General Motors is considering at least three proposals to shed most of its $US64bn in costs for retiree health-care benefits in an attempt to return to profitability, people with knowledge of the plans have told a news agency.
According to Bloomberg News, GM is developing the options even as union leaders suggest any comprehensive health-care fix will be rejected. The news agency noted that GM CEO Rick Wagoner said last January the automaker must reduce health-care obligations for US retirees after losing more than $12bn in the last two years.
“This is the most substantial cost target for them moving forward and it is very difficult for them to be competitive with this lingering above them,” Nathan Spunt, a Fitch Ratings credit analyst in New York, told Bloomberg.
The report said GM is considering options including revising a union health-care fund that is financed to the end of 2011 and was agreed to only last year. It also may create a new fund for union retirees not yet part of any plan.
Lastly, it’s considering a combination of the two ideas, the sources, who did not want to be quoted because the labour talks haven’t started and the proposals haven’t been made to the United Auto Workers union, told Bloomberg News. They may be raised during talks with the UAW later this year, the sources reportedly added.
GM and UAW spokespeople declined to comment to Bloomberg.