Detroit Automakers Consider Handing Over Retiree Health Care to UAW

January 24, 2007 ( - Detroit automakers may be on the brink of a deal with the United Auto Workers (UAW) in which the union would fund a trust to cover the health care costs of retired hourly employees, according to the Detroit News.

The plan, the blueprint of which stems from a recent settled strike between Goodyear Tire & Rubber Co. and the United Steelworkers, calls for the auto companies to put billions of dollars in cash and stocks into the fund that the union would be responsible for keeping solvent. The move would ensure that retirement benefits are safe from the bankruptcy courts.

The plan is still in its fledgling stages, GM told the Detroit News, and will likely be different than the Goodyear deal because GM’s health care liability is so much larger than the tire company’s.

Ford also admitted to the newspaper that it has been examining the Goodyear plan, but DaimlerChrysler said it was not considering it.

According to the newspaper, JPMorgan analyst Himanshu Patel says a plan modeled affer the Goodyear deal would be too expensive, estimating that it would cost GM $33 billion and Ford $13 billion to set up the fund.