GM Considering Asking for Same Health Plan

[Globalist]

Associated Press
GM Considering Asking for Same Health Plan
Wednesday March 23, 7:06 pm ET
By Dee-Ann Durbin, AP Auto Writer
Chairman Lutz Says GM Would Consider Asking All Workers for Same Health Plan

DETROIT (AP) -- General Motors Corp. Vice Chairman Bob Lutz said Wednesday that efforts to streamline the world's largest automaker could include adopting a health care system that requires hourly workers to pay more and phasing out weaker brands.
Lutz said GM must get its health care costs under control, and one way to do that would be to adopt a health care plan that provides the same benefits for salaried and hourly workers.

Lutz said he hoped GM wouldn't have to phase out one of its weaker brands, such as Buick and Pontiac, at a time when competitors like Toyota Motor Co. are adding brands. But he said he and GM Chairman and CEO Rick Wagoner are determined to spend resources wisely.

"Let's not squander all our resources on trying to overcome negative momentum. Let's put the resources where we've got positive momentum, which is basically Cadillac, Hummer and GMC," Lutz said in a speech before Morgan Stanley's Global Automotive Conference in New York. Lutz also was attending the New York Auto Show on Wednesday.

GM's salaried workers pay 27 percent of their total health care costs, while the company's hourly workers, who are covered by the United Auto Workers union, pay 7 percent, according to GM data. The average U.S. corporate employee pays 32 percent of the cost of health care, GM said.

"Our salaried employees have one of the absolute best health care plans, probably in the world, but definitely in the United States. The UAW hourly health care is way, way richer than that," Lutz said. "We've got to get to the point where all of our employees, hourly and salaried and the UAW have the same health care contract. ... That would mean huge sums of money for us."

UAW President Ron Gettelfinger said in a statement earlier this week that the union recognizes "rising health care costs are a serious problem for working families and many of their employers." He said the UAW is working closely with employers to control health care costs, but believes the best solution is national health care reform.

Chrysler Corp. and the UAW recently negotiated a new health care agreement that requires around 35,000 Chrysler hourly workers and retirees to start paying deductibles of between $100 and $1,000 for health care that previously was free.

GM may try to negotiate a similar change, although a UAW spokesman said Wednesday that the union hasn't announced whether it will reopen negotiations on its contract with GM, which expires in 2007. GM and the UAW are scheduled to meet April 14 to discuss health care and other issues.

GM spent $5.2 billion last year to cover 1.1 million salaried and hourly employees, retirees and family members.

GM has been struggling with sluggish sales and last week lowered its earnings outlook for 2005. Lutz said GM's March sales likely will be flat year over year, but are better than the company expected and "substantially better" than sales in January and February.

GM's shares fell 88 cents, or nearly 3 percent, Wednesday to close at $28.66 on the New York Stock Exchange, at the low end of their 52-week range of $27.98 to $50.04.

[mgescuro]

Uhh-huuuh... 1 step ahead of me again.... grrrr

http://online.wsj.com/article/0,,SB1..._whats_news_us

You will need a paid subscription to WSJ Online to view article.

[LAMRONH]

I can see it now: "GM closes all US plants for one year, fires all UAW workers. Invites illegal immigrants to apply for line jobs @ $8.00/day plus 2 free aspirin/day health care plan."

[desmo9]

Put resources into truck brands like Hummer and GMC at the EXPENSE of car brands like Pontiac? So when gas hits $4 a gallon, and about 10 Hummers are sold a year, then what? We do a little Hummer ragtop on Kappa? Ohmigosh, the guy's really not got it. Too old? Nah. Never actually had much of a clue? Yeah.

[s113]

Why not put the resources into reviving the weak brands instead of putting them into brands that are already getting back on their feet? That, plus a reduction in healthcare costs, would help fend off any possible brand axing.

[dav305z]

WOW, are they stupid??? No seriously are they? They are going to throw more money at Hummer?! AND GMC? Hummer alone is stupid enough, but to push it in conjunction with GMC, a brand selling cars to the exact same market is really dumb.

And since when is Pontiac a "weaker" brand. Its the 2nd best selling one in the company. The only reason it isn't selling as much now is because they're canceling models without offering replacements.

