The problems facing the United States auto industry were sharply underscored today by an announcement from General Motors. The world's largest car company has had to negotiate big concessions from its Union over health care expenses.
The agreement comes as the company reported another large loss for the third quarter. The tentative agreement with the United auto workers is expected to save General Motors a billion dollars a year in cash.
Rick Wagoner, Chairman and CEO of General Motors said, " This is an important time in the history of GM, and I would say a time of great change in the global auto industry. The plan, if ratified by the Union's rank and file, would allow GM to slash its health care costs."
The company expects none of its 750,000 workers, retirees, and their dependents to lose benefits, but they would now be asked to foot more of the bill.
Mellody Hobson, an ABC News Financial Contributor said, "They are the largest health insurance buyer in the nation. They spend $5.6 billion a year on health insurance. That's more than they spend on steel."
To offset slumping sales and lift the company's dismal credit rating, GM said it's considering selling its profitable financing unit, GMAC.
Wagoner said, "What has driven us is the poor credit that GM and GMAC have and calls for looking at strategic alternatives like I outlined today."