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DEARBORN, Michigan — The United Auto Workers union and Ford Motor Co. have tentatively agreed to change some terms of funding a trust that pays for retiree health care.
Under the agreement, Ford would have the option to contribute shares of stock rather than cash to the Voluntary Employee Beneficiary Association (VEBA) trust, the company said in a Monday release. Ford could contribute up to 50 percent in stock rather than cash.
This option gives the Dearborn, Mich., automaker the ability to better manage its cash flow during the global recession, which on Friday sent General Motor’s Saab unit to bankruptcy court, according to the New York Times. Ford is the only one of the Big Three U.S. automakers that has not accepted federal bailout money.
“We will consider each payment when it is due and use our discretion in determining whether cash or stock makes sense at the time, balancing our liquidity needs and preserving shareholder value,” Joe Hinrichs, group vice president of Global Manufacturing and Labor Affairs, said in the release.
Along with a Feb. 15 agreement with the union to change some operating provisions of its 2007 labor contract, “the agreements, if finalized, will allow Ford to become competitive with foreign automakers’ U.S. manufacturing operations, and are critical to our efforts to operate through the current deep economic downturn without accessing government loans and continue to fully invest in our ONE Ford product plan,” Hinrichs said.
Ford and the United Auto Workers said current union members must ratify the agreements and a court must approve them to become effective. “The modifications will protect jobs for UAW members by ensuring the long-term viability of the company,” UAW President Ron Gettelfinger said in a release from the union.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
So far, Detroit automakers General Motors Corp. and Chrysler have asked for more than $39 billion in federal aid, according to CNBCÂ . Terms of the VEBA agreement mirror those in federal loan guarantees extended to GM and Chrysler, according to the Wall Street Journal. Ford faces $13.6 billion in so-called legacy health care costs, the Journal said.
