• Feb 23, 2009
Ford Motor Company says it has reached a tentative deal with the UAW regarding modifications to the Voluntary Employees' Beneficiary Association (VEGA) pact, the union's retiree health care trust. While specifics are not yet being divulged, the Blue Oval says that it has agreed to make up to half of its future payments into the fund with Ford common stock, although it may continue to use cash depending on the automaker's needs.

Before this and other changes can take effect, the UAW will review the agreement later this week, and any alterations must be signed off on by UAW-represented Blue Oval workers as well as the court system. Ford says that the VEBA agreement, combined with the labor deal reached on February 15, will help the automaker be more competitive during the economic recession without federal loans. Be sure to check out Ford's press release after the jump.

[Source: Ford | Image: Bill Pugliano/Getty]

PRESS RELEASE:

UAW AND FORD REACH TENTATIVE AGREEMENT ON FUTURE FUNDING OF THE VEBA HEALTH CARE TRUST

Editor's Note: The following statement is attributable to Joe Hinrichs, group vice president, Global Manufacturing and Labor Affairs, Ford Motor Company.

Dearborn, Mich., Feb. 23 – The United Auto Workers union and Ford Motor Company have reached a tentative agreement on modifications to the Voluntary Employee Beneficiary Association (VEBA) retiree health care trust.

We are pleased with this agreement, which provides us the option to settle with Ford common stock up to 50 percent of the payments into the VEBA in lieu of cash. 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.

The VEBA agreement – together with the agreement reached Feb. 15 by Ford and the UAW to modify certain operating provisions of the 2007 National Labor Agreement – is subject to ratification by the active UAW-Ford membership and other conditions, including pursuing restructuring actions with other stakeholders. Additionally, the VEBA agreement requires court approval.

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.

I would like to thank the entire UAW leadership and national bargaining committee – particularly UAW President Ron Gettelfinger and UAW Vice President Bob King – for their leadership during these important discussions. I also would like to thank Ford's national bargaining team for their tireless efforts over the past few weeks.

All of us at Ford will continue to work with all of our stakeholders to participate in the current industry restructuring and improve our company's overall competitiveness.

###

About Ford Motor Company
Ford Motor Company, a global automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles across six continents. With about 213,000 employees and about 90 plants worldwide, the company's wholly owned automotive brands include Ford, Lincoln, Mercury and Volvo. The company provides financial services through Ford Motor Credit Company. For more information regarding Ford's products, please visit www.ford.com.


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    • 1 Second Ago
  • 6 Comments
      • 5 Years Ago
      I guess this way union members will care a little more about the health of the company they work for.
      • 5 Years Ago
      just a band-aid on both gangrenous lower extremities (or three if it's male).

      Until the next cry for a federal bailout....exacerbated by the extortionate agreement. What part of no profit/big loss does the UAW not understand?

      Everybody takes a 50% pay cut including retirees or no job/retirement payments. Period.
        • 5 Years Ago
        Ford hasn't taken any Government bailout money AFAIK, and although the 50% pay decrease would be good, it'll never happen since they are unionized.
        • 5 Years Ago
        "the 50% pay decrease would be good, it'll never happen since they are unionized."

        Yea, and all the salaried folks are lining up for a 50% pay cut, right?

        And while Ford hasn't taken any money yet, they will. I promise.
        • 5 Years Ago
        They don't need to take a pay cut really. They are already paid a competitive wage to what their non-union counterparts make.

        What is different from the non-union workers though are the legacy costs including healthcare of retired employees(decades worth). That's what is holding down Ford(and the rest of the Big 3) in being competitive from a labor cost standpoint.

        That's what this agreement is looking to remedy. Ford gets to take retired employees healthcare costs off its books and hand it all over to the Union. That agreement was already made in the talks in 2007, and the Big 3 had already started to fund the switchover(in the form of Billions of dollars each).

        From my understanding, this deal with the UAW just means that Ford will be paying more of what they owe with stock rather than straight cash.

        Other than that, it seems like the same deal that was in effect before.

        Hopefully GM and Chrysler can reach similar deals as that should be a big step towards the Big 3 getting back onto their feet.
        • 5 Years Ago
        People still think Ford took federal money?! Geesh, I'll go back under my rock . . .