Wall Street Cheers GM's Labor Deal, Awaits Details |
| CNNMoney.com - Sep 26, 2007 |
Investors greeted General Motors Corp.'s (GM) tentative agreement with the United Auto Workers union with optimism Wednesday, driving shares up considerably in pre-market trading, after the company insisted the " agreement helps us close the fundamental competitive gaps that exist in our business."
While very few details of the agreement are being confirmed, Wall Street welcomed the fact that GM - which began negotiations with the UAW in late July - was able to work out an agreement under which the union will take responsibility for about $50 billion in health-care liabilities that weighed on its balance sheet. The UAW will form a trust, known as a voluntary employees' beneficiary association, or VEBA, that GM will fund and an outside firm will manage.
"The projected competitive improvements in this agreement will allow us to maintain a strong manufacturing presence in the United States along with significant future investments," GM Chief Executive Rick Wagoner said in a press release. The executive has been pushing for health-care cost cuts over the entire second half of the decade, and the VEBA may help him more quickly achieve his goal of cutting structural costs to 25% of total revenue.
Read Full Article from CNNMoney.com
- Posted: 2007-09-26 10:08:57
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