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source:marketwatch.com

GM soars on UAW healthcare reports

SAN FRANCISCO (MarketWatch) - General Motors Corp. moved sharply higher Friday on reports that local United Auto Workers representatives have given their national leadership the go-ahead to discuss healthcare issues with the company.

GM shares were up 6.3% at $33.80 on the news.
While the UAW is not set to open formal contract talks with GM until 2007, union officials agreed at a meeting Thursday to broach the thorny issue of rising healthcare costs to explore ways the rank and file might ease some of the burden.

GM has outlined for the UAW steps the company needs to take to become more competitive and asked the union to respond by the end of the month.

GM, which on Tuesday announced plans to cut 25,000 jobs from its payroll, has repeatedly pointed to the spiraling cost of healthcare for current and former employees as a key factor behind its recent losses.

As part of its effort to rein in costs, GM has outlined for the UAW steps the company needs to take to become more competitive and asked the union to provide by the end of the month suggestions on how to achieve these goals.
"The fact that the UAW appears to be willing to negotiate and that some type of deadline has been set is an incremental positive," Morgan Stanley auto analyst Stephen Girsky said in a note.

"However, we would caution that the deadline may just be hypothetical and other deadlines have slipped in the past. In addition, it is not clear if GM can obtain meaningful savings without opening at least part of the contract," he added.