The deal would allow the carmaker to make contributions to the United Auto Workers (UAW) health care plan for retirees with up to 50 per cent stock instead of cash, a move the manufacturer said would help it meet its obligations. Ford owes 13.6 billion dollars to the Voluntary Employee Beneficiary Association, as the health care trust is known.
“The agreements, if finalized, will allow Ford to become competitive with foreign automakers’ US manufacturing operations, and are critical to our efforts to operate through the current deep economic downturn without accessing government loans,” said Joe Hinrichs, Ford vice president for global manufacturing and labour affairs.
UAW president Ron Gettelfinger said the deal would “protect jobs for UAW members by ensuring the long-term viability of the company.”
The company is the first of the three US carmakers to reach a deal on the health plan with the union and the agreement could pave the way for similar deals with General Motors Corp and Chrysler LLC.
Ford is the only company of the Big Three carmakers that did not receive a total of 17.4 billion dollars in emergency government loans.
GM and Chrysler last week submitted plans to the government to slash labour costs with about 50,000 job cuts, close manufacturing plants and dealerships and focus more on their core brands. The carmakers have until March 31 to show the government they can survive and the Obama administration is currently reviewing the plans.
The Wall Street Journal reported Monday that the Treasury Department was beginning to line up at least 40 billion dollars in bankruptcy loans for the carmakers should it be needed. (dpa)