[x2222]

Originally Posted by Globalist

Associated Press

"Let's not squander all our resources on trying to overcome negative momentum. Let's put the resources where we've got positive momentum, which is basically Cadillac, Hummer and GMC," Lutz said in a speech before Morgan Stanley's Global Automotive Conference in New York.

Wait a second, that was their strategy in the 90s to put money into big suvs because they knew that was where the momentum was. Well it turend out that half-*ss strategy cost them the car market and a further market share decline. The long term prospects of GM are not looking good. Maybe someday GM will only consist of producing one vehicle, the hummer H1. That is until some foreign automaker outdoes them at that too. GM tried to compete these last few years and their poor leadership really did the company in.

[FusionSVT]

they need Ghosn not Wagoner

[mgescuro]

Originally Posted by x2222

Wait a second, that was their strategy in the 90s to put money into big suvs because they knew that was where the momentum was. Well it turend out that half-*ss strategy cost them the car market and a further market share decline. The long term prospects of GM are not looking good. Maybe someday GM will only consist of producing one vehicle, the hummer H1. That is until some foreign automaker outdoes them at that too. GM tried to compete these last few years and their poor leadership really did the company in.

Not unless these full sized SUV's that 1) 6-spd trannies, 2) DOD, 3) Mild/Full Hybrid.
If any of these.... primarily #3 are in these trucks, and are marketed... you will see a massive increase in sales.

People still want these big things. BUT they want to save fuel, so they need to compromise somewhere. If they can get both... then CHA-CHING...

[ImajV]

If anything get rid of your stake in Hummer, and just provide them with duramax diesels. Then take a royalty for every Hummer with a duramax. Then you can always make profits if your royalties are priced right, and you avoid the whole gas-guzzler image,

[Slack]

They can only take so much bad news before something drastic must be done. I hate to see them screw so much up, but then again, I can't wait to get into the stock market when GM stock bottoms out.

[awalbert88]

Even if they survive, GM will not remain #1 if they execute this plan. GM will become a brand that people associate only with SUVs and trucks. This just goes to show that GM doesn't have the balls to stick with anything just because results aren't instant. It takes time to turn around an entire company. Ford has been weathering the storm for a couple of years now, but things are beginning to change for them. Yes, they made a lot of painful cuts, but results are starting to happen. GM seems to suddenly want to make some painful cuts, but they're effectively cutting off their arm because of a handshake.

[sncrducrx]

The only Solution to the Healthcare problem, is to Radically and Forcefully Change the system. Price Gouging,Price Fixing and Profiteering , are Rampant at every level of the U.S. system. HMO's and Drug Companys are the problem.

Any Short term Gain GM gets from the union. Will be lost within 2 years, as there are no controls in place to stop the Runaway Healthcare costs.

[Ming]

How can health care costs get under control when people pop pills like candy, and the Drug Companies promote them LIKE candy in commercials.

"Please ask your doctor about Drug X that you really don't need, but might make you feel a little bit better,"

[goblue]

Originally Posted by mgescuro

Not unless these full sized SUV's that 1) 6-spd trannies, 2) DOD, 3) Mild/Full Hybrid.
If any of these.... primarily #3 are in these trucks, and are marketed... you will see a massive increase in sales.

People still want these big things. BUT they want to save fuel, so they need to compromise somewhere. If they can get both... then CHA-CHING...

Yup - we know exactly what fuel econ needs to be on these things for them to sell.

30 gallons x 1.50 = $45
$45/2.25 = 20 gallons

Therefore, in the next year the big SUVs need a 50% mileage increase to take demand back up to 2002-2003 levels. It's really that simple. However, there a caveat - you can't charge more than the 2002 price + inflation. However, these things make so much profit, that its OK to make DOD and mild hybrid standard. That would go a long way to increasing sales. Also, GM may need to reduce MSRP and again burn a little profit so that gas+monthly payment is very similar to 2002 levels+inflation.

People want big SUVs. That hasn't changed. All rising gas prices do is make people question if they can afford it. Fix the affordabiltiy issue, and game on.