UAW open to auto health-care trust fund: report
DETROIT (Reuters) - The United Auto Workers union is open to establishing a trust fund for retiree health-care benefits if it can reach an agreement with the U.S. automakers on funding terms, the Detroit News reported on Tuesday, citing sources close to this summer's labor contract negotiations.
A UAW spokesman could not immediately be reached for comment.
Executives at all three Detroit-based automakers have expressed interest in exploring the idea of setting up a UAW-controlled trust fund, known as a Voluntary Employee Benefit Association or VEBA, before talks began with the UAW.
Such a trust fund would be set up with a one-time payment from the automakers, similar to a $1 billion deal negotiated by Goodyear Tire & Rubber Co. and the United Steelworkers union.
Wall Street analysts have said such a move -- if funded at a steep enough discount to estimated health-care liabilities -- could shift risk from the strained balance sheets of the automakers and boost future earnings.
Although U.S. automakers have said they are exploring proposals for a retiree health-care trust fund, the union has not commented publicly on its position, saying only that rising health-care costs are a national issue.
UAW President Ron Gettelfinger has conducted this summer's negotiations aimed at replacing a labor contract that expires September 14, without briefing union members or media on progress.
The overall health-care obligations for the automakers are huge. General Motors Corp underfunding for U.S. retiree health- and life-insurance benefits stood at $47.4 billion at the end of 2006 and Ford Motor Co's at $25.9 billion. Chrysler has about $17 billion of unfunded health-care obligations, according to previous disclosures.
GM alone spent $4.8 billion on health care in 2006. For the same amount, the company estimates it could have built four new plants, or launched six new vehicles. Taken together, the Detroit automakers cover health-care expenses for some 2 million employees, retirees and dependents.
