More bad news for GM (employees) By DEE-ANN DURBIN,
AP Auto Writer
General Motors Corp. and the United Auto Workers have reached a tentative agreement that will help the embattled automaker lower its health care costs, GM's chairman and CEO said Monday.
The announcement came as the world's biggest automaker said it lost $1.6 billion in the third quarter and said it was considering selling a stake in its financial services arm in a bid to restore its investment grade credit rating.
Its shares rose $3.14, or 11.2 percent, to $31.12 in premarket trading.
The tentative agreement on health care is projected to reduce GM's retiree health-care liabilities by about 25 percent, or $15 billion, and cut GM's annual employee health-care expense by about $3 billion, CEO and Chairman Rick Wagoner said. Cash savings are estimated to be about $1 billion a year.
"These negotiations were done in a positive, cooperative, problem-solving spirit," Wagoner told employees at GM headquarters in Detroit. "While it may have taken some time to reach this cooperative solution, I think it was time well-spent."
GM asked the UAW to help it lower its health care costs before its contract with the union expires in 2007. Both parties have been in negotiations since spring.
Also Monday, GM reported a loss of $2.89 per share for the July-September period in contrast to a profit of $315 million, or 56 cents a share, a year ago.
The loss for the third quarter included a charge of $805 million for asset impairments in North America and Europe and restructuring charges of $56 million at GM Europe.
Without the special items, GM's loss amounted to $1.1 billion, or $1.92 a share. But that is still a much larger loss than the loss of 87 cents a share that analysts surveyed by Thomson Financial expected.
Total revenue was $47 billion for the quarter, up from $44.8 billion in 2004.
The tentative health care agreement with the UAW also includes contributions to a new, independent voluntary employee benefit plan, which will be partially funded by GM.
Wagoner said the modified plan will continue to provide high-quality health care for GM's more than 750,000 hourly workers and dependents, retirees and surviving spouses in the U.S.
But he acknowledged that the decisions will have an impact on employees.
"We will do our best to minimize this impact on each of you and your families," he said. "We hope you will understand that, with these difficult actions, we will help to ensure a viable and growing GM for the future."
GM expects to spend $5.6 billion on health care this year.