Ford, UAW Sign Tentative Health Care Pact That Trims Benefits

[Marc]

More healthcare benefits bite the dust. From the Washington Post:

Ford Motor Co. and the United Auto Workers have reached a tentative agreement to reduce health care benefits after a similar deal made with General Motors Corp. in October.

The Ford deal follows the basic framework of the GM agreement, which requires workers and retirees to pay more for their health care, said a person familiar with the agreement. He spoke on condition of anonymity about the agreement that still must be presented to rank-and-file members for ratification.

In a statement yesterday, the UAW offered no details but said that even with the concessions, its members will continue to enjoy "some of the best health care coverage of any industrial workers in America." A Ford spokeswoman declined to discuss terms of the agreement.

GM has said its deal with the UAW will save the company $3 billion a year before taxes. For the first time it will require some retirees, who now pay nothing for health coverage, to pay as much as $752 a year in deductibles, co-payments and premiums.

Autoworkers represented by the UAW pay little in out-of-pocket costs for health care benefits, unlike workers in most other sectors of the economy. Health care and other benefits were won over decades of collective bargaining agreements between the union and Detroit automakers.

Executives at Ford and GM have said their U.S. operations are at a competitive disadvantage to major rivals in Europe and Asia, where governments shoulder the cost of health care. Foreign automakers have opened factories in the United States in recent years but have a relative handful of retirees to support.

GM and Ford are engaged in far-reaching overhauls to cut costs after their profitabilty slid this year. Both companies are closing plants and cutting tens of thousands of U.S. auto jobs.

According to the UAW, Ford has about 87,000 active, UAW-represented workers and about the same number of retirees. GM has about 110,000 active UAW workers and 335,000 retirees. These figures don't include family members and surviving spouses who receive benefits.

A Ford spokeswoman said the company's costs for health care were $3.2 billion in 2004, and are projected to increase to $3.5 billion this year. GM's health care bill is expected to hit $5.6 billion this year.

DaimlerChrysler AG's U.S. division, Chrysler Group, has similar burdens, though they are lighter because it is smaller. A Chrysler spokesman said the automaker has began communicating with the UAW over a health care relief package similar to what GM and Ford have won.

UAW's deal with GM was regarded by labor scholars as a major setback for the UAW, which has been called one of the last unions in the country with significant clout.