While GM management has given zero public indication it entertains such thoughts, the report by Sanford Bernstein auto analyst Brian Johnson argues employers like GM could immediately eliminate United Auto Workers retiree medical benefits without fear of a legal strike and eventually win a protracted court battle.
Johnson's report doesn't envision GM's current management taking such a step; but a corporate raider might not hesitate to make such a move.
In one scenario, a raider could buy GM for $19.7 billion, drop UAW retiree benefits for savings of $8.6 billion in two years, sell GMAC Mortgage for $10.4 billion, and thereby own GM and the rest of its financial-services unit for a relatively paltry $700 million.
GM, struggling under recent bond-rating downgrades and losses of market share and profit, expects to spend $5.6 billion in cash on healthcare in 2005.
Hourly workers pay for 7 percent of their health care, while salaried employees pay 27 percent of theirs.