The United Auto Workers union expects rank-and-file voting on a new health-care benefits funding deal withMotor Co. to conclude March 9.
The tentative agreement calls for the UAW to acceptstock in lieu of 50% of the auto maker’s promised cash contribution to the Voluntary Employee Benefit Fund, which formed part of the contract they negotiated in 2007.
Union leaders are recommending ratification and in a letter to some 42,000 UAW-represented Ford workers, UAW President Ron Gettelfinger warns the auto maker’s existence depends on the outcome.
In a memo distributed to the rank and file, Gettelfinger says Ford burned through $21 billion in cash last year and continues this year at a rate of $1 billion per month.
“The company cannot continue to sustain this level of losses and stay in business,” Gettelfinger says. “No auto company, including the transplants, can continue operations without significant modifications.”
In addition to accepting Ford stock to help finance the VEBA, which funds health-care benefits for retired workers and surviving spouses, the UAW also proposes its workers forgo cost-of-living raises and cash bonuses.
In addition, Ford will offer another round of buyout packages and early retirement incentives as the auto maker strives to trim its labor costs through attrition.
But Ford says it will preserve the base pay, health benefits and pensions of current UAW workers, while declaring a moratorium of sorts on plant closures. The auto maker’s assembly site in Twin Cities, MN, will close as scheduled in 2011.
For their part, Ford CEO Alan Mulally and Executive Chairman Bill Ford Jr. say they will voluntarily slash their annual compensation 30% for two years, while also suspending bonuses for salaried workers.