8 - The Michigan Daily - Wednesday, April 20, 2005 NEWS GM loses $1.1b in first quarter, largest loss in decade kI 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 said yesterday. 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- quarter results. "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 expectations. 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, I AP PHOTO 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 vehicles. 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. ,/. CODE 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 said. 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- tion. "We really made the code more accessible and understandable for students," Block said. Coleman said she was pleased with all the changes that she approved. "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 harassment. Block said it was important to clarify what constitutes sexual harassment. "It is an important and equally complex issue," he said. "There were wide understandings of the term, which in the past have adversely affected students." 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. POPE 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 dissenting views. 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 teachings. "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 of traditionalism. "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 teaching." Despite this, Porter said the label of "conser- vative" is an inappropriate description of the new pontiff. "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 said. 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- pected. "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," Curtin said. 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 social problems. "I'm never very optimistic about the pope," he said. 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 relations. "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 proclamations. "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 and Europe. "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. KOIB Continued from page 1 Liberties Union is defending in a lawsuit'against the state of Michi- gan. 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- al orientation. 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. U U Want a free drink to cool down during the \. I / hot Ann Arbor summer? BURSS TH AnouFncngtMH Announcing the 4