General Motors in North America seems stuck in neutral. GM’s critics acknowledge the company has made significant progress reducing costs, and revenue per vehicle sold in North America is up a startling $1,000. GM has rolled out a line of critically acclaimed of crossovers, SUVs and pickups and is rolling out its next generation of sedans, such as the Aura, 2008 Malibu, 2008 CTS, and 2008 Pontiac G8, which have also won praise. Still, its North American division can’t break even due to the massive cost burden of health care.
GM’s Chief Financial Officer told The Detroit News that reducing health care costs would be a major topic of the upcoming negotiations with the UAW and that the automaker planned to undertake those negotiations with a great deal of urgency as the massive costs diminish GM’s profits and cash flow. The automaker spends about $4.8 billion a year on health care, costs that most of its foreign competitors don’t have to shoulder due to nationalized health care in their home countries.
The union has said that it would like to help the Detroit automakers and in 2005 agreed to an unprecedented mid-contract concessions package to help reduce GM’s health care expenditures. However, don’t expect the union to cave in just because times are tough one official told The Detroit News. All sides seem to agree there is more riding on this next round of contract negotiations than there has been in generations.
