Join Date: Feb 2001
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US:Retirees fight Ford, UAW deal
Retirees fight Ford, UAW deal
Group contends union had no right to ink deal for nonmembers, firm can't cut vested benefits.
Brett Clanton / The Detroit News
A group of retired hourly workers from Ford Motor Co. is challenging in court a landmark health care agreement struck in December between Ford and the United Auto Workers union that cuts retiree benefits.
The legal motion, filed last week, threatens a key piece of the automaker's turnaround in North America. It argues that the UAW did not have the right to negotiate benefit cuts on behalf of retirees, who do not pay union dues and were not allowed to vote on the agreement, and that Ford cannot legally reduce benefits based on the pact.
The outcome of the retirees' motion could have implications for tens of thousands of Ford retirees, surviving spouses and dependents. It also could establish a precedent for other U.S. automakers and parts suppliers trying to shed costs by reducing retiree benefits.
Minimally, savings from the Ford-UAW deal could be delayed if the legal challenge stretches out for months.
Marcey Evans, a Ford spokeswoman, declined to comment on the retirees' motion.
"We're in the process of reviewing the lawsuit," she said, "and it would be inappropriate for us to comment at this time."
A UAW spokesman was not available for comment.
The motion was filed as a request to intervene in an earlier suit filed by the UAW against Ford, in which the union asks for legal authority to bargain on behalf of Ford retirees and to bar Ford from unilaterally cutting retiree health care.
The motion characterizes that suit, which the court must approve before Ford can begin to realize savings from the health care deal, as "nonadversarial" and a "formality" to gain "a rubber stamp of approval" for the retiree cuts.
The retirees' motion names three plaintiffs, who are seeking class-action status to represent all affected Ford retirees. Tom Laney is the former president of UAW Local 879 in St. Paul, Minn.; Lawrence Bronson is a former vice president of UAW Local 600, which includes workers at the Ford Rouge Plant in Dearborn; and Earl McKinney is a former committee member at UAW Local 1216 in Fairfield, Ohio.
General Motors Corp. retirees recently took similar legal action against GM, which reached a historic health care deal with the UAW in October that became the pattern for the Ford agreement.
GM hammered out the deal after convincing the UAW that its financial troubles demanded more cost-sharing from workers and retirees on health care, an argument Ford also used to win concessions from the union ahead of the 2007 renegotiation of its contract.
Attorneys for the Ford retirees are trying to keep the cases from being lumped together, claiming that GM had a different financial situation than Ford.
"It's the same ploy, but it's not the same case," said Mark Baumkel, an attorney with Provizer & Phillips PC in Bingham Farms, who is representing both GM and Ford retirees in the cases.
To get a distinct ruling, the retirees' motion was filed with U.S. District Judge Arthur J. Tarnow. The GM case is pending before Judge Robert E. Cleland in the same court.
In the Ford case, the retirees blast the UAW and the automaker for negotiating an agreement that they claim oversteps each organization's powers.
"In essence, Ford, which represents its own interests, and the UAW, which represents the interests of current Ford employees, have negotiated away significant vested rights of retirees without legal authority to do so and without seeking a vote from Ford retirees," the motion said.
Ford, the motion claims, lacks the legal basis to reduce benefits that are vested after years of service at the company, while the union cannot negotiate away retiree benefits because it represents only active Ford workers.
Under the agreement, retired autoworkers would for the first time pay monthly contributions and yearly deductibles, up to a maximum of $370 a year for individuals and $752 for a family.
Active workers will forgo about $1 an hour in future wage increases to help offset increases in retiree health costs and will see higher prescription drug charges, but will not pay deductibles or monthly premiums.
Ford workers ratified the agreement Dec. 22 by a 51 percent margin, with opponents arguing that retirees will pay more than their share to help the company.
UAW President Ron Gettelfinger characterized the deal favorably when the two parties reached a tentative pact in early December.
"Our goal in these discussions with Ford was to provide the best possible health care coverage and the strongest possible long-term protections for all UAW-Ford workers, retirees and surviving spouses," Gettelfinger said.
Last year, Ford spent about $3.5 billion on health care to cover 550,000 workers, retirees, surviving spouses and their dependents, up from $3.1 billion in 2004.
Under the new agreement, Ford expects to save $650 million on a pre-tax basis each year and $200 million in annual cash outlays.
In addition, it will shave $5 billion from the automaker's future retiree obligations.
The pact will help the automaker as it struggles to rebound from declining sales and falling profits in North America. And it could bolster the company's newly announced "way forward" turnaround plan, which will close 14 North American plants by 2012 and eliminate up to 30,000 hourly jobs.
Yet some industry observers say the cuts do not go far enough in addressing the automaker's declining market share, rising labor costs and overdependence on SUVs.
"Ford's plans still have the feel of being too little, too late," said Terrence Guay, an assistant professor of international business at Pennsylvania State University's Smeal College of Business, last week after the "way forward" plan was revealed.
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My next Ford.....