UAW Leaders, Ford Executives Sign Contract At Ceremony

Main Category: Health Insurance / Medical Insurance
Article Date: 05 Dec 2007 - 10:00 PDT

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United Auto Workers President Ron Gettelfinger on Monday met with Ford Motor Executive Chair Bill Ford and CEO Allan Mulally to formally sign the new four-year contract that includes the creation of a voluntary employees' beneficiary association at a ceremony attended by Ford and UAW leaders, the Detroit Free Press reports. The deal was reached on Nov. 3 and ratified by rank-and-file members on Nov. 14. The contract, which is based on earlier deals reached by General Motors and Chrysler Group, will transfer $23.7 billion in retiree health care liabilities from the automaker to the union through the VEBA.

The VEBA is expected to bolster Ford's cash flow by about $1 billion per year and cut annual health care costs by $2 billion. The contract also improves job security and creates a two-tier wage system. Gettelfinger at the ceremony said that the contracts with the Big Three are important because they help preserve the middle class (Webster, Detroit Free Press, 12/4).

Auto Contracts Might Affect Other Industries
Labor experts say that the contract deals reached by UAW and the Big Three are transformational and that their effects could spread throughout the U.S. manufacturing industry and even extend into the public sector, USA Today reports. According to USA Today, the union "agreed to some radical changes, including taking control of retiree health care" -- a move that other companies might copy as they "look for ways to alter their cost structures." Companies in the Midwest and elsewhere often use the auto contracts to establish new practices for their businesses, USA Today reports. Harley Shaiken, a professor of labor studies at University of California-Berkeley, notes that UAW in past contracts "pioneered" employer-sponsored health care, pensions and job security. Shaiken said, "We will certainly see considerably more pressure for VEBAs."

Under the VEBA, UAW will be responsible for a trust worth $61.9 billion that will provide health care benefits to 600,000 to 700,000 retired auto workers and their dependents. The VEBA will give UAW more clout in Washington, D.C., "where the union has been lobbying for nationalized health care for years," USA Today reports. Jane Lauer Barker, a labor attorney at Pitta & Dreier, said, "This agreement is going to help push health care reform in the country," adding, "The health care needs of workers, including retirees, need to be dealt with in some desirable, rational manner. I'm sure the UAW will be moving the country's political climate behind universal health care" (Silke Carty, USA Today, 12/4).

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