GM to ask union for cuts in retiree healthcare costs

General Motors Corp. will seek relief from its $68-billion post-retirement employee healthcare obligation in contract talks with the United Auto Workers union, according to an annual report filed with federal regulators.

In the filing Thursday with the Securities and Exchange Commission, GM said that healthcare was its largest competitive disadvantage and that the burden could grow.

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

The comments came only a day after GM’s delayed release of financial results for the fourth quarter and full year 2006. The earnings report was delayed as the automaker sorted through accounting issues dating to 2002.

On Wednesday, Detroit-based GM reported a 2006 fourth-quarter profit of $950 million, but the company still lost $2 billion for the year. It also lost $10.4 billion in 2005 and is in the midst of shedding thousands of jobs and closing plants to shrink its factory capacity.

GM said in Thursday’s filing that it spent $4.8 billion on healthcare in the U.S. last year and that the cost was expected to drop only slightly to $4.7 billion this year.

“We must continue to make structural changes to reduce our U.S. healthcare cost burden,” the company’s report said.

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

Shares of GM declined 87 cents Thursday to $29.38.

A UAW spokesman declined to comment on the filing. GM spokesman Dan Flores said healthcare costs remained under discussion with the union.