UAW Reaches Tentative Agreement with Ford on Health Care Costs

Strategic Insights -

The United Auto Workers union has announced a tentative agreement with Ford Motor Co. on health care costs that will require "sacrifices" from workers and retirees. The agreement, which is subject to ratification by UAW members and court approval, will ask active and retired members to make contributions to their health care coverage. This comes after General Motors Corp. reached a similar agreement with the UAW last month, which included retirees and hourly workers paying more for their health care. The UAW and Ford are being tight-lipped about the details of the agreement, but industry analysts expect it to be similar to the GM deal.

Key Takeaways:

  • The UAW has reached a tentative agreement with Ford Motor Co. on health care costs that will require "sacrifices" from workers and retirees.
  • The agreement, subject to ratification by UAW members and court approval, asks active and retired members to make contributions to their health care coverage.
  • This marks the second major automaker to reach an agreement with the UAW on health care costs, following General Motors Corp. last month.
  • Under the GM deal, retirees and hourly workers agreed to pay more for their health care, with employees paying about 25% of their medical expenses.
  • The GM agreement is expected to save the company $3 billion a year before taxes.
  • Ford and DaimlerChrysler AG's Chrysler Group had expected to ask the UAW for similar cuts after the GM deal was announced.
  • The UAW and Ford are being tight-lipped about the details of the agreement, but industry analysts expect it to be similar to the GM deal.
  • The agreement will be voted on by UAW members and will require court approval.

Statistics:

  • $3 billion: the expected annual savings from the GM deal before taxes.
  • 25%: the employee contribution to medical expenses under the GM deal.
  • $11 billion: the expected annual health care cost for GM, Ford, and Chrysler employees in 2005.
  • $3.1 billion: Ford's health care spending in 2004 for 550,000 hourly and salaried workers, retirees, and dependents.
  • $3.5 billion: Ford's expected health care spending in 2005.

Sources:

  • The Associated Press. "UAW, Ford Reach Tentative Accord." THE ASSOCIATED PRESS DETROIT.