GM and the UAW labour union are said to be retreating from speculation that a healthcare deal is imminent, according to a Bloomberg report.
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Bloomberg notes that GM shares rallied three weeks ago on optimism that the company was pressing its biggest union to agree to cuts in healthcare benefits by today. Now, both sides are making it clear no deal is imminent, the report says.
“Ever since the idea of a deadline hit the press, everyone has been backpedaling from it,” said Al Benchich, president of United Auto Workers Local 909 at a GM transmission plant in Warren, Michigan. GM spokesman Edd Snyder said, “I know of no deadline.”
GM threatened in a June 9 meeting to cut healthcare benefits if the union didn’t agree to concessions, according to UAW officials. Shares of GM, the world’s largest automaker, rose 8.5 percent the next day as investors saw signs that Chief Executive Rick Wagoner was making progress in slashing the company’s $5.6 billion annual tab for healthcare, Bloomberg said.
The union can’t “play the strike card at GM and have it achieve anything,” said Maryann Keller, an independent auto analyst based in Greenwich, Connecticut.
GM still has to negotiate with the union for Wagoner to reach his goal of cutting 25,000 U.S. manufacturing jobs by the end of 2008, she said.
Cutting healthcare expenses and closing plants are elements of Wagoner’s four-point plan to reduce costs and improve sales after GM posted a $1.1 billion loss in the first quarter.
The suggestion that GM was willing to force the union to make healthcare cuts combined with a vote by plant-based union officials to let union leaders discuss concessions helped GM stock rise 14 percent from June 9 to June 15, Bloomberg said.
However, the union, led by President Ron Gettelfinger, has repeatedly said it won’t make significant concessions outside of the current labor contract, which expires in 2007.
