DETROIT (AP) – Ford Motor Co. on Wednesday asked a federal judge to approve a health care agreement with the United Auto Workers that would save the company $200 million annually by making retired autoworkers pay more for their health care.
“Ford’s financial difficulties are dire,” Ford attorney Jonathan Abram said. “The plan that’s being presented here is an extremely fair and generous plan.”
Mark Baumkel, an attorney who represents 430 retirees opposed to the deal, said the UAW lacks the legal authority to change retirees’ health care. Baumkel also rejected Ford’s contention that the deal will cover health care costs for 20 years, pointing out that the company is allowed to renegotiate the terms in 2011.
“How dare they project a rosy picture for 20 years?” Baumkel said. Retirees objecting to the plan were scheduled to testify later Wednesday.
Abram asked Judge Paul Borman to approve the plan by July so Ford can maximize its savings. Ford says the agreement will shave $5 billion off its overall health care liability, which is currently estimated at $35 billion. Ford doesn’t break out health care spending for retirees, but it spent about $3.5 billion to cover 550,000 hourly and salaried workers, retirees and dependents last year.
The settlement would require retirees to pay deductibles and co-payments for the first time, up to $752 annually for families and $370 for individuals. Active workers approved the deal late last year by a 51 percent margin, but UAW retirees weren’t allowed to vote. The agreement is similar to one at General Motors Corp. approved earlier this year by a different federal judge.
Under the plan, Ford would contribute $108 million over three years to a fund to help pay for retirees’ health care. Active hourly workers would contribute about $2,000 annually to the same fund. Ford would make further contributions if its stock price went above $8.14 per share.
Ford shares rose 13 cents, or 1.9 percent, to $7.11 in midday trading on the New York Stock Exchange.
AP-ES-05-31-06 1323EDT
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