UPDATE 2GM sees significantly improved operating results
(Recasts, adds details on labor actions, background, byline)
By Poornima Gupta
DETROIT, Jan 17 (Reuters) - General Motors Corp (GM.N: Quote, Profile, Research) said on Thursday it sees significantly improved operating earnings and cash flow in the next two to three years, but expects high fuel prices and declining consumer confidence to be a drag on U.S. sales this year.
In a presentation to Wall Street analysts, GM said it plans to reduce its annual U.S. labor costs by about $5 billion by 2011, mainly through the labor agreement reached with the United Auto Workers union last year.
The new UAW contract allows the U.S. automaker to shift hourly retiree health-care liabilities to a union-run trust fund and hire new workers at lower pay.
GM said it expects to cut U.S. hourly and salaried pension and health-care spending to an average of $1 billion a year from 2010, down from $7 billion a year over the last 15 years.
GM also said it aims to reduce structural costs as a percentage of revenue beyond 2010, with a target of 23 percent by 2012. GM said structural costs are below 30 percent, compared with 34 percent in 2005.
Chief Executive Rick Wagoner said GM would face challenging headwinds in 2008, including weak U.S. auto industry sales, high fuel prices, high commodity and steel prices, and mounting regulatory requirements. Continued…
Tags: Auto, auto industry, auto workers union, automaker, consumer confidence, fuel price, general motors corp, gm, lows, reuters, rick wagoner, united auto workers, united auto workers union
