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General Motors Corp.'s United Auto Workers union members ratified a plan to help the world's largest automaker reduce its health-care costs and end four straight quarters of losses.
Sixty-one percent of voting members approved the accord, the union said in a statement today. The agreement, announced Oct. 17, takes effect immediately for active workers and reduces the Detroit-based company's cash outlays for health care by $1 billion annually and its long-term retiree medical liability by $15 billion.
GM Chief Executive Rick Wagoner made cuts in health-care costs his No. 1 goal this year, saying the tab puts his company at a $1,500-per-vehicle disadvantage against Toyota Motor Corp. and other rivals. GM shares rose 7.5 percent on news of the accord, the same day GM announced a $1.63 billion third-quarter loss. The shares fell 22 percent since then through yesterday amid news of debt downgrades and earnings restatements.
``At this point, the excitement surrounding what now look to be relatively small health-care concessions is but a distant memory,'' Rob Hinchliffe, an analyst with UBS Securities in New York, said in an interview.
On Oct. 27, the automaker received subpoenas from the U.S. Securities and Exchange Commission concerning its reporting of pensions and other retiree benefits. GM's October U.S. auto sales dropped 26 percent. Moody's Investors Service and Fitch Ratings this month lowered their ratings on GM debt two levels further below investment grade.
In addition, some UAW members at GM's biggest parts supplier and former subsidiary, Delphi Corp., have threatened to strike over that bankrupt company's demands for wage and benefit cuts. Two days ago, GM said it would restate 2001 earnings because of accounting errors. Yesterday, the stock traded at a 13-year low.
Sixty-one percent of voting members approved the accord, the union said in a statement today. The agreement, announced Oct. 17, takes effect immediately for active workers and reduces the Detroit-based company's cash outlays for health care by $1 billion annually and its long-term retiree medical liability by $15 billion.
GM Chief Executive Rick Wagoner made cuts in health-care costs his No. 1 goal this year, saying the tab puts his company at a $1,500-per-vehicle disadvantage against Toyota Motor Corp. and other rivals. GM shares rose 7.5 percent on news of the accord, the same day GM announced a $1.63 billion third-quarter loss. The shares fell 22 percent since then through yesterday amid news of debt downgrades and earnings restatements.
``At this point, the excitement surrounding what now look to be relatively small health-care concessions is but a distant memory,'' Rob Hinchliffe, an analyst with UBS Securities in New York, said in an interview.
On Oct. 27, the automaker received subpoenas from the U.S. Securities and Exchange Commission concerning its reporting of pensions and other retiree benefits. GM's October U.S. auto sales dropped 26 percent. Moody's Investors Service and Fitch Ratings this month lowered their ratings on GM debt two levels further below investment grade.
In addition, some UAW members at GM's biggest parts supplier and former subsidiary, Delphi Corp., have threatened to strike over that bankrupt company's demands for wage and benefit cuts. Two days ago, GM said it would restate 2001 earnings because of accounting errors. Yesterday, the stock traded at a 13-year low.
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