Friday, January 19, 2007

GM studies health plan at Goodyear

Friday, January 19, 2007
GM studies health plan at Goodyear
Changing to tiremaker's model regarding retirees could help the automaker ease its $81B costs.
John Lippert and Jeff Green / Bloomberg News

DETROIT -- General Motors Corp. may copy an accord between Goodyear Tire & Rubber Co. and its largest union in an attempt to shed billions of dollars in retiree health-care obligations.

As part of last month's deal to end a three-month strike, Goodyear transferred its health-care liability for current and future union retirees to an independent trust fund. GM Chief Executive Officer Rick Wagoner says the Detroit automaker is studying Goodyear's contract with the United Steelworkers of America.

"It would be fair to say that we have more than a passing interest in the Goodyear agreement," GM Chief Financial Officer Fritz Henderson told analysts last week. He said the company isn't yet discussing the issue with the United Auto Workers union.

GM had about $81 billion in salaried and hourly retiree health-care obligations in the U.S. at the end of 2005, the last official GM estimate.

Switching to such a plan would help ease the employee health-care costs that Wagoner this week called one of the biggest drains on GM's profits. Over the past seven quarters, GM has posted more than $13 billion in losses. GM had estimated it would spend about $5.1 billion last year on health care for 1.1 million employees, retirees and their dependents.

The UAW's contract with GM expires Sept. 14.

© Copyright 2007 The Detroit News. All rights reserved.


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