Automakers Seek Health-Care Cost Cuts from UAW

Strategic Insights -

Ford Motor Co. and other major US automakers are in talks with the United Auto Workers (UAW) to reduce health-care costs, following an agreement reached by General Motors Corp. to trim those expenses. The discussions at Ford are described as "very private and constructive" by Joe Laymon, a group vice president. General Motors' agreement with the UAW is expected to save the company $1 billion in annual costs. The UAW has yet to comment on Ford's discussions.

Key Takeaways:

  • Ford Motor Co. is in talks with the UAW to cut health-care costs, similar to General Motors' recent agreement.
  • General Motors' agreement with the UAW is expected to reduce annual costs by $1 billion.
  • Ford estimates its annual U.S. health-care costs to be around $3.5 billion this year.
  • DaimlerChrysler AG's Chrysler is expecting similar treatment from the UAW if GM's agreement is approved.
  • GM has estimated its annual U.S. health-care costs to be about $5.6 billion.
  • Ford's discussions with the UAW are "very private and constructive" according to Joe Laymon, a group vice president.
  • Each of the Big Three US automakers - GM, Ford, and Chrysler - is facing significant health-care costs, with GM's estimated at $5.6 billion and Ford's at $3.5 billion for this year.
  • Chrysler is unable to provide an estimate of its health-care costs, but expects similar treatment from the UAW if GM's agreement is approved.

Statistics:

  • General Motors' estimated annual U.S. health-care costs: $5.6 billion
  • Ford's estimated annual U.S. health-care costs: $3.5 billion
  • Estimated annual savings from General Motors' agreement with the UAW: $1 billion
  • Percentage of UAW-represented union members at GM with health-care costs affected by the agreement: unknown

Sources:

  • Bloomberg News
  • Joe Laymon, group vice president, Ford Motor Co.
  • Tom Hoyt, Ford spokesman
  • Ed Saenz, Chrysler spokesman
  • Paul Krell, UAW spokesman