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.”