Struggling car maker General Motors (GM) reached a landmark deal with its biggest union yesterday that cuts $15bn (£8.5bn) from its workers’ healthcare plan.
The agreement with United Auto Workers (UAW), which includes a further 25,000 job cuts in GM and a series of factory closures, will see the defined-benefit healthcare deal scrapped in favour of a defined-contribution plan.
The healthcare plan takes care of 750,000 past and present employees and their families at a cost of more than $3bn a year.
The plan will cut GM’s healthcare liabilities by as much as $15bn, the company said, and set it on course for annual cost savings of as much as $5bn by 2007.
The plan must still be ratified by the UAW’s membership at GM.