Goodyear VEBA Gets Court OK

August 25, 2008 ( - Following the lead set by the big three automakers, Goodyear Tire & Rubber has hammered out an agreement with the United Steelworkers union to create a voluntary employees beneficiary association (VEBA) that will fund union retirees' health care bills.

U.S. District Court Judge John R. Adams of the U.S. District Court for the Northern District of Ohio approved the proposed VEBA into which Goodyear will deposit $1 billion so the new entity can fund the company’s $1.2-billion retiree health care obligation.The Akron-based tiremaker’s agreement is similar to those negotiated between the United Auto Workers and General Motors Corp., Chrysler LLC, and Ford Motor Co. last year (See Total Benefits: Viva VEBA ).

Goodyear said the trust fund will save the company about $100 million a year and improve its annual cash flow by about $130 million compared with 2007 figures. The Trust was negotiated between Goodyear and the Steelworkers in 2006.

“Gaining court approval for the VEBA is a win-win for Goodyear and for our current and future USW retirees,” said Goodyear Chairman Robert J. Keegan, in a statement. “This agreement both protects retiree benefits for years to come and removes a significant legacy obligation from our North American business.”