According to automotive industry analysts, if the ratification process of the new contract by the United Auto Workers will be successful, it will benefit General Motors with $2 billion to $3 billion per year. GM intends to use the profit to increase their production of hybrid vehicles, and for the development of new product lines, added the analysts.
Although specific details of the new contract had not been publicized, the $3 billion estimated savings is reported to come from the shift of GM0s retiree health care obligations to a trust fund controlled by the UAW through a VEBA or the Voluntary Employees Beneficiary Association.
Presently, GM pays bout $3.3 billion per year for their retiree health care obligations that covers their retired hourly employees and their spouses. The new contract will remove this obligation from GM but the savings will be subjected to the other element of the deal like the provision of hiring temporary workers to be paid on regular rate.
According to Shelly Lombard, a senior high-yield analyst at the New York-based bond research firm GimmeCredit, with just the VEBA, GM will gain $3 billion per year. But this profit will still be modified depending on the jobs bank where the […]

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