To make the economics even better, GM has eliminated health care for salaried retirees. To insure that costs stayed in line new union hires will receive a choice of a high deductible health plan or flex spending plan and a $1.00 per hour 401K to fund their retiree health benefits.

Analysts predicted that the labor cost gap between the transplants and the US domestics (especially GM) would be eliminated by 2011 due to these factors and, when combined with increased efficiency that is nearly on par with Toyota, will put GM in the black. All in all, GM’s looking at over $5 billion a year in savings from 2007 costs. While the majority of cost savings will kick in sequentially GM saved $300 million on drug benefits in the first year alone.