8 - The Michigan Daily - Wednesday, April 20, 2005
GM loses $1.1b in first quarter, largest loss in decade
Clash with UAW looms as
health care is cited as main
reason for largest quarterly
loss in more than 10 years
DETROIT (AP) - General Motors Corp.
and the United Auto Workers union appear
headed for a historic clash as spiraling health
care costs seemingly threaten the very sur-
vival of the world's largest carmaker.
GM reported yesterday it lost $1.1 billion
in the first quarter, its largest quarterly loss
in more than a decade, and it cited the cost of
providing health coverage for its workers and
retirees as a main culprit.
GM did not provide details of what it spent
in the quarter for medical expenses, but it
has said the bill for covering its 1.1 million
employees, retirees and family members is
lkWly to approach $6 billion in 2005, up 15
percent from last year's tab of $5.2 billion.
"Addressing health care is our top objec-
tive," GM Chief Financial Officer John Devine
But it may be years before any concrete
results are evident. That is because the cur-
rent four-year labor agreement with the
UAW runs through 2007, and union lead-
ers said last week they have no intention of
renegotiating the current contract. Instead,
they said they would do what they could
within the agreement to help GM reduce
health care spending.
UAW spokesman Paul Krell said the union
had no comment yesterday about GM's first-
"Our view is that concessions are highly
unlikely before 2007, and that today's state-
ment underscores that restructuring GM's
North American operations will be a long,
arduous process," Merrill Lynch analyst John
Casesa said in a research note.
The company faces other obstacles as well.
Its product focus in the past year or so has
been on its car lineup, which generates lower
profits than trucks and sport utility vehicles.
Yet car sales have been lackluster, contribut-
ing to a 4 percent decline in overall business
for the first three months of the year. Sales
of big trucks and SUVs are off too, in part
because of high gas prices.
And, like No. 2 U.S. automaker Ford Motor
Co., GM continues to battle declining U.S.
market share amid intense competition from
Asian rivals such as Toyota Motor Corp. and
Nissan Motor Co. Analysts say GM may be
able to lift sales with an improved vehicle
portfolio, but stemming market share losses
will be difficult if not impossible.
GM's foreign rivals also do not face the
same health care cost challenges because, for
the most part, they have younger employees,
fewer retirees and different systems for pay-
ing for health care. That is why GM, Ford and
others have been trying to focus more atten-
tion in corporate America and at the state
and federal levels on what they describe as a
health care crisis.
GM warned investors in March that its.
first-quarter earnings would be below previ-
ous estimates of break-even or better, in part
because of medical costs. And it reduced its
estimate for full-year earnings to between $1
and $2 per share, down from a previous esti-
mate of $4 to $5 a share.
But significantly, it declined to reaffirm that
figure Tuesday and offered no further forecast,
citing "the uncertainty affecting key elements
of our financial forecast, such as resolution of
the health-care cost crisis."
Standard & Poor's, Moody's Investors Ser-
vice and Fitch Ratings all have cut GM's debt
rating to one notch above junk status because
of declining market share, increased compe-
tition and other factors. Further downgrades
could significantly increase GM's borrowing
costs, though none of the agencies acted after
GM's report yesterday.
An S&P spokesman said GM's first-quar-
ter results were in line with the agency's
GM's first-quarter loss amounted to $1.95
per share, compared with earnings of $1.3 bil-
lion, or $2.25 a share, in the year-ago quarter,
Chevrolet cars are lined up outside Sundance Chevrolet yesterday in Grand Ledge, Mich. General Motors Corp. reported yesterday that
it lost $1.1 billion In the first quarter.
when the company benefited from its finance
arm and improved business in Asia. Revenue
fell 4.3 percent to $45.8 billion from $47.8 bil-
lion a year ago.
The January-March period marked GM's
steepest quarterly deficit since the first quar-
ter of 1992, when it reported a $21 billion loss
primarily because of changes in accounting
procedures for retiree health care costs.
GM shares fell 10 cents to $26.09 in trading
yesterday on the New York Stock Exchange,
slightly above the lower end of its 52-week
range. Its shares have plunged in recent weeks
to levels not seen in a decade or more.
The company behind brands such as Chev-
rolet, Saturn and Hummer led the industry
with 291 U.S. vehicle introductions in 2004
and plans to follow that with 17 this year.
On top of lukewarm car demand and ris-
ing medical costs, GM also battled intense
pricing competition in the first quarter.
