GM sees no government relief on health care
Posted on: Wednesday, 20 July 2005, 12:21 CDT
DETROIT (Reuters) - General Motors Corp. said on Wednesday that it sees no near-term relief from the U.S. government on its massive health-care costs.
"I don't think there's any enthusiasm at the political level to do anything on health care, period," said GM Chief Financial Officer John Devine.
"Maybe that will change in the forward years but there's no enthusiasm to do anything on health care that we can determine, so we can't wait for any kind of government solutions on health care," he said.
He spoke on a conference call with analysts and reporters after the world's largest automaker, which is also the nation's leading private provider of health care, posted an unexpected second-quarter loss of $286 million due to soaring costs for everything from materials to health care.
On the call, Devine warned that high costs were undermining the competitive position of all manufacturers in America and putting growing pressure on automakers and their suppliers to shift work to low-cost labor markets in Asia and Eastern Europe.
GM has been in potentially explosive talks since April with the United Auto Workers union about rolling back the health-care benefits of hourly employees. The company provides health-care coverage for 1.1 million workers, retirees and their family members.
"Health-care relief really is a fundamental driver of us being successful going forward," Devine said.
"We think this is an urgent matter that we have to tackle now," he said.
Devine added that while the government may offer some ways to rein in health-care costs over the long term he does not believe that a national health plan is in the cards.
"There's a lot of opportunity but our sense is it's going to take a long time for that to bear any fruit in Washington, if ever," Devine said.
GM's second quarter loss followed a deeper $1.1 billion loss in the first quarter. That is when the industrial icon, which has long said that it spends more money on health care than it does on steel, alarmed markets about its current cost structure problems in North America.
Source: REUTERS
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