Steep GM Drop Puts Heat on Labor Talks

Poor sales in North America point to showdown with unions
By Peter Fearon,  Newser Staff
Posted May 3, 2007 8:00 PM CDT
'   (Associated Press)

(Newser) – General Motors, swimming in losses despite major cuts in spending, saw its bottom line plunge a staggering 90% in the first quarter. Somewhat improved automotive profits, especially in emerging markets, were undercut by heavy losses from defaults on high-risk home loans at lending unit GMAC.

The Wall Street Journal reports that losses of $46 million in North America will increase pressure to cut labor costs—and set the stage for a showdown with unions like the UAW this summer." These are going to be historic negotiations," said a pessimistic S&P auto analyst, who downgraded GM's stock from "hold" to "sell."