Hardest hit will be retirees who for the first time will have to pay deductibles, co-payments, and premiums for medical care, up to $752 a year for a family. The agreement would reduce GM’s liabilities for health care for pensioners, which stood at $77.5 billion at the start of this year, by $15 billion. Workers currently employed will now have higher drug co-payments and are being asked to give up $1 an hour in 2006 by deferring cost-of-living adjustments and planned wage increases. Union members must still vote on this deal, though a date has not yet been set.

GM chairman Richard Wagoner praised the health cuts as the “single biggest cost reduction in a single day in the history of GM.” GM is the largest private health-care provider in the United States, covering 1.1 million workers, pensioners, and their families.

The recent filing for bankruptcy protection by Delphi Corp., the largest U.S. auto parts supplier, may lead GM to demand even greater pension and health-care cuts from its union workforce. As Delphi’s former parent company, GM “could be on the hook for up to $12 billion in liabilities at Delphi, up from a previous estimate of $11 billion,” noted Reuters.

GM is also looking into selling a controlling interest in its financial division, General Motors Acceptance Corp. (GMAC), to pull the credit rating of its bonds out of junk status. This move, however, would “divert earnings from GM,” noted Goldman Sachs analyst Robert Barry. In 2004, 80 percent of GM’s earnings came from GMAC.

The health care benefit cuts are “a very important step,” GM head boss Wagoner told the New York Times. “I didn’t say it was the last step, and it’s not the first step,” he added. Last June Wagoner had announced the elimination of 25,000 jobs from U.S. plants by 2008.

GM follows the footsteps of most major airlines, and steel, and other companies that have increasingly used the threat of bankruptcy to rationalize the imposition of profit-seeking cuts in wages and benefits. Big business has enlisted many scribblers to help the bosses demoralize the workers into accepting such attacks. A column in the November 7 Business Week is one such example.

“Fat wages and benefits can’t last when competition is cutthroat,” states David Welch in this news commentatary. To embellish his message, Welch says he comes from a blue-collar family who is watching the latest attacks by GM with “mixed emotions.” Describing how his father lost his job as a union machinist, he then argues that UAW workers have no choice but to accept much deeper concessions as GM’s market share continues to slide. “UAW workers aren’t there yet, but the clock is ticking,” he says. “The UAW should be glad they’ve had it this good for so long.”  
 
 
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