Benefits August 25, 2008

Goodyear VEBA Gets Court OK

August 25, 2008 (PLANSPONSOR.com) - 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.
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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.”

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