UAW hires team led by Lazard to probe GM finances

DETROIT (Reuters) – The United Auto Workers union, which
has questioned the severity of financial problems at General
Motors Corp., said on Friday it hired a team of outside
advisers to put the company’s finances under the microscope.

GM, which expects its health care costs to total nearly $6
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 U.S. manufacturing sector.

UAW spokesman Paul Krell said 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 said.

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 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.

“We take our responsibility to GM workers and retirees very
seriously. I think you see our commitment to them reflected in
the decision by Gettelfinger to put together the best possible
team to do this,” Krell said.

He said 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.

“He’s an old friend of the UAW,” Krell said.

While actively negotiating with the UAW to reduce costs,
Wagoner left open the possibility last month of acting
unilaterally if changes on health care did not happen soon.

Gettelfinger and other union officials, hinting at a
potentially crippling work stoppage, have said it would be a
big mistake if GM changes employee or retiree health plans
without the UAW’s consent, however.

GM’s fortunes have clearly worsened this year. But
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 labor contract,
which does not expire for another two years.