DETROIT – General Motors Corp.'s (GM) Chairman and Chief Executive Rick Wagoner (search) should take a pay cut as part of any deal under which the United Auto Workers (search) makes concessions to help return the company to profitability, the union's president suggested Friday.
The world's largest automaker, which expects its health care costs to total nearly $6 billion this year, has been in talks with the UAW since April to try to slash some of the union medical benefits that Wagoner blames for hurting its ability to compete with more nimble Asian rivals.
UAW President Ron Gettelfinger (search) did not comment on progress in the talks Friday, during a media event at his Detroit headquarters marking the 70th anniversary of the traditionally militant trade union.
But he said shared sacrifice would have to be part of any bailout agreement between GM and its largest union.
"At General Motors it is going to have to be all in," Gettelfinger told Reuters.
His comment came when asked specifically about pay for Wagoner, whose cash compensation fell to $4.8 million last year from $8.5 million in 2003. He also received options for 400,000 GM shares, according to regulatory filings.
The cut in executive compensation came after GM's automotive operations began to lose money last year on weaker U.S. sales and market share. The Detroit automaker's fortunes have worsened considerably this year, as highlighted by a $2.5 billion loss so far in North America.
In a fresh blow to GM, as it battles intensifying competition and rising costs, Moody's Investor Service became the last of three major ratings agencies to cut its debt to "junk" status earlier this week.
Gettelfinger also said health insurer Empire Blue Cross and Blue Shield — officially known as WellChoice, Inc — should be expected to make some concessions as part of any union agreement with GM on cuts in health-care benefits.
"They've got billions of dollars in reserve," he said of the insurer.
GM spokesman Stefan Weinmann said he was unable to comment on whether compensation for Wagoner and other executives had been discussed in GM's negotiations with the UAW.
The UAW, which has questioned the severity of GM's financial problems in the past, said last month it had hired a team of outside advisers led by New York-based investment bank Lazard Ltd to examine the company's finances.
"Due diligence is still under way there so we're not prepared to comment on that," Gettelfinger said.
The UAW is also under pressure from struggling auto parts maker Delphi Corp. for cuts in hard-won pay and benefits.
Steve Miller, Delphi's chairman and CEO, has said he would consider filing for bankruptcy if the UAW and GM, its former parent, fail to move quickly to help lower its U.S. factory wages and health-care expenses.
But Gettelfinger said he had not given much thought to the possibility of a bankruptcy at the largest U.S. auto parts supplier.
"Obviously Mr. Miller has made that comment publicly, that that's one of his options. I'm not sure if he's overplayed his hand on that or not. It will take us some time to work our way through that," he said.
In his wide-ranging comments, Gettelfinger suggested that issues such as vehicle design, product development, market share, and the perception that vehicles from Detroit automakers are inferior to their foreign competitors, were probably a bigger problem for GM than its health-care or labor costs.
"We just need to gain back the confidence of the consumer because that's really what it's all about," he said.
"We've got great products out there, great quality products, If we can just get people in them, to take a look at them, they'll see that they're as good as anything the competition has to offer."