wagoner, 52, said that health-care spending made GM uncompetitive and that he couldn't forecast earnings for the year until the ``health-care cost crisis'' was resolved.

Gettelfinger's comments reflect the challenge Wagoner will have in persuading unions to accept reductions in health-care benefits, which GM estimates will cost $5.6 billion this year. The union and company were in talks over the issue throughout the second quarter. On June 9, union officials said GM had set a June 30 ``deadline'' to come to an agreement or face unilateral cuts. Both sides have since backed off talk of a deadline.

The union is conducting a review of GM's financial condition that goes beyond health care, Gettelfinger said. The union also is ``looking at waste that's in the system.''

``To us the issue is product,'' said Gettelfinger, who has led the UAW for three years. ``Product is the key to the success of any company, and the same can be said of General Motors. The design, the product development, production and marketing strategy all go hand in hand.''

`Great Product'

GM has ``addressed those issues along the way,'' Gettelfinger said. ``It appears to us they have a lot of great product coming out that we're proud to assemble. We believe you will see them pick up some market share.'' GM's U.S. sales slipped 6.7 percent through May and its market share dropped to 25.7 percent from 27.2 percent a year earlier.

Wagoner has said GM sales will improve this year as the company introduces new models with better designs and reduces the prices of existing cars and trucks. GM is introducing 10 new models, such as the Chevrolet HHR and Hummer H3 sport-utility vehicles and Pontiac Solstice sports car, as well as new versions of existing vehicles such as the Corvette Z06 and performance models of the Chevrolet TrailBlazer SUV and Cadillac STS sedan.

Next year, GM will sell new versions of its largest SUVs and pickup trucks, such as the Chevy Silverado and GMC Yukon, Wagoner has said.

Bargaining Risk

GM's ability to press the union may be hurt by a surge in sales in June, spurred by the decision to offer all customers the discounts typically available only to employees. The increase in sales might attract so many customers that the company's finances improve before it gets the long-term cuts it needs, UBS analyst Rob Hinchliffe wrote in a June 28 report. Analysts surveyed by Bloomberg expect GM to report today that June sales rose as much as 30 percent from a year earlier.

Gettelfinger and union Vice President Richard Shoemaker said in a June 16 statement that it would be a ``huge mistake'' for GM to unilaterally cut workers' health-care benefits.

``It is in the best interests of all GM stakeholders'' for the company and the union to ``maintain the solid working relationship that we have worked so hard to build since 1998,'' they said. That year was the last time the UAW had a strike at Detroit-based GM.

Avoid Ultimatums

``The last thing you want to do with Ron Gettelfinger is issue ultimatums,'' said Harley Shaiken, a labor analyst at the University of California at Berkeley, in an interview. ``He wants to roll up his sleeves and see what they can do. He's a very straightforward guy, but doesn't respond to ultimatums.''

Gettelfinger joined the UAW in 1964 when he was a repairman on a Ford assembly line in Louisville, Kentucky. He was elected president in 2002 after serving in various UAW posts. As an Indianapolis-based regional UAW official from 1992 to 1998, he supervised strikes at GM and Chrysler Corp. plants that produced critical parts such as transmissions or body panels.

Gettelfinger said the union's social security department, which deals with benefits and pensions, will be involved in the review of GM's finances. The UAW's research and legal sections also will participate, he said.

``We're not Johnny Come Latelys when it comes to this kind of issue,'' he said ``We are in the process of interviewing outside finance people, investment bankers as well as other attorneys to assist our experts who are in-house.''

The union president said he and Shoemaker will make a decision once the review is finished and declined to estimate how long that process will take.

What's Next?

The union will explore whether GM's first-quarter losses will continue. ``There's got to be projections out there of where they're going to be in the second or the third,'' Gettelfinger said. ``Are they going to be profitable in the fourth quarter? Those are the kinds of things we're also looking at.''

Maryann Keller, an independent auto analyst based in Greenwich, Connecticut, in an interview this week questioned GM's approach in seeking help from the union on health care.

``GM says, we have $20 billion in cash, we continue to pay the dividend, everything will be peachy when new cars come out,'' Keller said. ``How do you in that context declare a crisis in one area and not a broader crisis that requires action by everyone?''

Skepticism

Gettelfinger, in the interview, expressed skepticism about GM's case.

