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GM, Union Reported Near Health Accord

October 17, 2005|From Reuters

General Motors Corp. and the United Auto Workers negotiated through the weekend over GM's plan to cut healthcare costs and could announce an agreement as soon as today, an industry analyst said.

GM, the world's largest automaker, and the union have been in talks for months over GM's aim to reduce annual healthcare costs, which are estimated to rise to $5.6 billion in 2005 from $5.2 billion in 2004. GM announces quarterly results today.

"I have talked to the GM people and they feel they have come to a point where they can put an agreement together," said David Cole, chairman of the nonprofit Center for Automotive Research. "I think both sides expect they will have something, and the target is the announcement of earnings."

GM has struggled to counter market share losses to Asian rivals in the United States and rising material costs in addition to the healthcare costs. It reported losses in North America of more than $2.5 billion in the first half of 2005.

Cole said he did not know how an agreement would be structured or when it might be completed. Healthcare is a dominant factor in GM's costs and must be addressed, he said.

A GM spokesman declined to comment.

The union notified plant workers on Friday that talks with GM had been constructive and were reaching a point where an agreement was possible, spokesman Paul Krell said.

It is in the interest of both the union and GM to complete the talks, Krell said.

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