DETROIT -- General Motors' tentative health care deal with the UAW is just one step in the automaker's recovery plan, CEO Rick Wagoner said Monday.
Deal saves billions
The GM-UAW health care agreement announced Monday will save the automaker $3 billion annually on an accounting basis and $1 billion in cash. But Wagoner said he remains wary of out-of-control health care legislation. He called for federal officials to take action.
"We would really like to see more focus and action on this issue from elected officials, particularly in Washington," he said.
GM says the deal reached early Monday will cut $15 billion from its health care liability for 750,000 retired workers and their families.
GM did not release details of the plan but said the deal must be ratified by UAW workers -- a sign that the union, in a precedent-setting move, reopened its four-year contract with the automaker. That contract is set to expire in 2007.
To compensate for the cut in health care coverage, GM agreed to contribute as much as $3 billion to an insurance fund for hourly retirees. GM said it expects to make $1 billion contributions to the fund in 2006, 2007 and 2011.
In other cost-cutting efforts, GM set a target of reducing its costs for materials by $2 billion in 2006. When the amount is offset by upgrades to its products, GM said the savings would total $1 billion.
Third quarter loss hits $1.6 billion
GM, which lost more than $1.4 billion in the first half of the year, posted a third-quarter loss of $1.6 billion, or $2.89 a share.
Excluding special items -- including a charge of $805 million for asset impairments primarily in North America and Europe and restructuring charges at GM Europe of $56 million -- the third-quarter loss was $1.92 per share, much worse than the average loss forecast of 81 cents a share among analysts polled by Reuters Estimates.
Quarterly revenue rose more than 5 percent to $47.2 billion.
GM said it aims to cut materials costs by a net $1 billion next year as part of broad-based efforts to turn around its operations.
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contributed to this report.