``Let's just set the record straight again,'' Gettelfinger said of the company. ``They've got somewhere in the neighborhood of $18 billion to $20 billion in cash reserves. They're paying out $1.1 billion in dividends. Their shareholders' equity is going up. And it seems like their products in the pipeline are coming forward and making a hit. Nobody can argue with the success of Cadillac, the new Cobalt that's out there.''

GM's shares rose 63 cents to $34.63 at 9:54 a.m. in New York Stock Exchange composite trading. They've dropped 14 percent this year.
http://quote.bloomberg.com/apps/news?pid=10000006&sid=a0vuhXPclC5E&refer=home#
 

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fieroed88 said:
can u sum it up
The truth is in the middle, but it looks like the UAW talking heads/leaders are willing to risk leeching GM to extinction (as their "our experts dont tell us GM's really hurting" propoganda suggests) just to perserve their priviledged positions in their organization.

I wonder if the rank and file members would be more worried about having to find a job at a nonUAW manufacturer rather than have to face higher copays for health benefits.
 

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Pure corporate spin BS. Just keep your eye on the insider stock trades once Wagoner lifts his "indefinate" media hold on trading. Almost makes me mad enuf to tell them to kiss my royal Irish arse and keep their car.
 

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The problem goes way beyond GM and the union. The problem is with the entire system. Last year the medical insurance for my company took a 22% increase. That is without having a single major injury or medical problem. This year we are being quoted an increase of 34%. This is rediculous. The fees for the work I do does not increase at rates anywhere near the increases in medical increases. Where do these people think they are coming from? Three years ago I spent four days in the hospital because a medication my doctor wanted me to take for an inflamed shoulder was not approved by the insurance company and a substitute had to be taken. In three weeks the substitute gave me two ulsers and resulted in my never being able to take aspirin again in my life. Where do these insurance companys get this much power? I know what I have to pay in medical insurance for my employees. I also know I'm in the minority because I still pay 100% of their insurance costs. I'm not advocating socialized medicine because I can see what a disaster it really is. I would just like to see the entire medical industry step back and revamp. Changes need to be made with respect to law suits, changes need to be made to increase the effeciency of our hospitals, and changes need to be made so doctors can do their job without being dictated to by outsiders. While I was in the hospital, my roommates wife asked his doctor about a test she had read about. The doctor tried to explain to the woman that the test was for a totally unrelated illness. The woman insisted that this was the test her husband needed. Do you know what happened? The doctor ordered the test. I'm certain he did it not because it was needed, but instead because he was aftraid of what might happen if he didn't have the test performed and my roommate's health tanked. We have a system that need a major overhauling, from top to bottom. I'm 55 and I doubt I'll live long enough to see the change occur. Take out the large costs of medical insurance and see where GM stands with their employees. I would venture a guess that the savings would be unbelievable. Everyone wants to make more money (unless you're a starving artist) it's normal. What hurts is all of the bleeding which occurs from our paychecks as a results of high insurance costs, both direct and indirect. I'll get off the soap box now. I just needed to vent a little myself. 'By the way, did anyone pick up their Solstice yet? 'Just kiddin'.
 

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I agree with you. Our entire political system is corrupt. It's one special interest after another with their lawyers and lobbyists. What the hell does independence day stand for when we're all slaves to the corporations, the media, the phony politicians and every spin doctor under the sun...
My father-in-law worked for GM for 40 years. He's 74, and has rhuematoid arthritis. He told me that the GM employee discount was put on the table years ago and awarded as a negotiated contract benefit. Is it his fault that GM made poor investment decisions? He held up his end of the deal. Never missed work, etc. Why should he be penalized now?
I'll tell you this, I'd like to see all these greedy individualists who have no moral or social conscience get their just reward soon.
 