Revenue per vehicle in North America fell
to $18,396, down from $19,084 a year ago,
in part because of reduced pricing on some
Excluding special charges, GM said first-
quarter earnings amounted to a loss of $839
million, or $1.48 a share, compared with net
income of $1.2 billion, or $2.12 a share, in the
first quarter of 2004.
Continued from page 1.
the student in an expulsion hearing
undermines its educational value.
"I've really been impressed with
(the University's) system," she
Keith Elkin, director of the
Office of Student Conflict Reso-
lution, was.also reluctant to allow
students to have a lawyer present
during expulsion hearings.
"We don't have the same adver-
sarial system that civil and crimi-
nal courts have. (The proposed
change) wouldn't really fit in our
context," he said.
Gewolb agreed that the propos-
al would change the nature of the
hearing but added that it was vital
for the change to take place. He said
he wondered how the University
could expect students to be respon-
sible for representing themselves in
such a serious meeting.
"Imagine putting a 17-year-
old freshman's entire life in their
hands," he said.
The Code of Conduct Advisory
Board said it was pleased with the
progress that was made in revis-
ing the code, despite the one rejec-
"We really made the code more
accessible and understandable for
students," Block said.
Coleman said she was pleased
with all the changes that she
"The changes were really quite
good..... They explicitly added
clarifications that will protect stu-
dents," she said.
Several changes to the code of
conduct revised the code's language
to give students a better under-
standing of their responsibilities
and expectations, Gewolb said.
One area that was revised was the
University's definition of sexual
Block said it was important to
clarify what constitutes sexual
"It is an important and equally
complex issue," he said. "There were
wide understandings of the term,
which in the past have adversely
Language in the code was also
revised to mandate harsher punish-
ment for acts of violence, grafiti or
harassment motivated by apparent
racial, ethnic, gender or other types
of bias than for acts of malice not
motivated by bias.
"It's important that the statement
recognizes that we take acting with
bias more seriously," Gewolb said.
Continued from page 1
critics of liberalism within the church, Benedict's
election has dismayed some liberal Catholics and
others who had hoped for a pontiff more open to
While experts say Benedict is unlikely to
budge on some of the social issues for which
John Paul was criticized for being too ortho-
dox - such as the role of women. in the church,
priestly celibacy and birth control - some stu-
dents still hope for flexibility on the church's
"The one thing that I don't like about the
Catholic Church is that priests can't get mar-
ried," said LSA freshman Kirsten Rose, who is
Catholic. "I've heard that's an issue being raised
in the Vatican, and hopefully that can change."
In his homily at the convocation that began
the conclave, Benedict spoke out against critics
"Having a clear faith, based on the creed of
the church, is often labeled today as a funda-
mentalism," he said Monday. He went on to cau-
tion listeners against many secular ideologies,
including agnosticism, atheism and relativism
- the denial of the existence of absolute truth
- saying that following these ideas is para-
mount to being "swept along by every wind of
Despite this, Porter said the label of "conser-
vative" is an inappropriate description of the
"Those labels are always really tricky when
you're talking about figures within the church,"
he said. "On a lot of issues that we define as con-
servative within the United States, he wouldn't
fit that label. Certainly on issues of the poor, he
is not conservative."
However, within the context of the Catholic
Church, Benedict is a traditionalist, Porter said.
"He's not going to be changing the policies of
Pope John Paul II," he said.
Some Catholic students are encouraged by the
idea of Benedict continuing John Paul's work.
Engineering senior Brian Reed, a Catho-
lic who attends St. Mary's Student Parish on
Thompson Street, said he hopes the new pope
picks up where John Paul left off. "I especially
hope he continues encouraging youth and keep-
ing the importance on the Eucharist where it
belongs," he said.
Elisabeth Mueller, also an Engineering senior
and member of St. Mary's, agreed, saying that
although it will be a change to follow someone
other than John Paul, Benedict's traditionalism
is not a problem.
"I don't think there's any reason to be legalis-
tic, but the church should not be changing what
they teach based on what society says," Mueller
Other students were disappointed with the
selection of the new pope, having hoped for the
election of a pontiff who would pursue a more
liberal stance on church doctrine concerning
issues such as women's rights.
