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GM Workers Agree to Cuts

UAW members ratify health care changes that could save the ailing automaker $15 billion.
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Members of the United Auto Workers have approved a plan designed to help

General Motors

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cut its ballooning health care bill.

The UAW said on its Web site that members ratified the changes, which negotiators worked out last month, by a 61% majority. The plan is still subject to approval by the U.S. District Court for the Eastern District of Michigan.

The automaker expects to reduce its health care expenditures for hourly retirees by $3 billion on a pretax basis, generating annual savings of $1 billion. Overall, GM has estimated it would generate cost savings of $15 billion, or 25% of its health care liability for hourly workers.

Analysts have said the deal will pave the way for more union concessions on health care costs and other issues.

Struggling with soaring health care and pension expenses, GM recently recorded a $1.3 billion quarterly loss. The company is having a bad year. Its debt ratings have been slashed to junk status, and it has lost market share to foreign automakers with leaner cost structures. Meanwhile, rising pump prices have prompted consumers to think twice about buying big trucks and SUVs, two categories GM has pushed aggressively in recent years.

Last week, GM shares plummeted to a 23-year low of $22.74 after the company

announced it would restate 2001 earnings because of inaccurate accounting.

Shares finished the week at $23.51.