UAW ratifies healthcare cost agreement with General Motors

11/12/05 - newratings.com

NEW YORK, November 12 (newratings.com) – The members of the United Auto Workers’ Union (UAW) on Friday ratified a tentative agreement to lower automobile giant General Motors’ (XGM) healthcare costs with a 61% majority vote. General Motors’ share price appreciated nearly 3.9% to $24.43 on the NYSE on Friday.

The proposed changes to General Motors’ retiree healthcare benefits are subject to the approval of the US District Court for the Eastern District of Michigan. The court decision is expected early next year, the company announced. General Motors mentioned that the deal with the union will enable the company to slash its long-term healthcare liability by $15 billion, cut its hourly healthcare liability by 25% and reduce healthcare expenses by about $3 billion annually, before taxes.

As per the agreement, General Motors’ retirees will pay as much as $752 per family each year for their healthcare. They previously had no out-of-pocket costs for healthcare insurance premiums. In addition, $1 an hour in future pay increases for active workers will be diverted into a healthcare fund. The company’s chief executive, Rick Wagoner, had made the cut in healthcare costs his priority for the current year.