Billionaire investor demands General Motors slash jobs, health care, pensions

The GM board also voted at its February 6 meeting to accelerate the “turnaround” strategy of job cuts and reductions in workers’ health and retirement benefits, as demanded by Kerkorian.

GM capped salaried retiree health benefits at 2006 levels starting in January, affecting roughly 100,000 white-collar retirees and about 25,000 employees who have yet to retire. Next year GM will “reassess” medical benefits for white-collar retirees and consider the imposition of higher monthly contributions, deductibles, coinsurance and other options, according to the Detroit Free Press.

The company said it will freeze the accrual of pension benefits for salaried workers next month and will probably replace GM’s traditional defined benefit plan with a cash balance or a 401(k) plan that would put more of the burden for retirement savings on workers.

Late last year GM imposed unprecedented healthcare takeaways on active and retired United Auto Workers members and announced plans to wipe out 30,000 jobs by 2008, eliminating shifts or carrying out closures at a dozen plants in Michigan, Georgia, Oklahoma, Tennessee and Ontario, Canada.

The reduction in salaried benefits will slash at least $4.8 billion from the company’s retiree healthcare liabilities and reduce the reported annual pretax healthcare expenses by $900 million. These cuts are only the beginning, as York and other top managers seek to impose on the backs of hourly and white-collar workers the burden of the company’s falling market share, its mismanagement and other failings that contributed to an $8.6 billion loss in 2005.

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