GM to seek reduced health care, pension costs

DETROIT — General Motors Corp. will try to reduce its staggering employee and retiree health care liabilities in upcoming contract talks with the United Auto Workers, according to a government regulatory filing Thursday.

The world’s largest automaker also said it has determined its internal financial controls are ineffective and that it is working to fix them. It has said previously that federal authorities are investigating its financial reporting.

The comments came in its annual report filed with the Securities and Exchange Commission only a day after its delayed release of financial results for the fourth quarter and full year 2006. The earnings report was delayed as its sorted throught accounting issues dating to 2002.

GM said in the annual report its obligation for post-retirement health care and other benefits was $68 billion at the end of last year and could grow on a global basis. It spent $4.8 billion on health care in the U.S. last year, and expects that will drop only slightly to $4.7 billion this year.

“We must continue to make structural changes to reduce our U.S. health-care cost burden, the source of our largest competitive cost disadvantage,” the company said in the filing.

GM said it needs to continue to reduce structural and material costs, and its production must become more efficient in order to return to profitability. But it said restrictions in labor agreements could limit cost savings.

“Our current collective bargaining agreement with the UAW will expire in September 2007, and we intend to pursue our cost-reduction goals vigorously in negotiating the new agreement,” the company said, adding that a UAW strike or threat of a strike could affect its business and impair further cost reductions.

GM said it provides extensive pension and retiree health care benefits to more than 400,000 retirees and surviving spouses in the U.S.