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Ex-Miata Man said:
The problem goes way beyond GM and the union. The problem is with the entire system. Last year the medical insurance for my company took a 22% increase. That is without having a single major injury or medical problem. This year we are being quoted an increase of 34%. This is rediculous. The fees for the work I do does not increase at rates anywhere near the increases in medical increases. Where do these people think they are coming from? Three years ago I spent four days in the hospital because a medication my doctor wanted me to take for an inflamed shoulder was not approved by the insurance company and a substitute had to be taken. In three weeks the substitute gave me two ulsers and resulted in my never being able to take aspirin again in my life. Where do these insurance companys get this much power? I know what I have to pay in medical insurance for my employees. I also know I'm in the minority because I still pay 100% of their insurance costs. I'm not advocating socialized medicine because I can see what a disaster it really is. I would just like to see the entire medical industry step back and revamp. Changes need to be made with respect to law suits, changes need to be made to increase the effeciency of our hospitals, and changes need to be made so doctors can do their job without being dictated to by outsiders. While I was in the hospital, my roommates wife asked his doctor about a test she had read about. The doctor tried to explain to the woman that the test was for a totally unrelated illness. The woman insisted that this was the test her husband needed. Do you know what happened? The doctor ordered the test. I'm certain he did it not because it was needed, but instead because he was aftraid of what might happen if he didn't have the test performed and my roommate's health tanked. We have a system that need a major overhauling, from top to bottom. I'm 55 and I doubt I'll live long enough to see the change occur. Take out the large costs of medical insurance and see where GM stands with their employees. I would venture a guess that the savings would be unbelievable. Everyone wants to make more money (unless you're a starving artist) it's normal. What hurts is all of the bleeding which occurs from our paychecks as a results of high insurance costs, both direct and indirect. I'll get off the soap box now. I just needed to vent a little myself. 'By the way, did anyone pick up their Solstice yet? 'Just kiddin'.
EMM, youre right in many ways about the system being broke. But the public should be clearly aware that there are no simple answers to these problems. Take it form someone who knows the facts (which are public knowledge but suppressed or discredited by the media and the legal profession), much of the cost increase is for administrative purposes and not related to the direct delivery of care.

The patients' input gets left out of the process, the Doctor gets paid less every year by Medicare and therefore the insurers (while their overhead goes up with inflation and malpractice rates), the trial lawyers (who own our politicians) have no disincentive to avoid needless or frivoluous suits, the public has a lottery mentality and doesnt believe in personal responsibility for their actions anymore, and the middlemen, goods suppliers and executives (hospital, insurance, and government) personally make more and more money every year on the basis of how much they can charge and how much they can limit payment to patients for benefits and to providers for delivering care.

If the public wants the system fixed, they need to speak with their vote and look at the facts of how their local, state, and federal representatives have voted on these issues and where they get their campaign funds from. The public has no one but themselves to blame for this mess because they elected the politicians for the last 20 years that planted the seeds for this impending disaster. When Bob lutz or Ron Gettelfinger cant get their heart catheterization or hip replacement without paying for it themselves out-of-pocket, then I think will see meaningful efforts to sort this mess out, not before.
 

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Trust me, I'm a Pharmacist.

Three words: Drug Price Controls.

Every industrialized country in the world has them, except the US, so our drug prices are higher than anywhere else. We're the only country in the world that they can milk. The only reason drug reimportation makes any sense is because of foreign drug price controls.

I work in an administrative capacity for a large governmental healthcare organization that strongly negotiates drug prices. It's amazing how low prices can go when a phamaceutical company is threatened with losing 170 hospitals & hundreds of outpatient clinics to a very similar drug in the same class.

As a patient, the best thing you can do is to question your doctor when he/she writes a prescription. Don't believe everything that you've seen in drug ads on TV. Is this really the best drug for me? Is there something else that is cheaper that will work just as well? The drug companies don't advertise or otherwise market the older, cheaper stuff. Consumer Reports recently launched a service at http://www.crbestbuydrugs.org/ that you might want to check out. There are some oversimplifications there, but the concepts are generally correct.


I agree that administrative costs certainly have risen, partly due to lawsuits, partly because of the demands of outside organizations like JCAHO or the ASHP's new "797 standards for IV compounding facilities. Safety is one thing, but onerous, ivory tower "standards" don't help anyone.
 

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Good point about drug costs. And there are effective generic medicines out there that will work for people just fine. Some people need brand name drugs due to side-effects or intolerances, but this is relatively rare.

I would be careful about squeezing the pharmaceutical companies too much though. Driving drug development overseas isn’t in our healthcare interests either. I don’t begrudge someone making a fair profit on their investment. We all expect the same consideration in our own businesses if the situation applies to us. But someone has to decide what’s fair and what isn’t, and that is where things break down. When it comes to passing on cost to patients and providers, there has to be a fair review process and right now that is left up to the free market and the same old ineffective methods of sorting things out.

Many experts are making a frighteningly good argument that our healthcare system is going to crash and burn badly if things keep going the way they are. And if 20 years of state and federal executive and legislative history is any indication, there’s no chance for avoiding it.
 
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