The United Auto Workers union, which has questioned the severity of financial problems at General Motors, on Friday said it had hired a team of outside advisers to put the company’s finances under the microscope.
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Reuters noted that GM, which expects its health care costs to total nearly $US6 billion this year, has been in talks with the UAW since April to try to slash some of the health care benefits that chief executive Rick Wagoner blames for hurting the company’s ability to compete with more nimble Asian rivals.
But UAW president Ron Gettelfinger has said the union is not convinced the world’s largest automaker is in dire straits, and there has been no sign the union will cede any significant ground on health care and post-retirement benefits that are the gold standard of the US manufacturing sector.
UAW spokesman Paul Krell told Reuters the outside consultants, who have been working with the union for the past few weeks, were from New York-based investment bank Lazard Ltd. and financial advisers Leon Potok & Company.
New York-based law firm Cleary Gottlieb Steen & Hamilton LLP and Milliman, a Washington, D.C.-based actuary, are also part of the team, Krell reportedly said.
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By GlobalDataAccording to Reuters, GM, which had a stunning $1.1 billion loss in the first quarter and a $1.2 billion loss in its core North American automotive business in the second quarter, says it has already shared ample information with the UAW about its finances to drive home the need for cost cuts and a more competitive health care plan than it has today.
Krell, who reportedly denied the hiring of outside advisers reflected any level of distrust in the union’s dealings with GM, said the UAW simply wanted to have the “expertise and perspective” brought by independent consultants to make sure it knows everything possible about GM’s economic health.
He told Reuters that Ron Bloom, a former Wall Street investment banker, who now works for the United Steelworkers union, has also been involved on an informal basis in the UAW’s review of GM’s finances.
Reuters said GM’s fortunes have clearly worsened this year but noted that Gettelfinger has pointed to its relatively large dividend (it paid $1.1 billion to shareholders in 2004) and billions of dollars in cash on hand – as evidence that union concessions may not be needed under the company’s current labour contract, which does not expire for another two years.
