Union's response to GM on healthcare....
http://quote.bloomberg.com/apps/news?pid=10000006&sid=a0vuhXPclC5E&refer=home#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.''
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.
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.
``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.
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?''
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.