RC sophomore Sara Curtin, a Catholic, said
while she hoped for a more liberal pope, the
election of a conservative pontiff was not unex-
"I would like to see a more liberal pope, but
with the way the politics of the world are, I'm
not surprised that they elected a more conserva-
tive cardinal to be pope," she said. "I think they
need to reconsider their stand on contraception
and birth control methods ... I wish that they had
made a different decision."
Curtin added that she regrets that the church
leadership does not do more to involve women
in the church.
"The way things are looking, it looks like
they are going to lessen the role of women in
the church, and I wish they wouldn't do that,"
LSA sophomore Daniel Green, who describes
himself as "not very religious," agreed, adding
that he believes the cardinals should have elect-
ed a more liberal pontiff.
"It's important for the pope to be much more
liberal on issues like abortion and gay rights," he
said, adding that although many say Pope John
Paul II did a lot of work on issues like commu-
nism, he was obviously conservative on other
"I'm never very optimistic about the pope,"
While John Paul was widely praised for his
efforts to reach out to Jews, including his offi-
cial apology in 2000 for the church's past anti-
Semitic actions, Benedict's more conservative
views on interfaith dialogue have caused some
concern in the Jewish community.
Rabbi Jason Miller, assistant director of the
University's chapter of Hillel, said he hopes
Benedict will continue the work started by John
Paul. "We recognize that it was Cardinal Ratz-
inger who was the architect of the ideological
policy to recognize and have full-relations with
Israel," he said.
RC sophomore Monica Woll, chair of the gov-
erning council of Hillel, said Benedict's par-
ticipation with Nazi activities such as the Hitler
Youth during World War II have also caused
anxiety about the future of Jewish-Catholic
"A lot of people are nervous only because he
did have membership in Hitler Youth, although
most people realize that was 60 years ago and he
is most likely a different person today," she said,
adding that Benedict said in a recent interview
that his membership in Hitler Youth was coni
pulsory, and that during his service in the army
he never fired a shot.
Despite these concerns, Miller said the pope's
efforts to reach out to Jews will be important to
the maintenance of understanding between the
two faiths which was started by John Paul.
"Catholic-Jewish relations are extremely
important in our society, and we hope that the
new pope will be our partner for peace, justice
and the appreciation of each other's faith trad-r
tions," he said.
Father Tom McClain, pastor of St. Mary's, said
Benedict's past service to the church has demon-
strated that he is qualified to be Holy Father. If
this position under John Paul, Benedict gained
great power, rising to be the second most powers
ful man in the Vatican, Porter said.
Even before John Paul's papacy, Benedict was
a key contributor to several important doctrinal
"He speaks many languages and was very instru-
mental in the Council of the Vatican II," McClain
said, adding that the pontiff is likely to follow in
the spirit of the Vatican II, the most recent and
most dynamic church council in the past centu-
ry. Vatican II introduced major reforms in 1965
and set precedents allowing the use of vernacular
language in Mass, and officially condemning the
anti-Semitism of World War II.
According to Porter, the main issue facing the
Catholic Church today is a major demographic
shift in church membership - the decline of
the church in Europe and the rising numbers of
Catholics in the Third World.
Sixty percent of the world's Catholics live in
non-industrial countries, Porter said, adding
that despite this high number, almost all of the
church's wealth comes from the United States
"The selection of a European is an indication that
they are not about to write off Europe," he said.
Still, the new pope's views are not in line with
much of the popular opinion in the West, Porter
said. Whether or not Benedict's papacy can save
the church in Eurepe is still up in the air.
McClain agreed. "It remains to be seen how
Benedict the XVI will bring his style to the
world. It's a matter of personal charisma, and we
need to give himdome time to establish that for
himself. He has a hard act to follow."
- The Associated Press contributed to this report.
Continued from page 1
Liberties Union is defending in a
lawsuit'against the state of Michi-
If the amendment passes, Michi-
gan would become the seventh
state in addition to the District of
Columbia to pass legislation that
prohibits discrimination based on
sexual orientation and gender iden-
tity. Ten other states have laws that
ban discrimination based on sexual
orientation and not gender identity.
In 2003, Gov. Jennifer Granholm
issued an executive order to pro-
hibit discrimination against public
employees on account of their sexu-
Similar amendments to the Elliot-
Larsen Act to protect LGBT people
from discrimination have been pro-
posed during every session since
1998, but none have passed:
Kolb introduced a similar amend-
ment last year, but the bill died in
the House Judiciary Committee.
Want a free drink to cool down during the
\. I /
hot Ann Arbor summer?