In negotiations with General Motors Corp. (NYSE: GM), Ford Motor Co. (NYSE: F), and Chrysler, the head of the United Auto Workers has said that the union would be open to a fund created to handle future health liabilities. The Big Three would have to provide the money for the fund, perhaps a much as $60 billion. The union would administer the pool.
The announcement made front page news because very little has been said by the UAW during the current round of negotiations, which has a deadline of September 14. But, according to The Wall Street Journal, UAW President Ron Gettelfinger has said that he is "willing to agree in principle to the creation of a multibillion-dollar, union-controlled health-care trust fund." GM, Ford, and Chrysler carry about $95 billion in health and pension liabilities on their balance sheets. A new fund operated by the union would transfer those obligations off their books.
The largest single hurdle to a deal is defining what the level of funding would need to be. It depends on complex calculations of how much would have to be paid out to workers each year and how much the fund could yield in returns on its invested capital.
The UAW is faced with a near-term problem of its own. A number of its rank and file members are more interested in keeping their jobs than in who holds the liability for their benefits. While UAW management may support a health care fund, if it has to trade job reductions as part of the bargain, it may not get the support of its members.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
9-13-2007 @ 1:25PM
lawrie mantwell said...
It's funny after faithfully serving the community at large as a fireman for many years my husband cannot get any service in return!
I need to get this off my chest, my husband and I purchased a Chevy Silverado Duramax Diesel 2500 with the Allsion Transmission. Being a fireman for over 22 years my husband knew any truck with the Allison trans had to be great!
Problem is we have had a total of four sets of injectors replaced in this truck, the last set only lasted little over 5600 hundred miles. Feeling frustrated we went to GM at the dealers suggestion and GM's only response was "sORRY YOU'RE UNHAPPY" they feel the truck has lived up to it's potential?
Each one of the GM dealerships that have worked on this truck say there is DEFINITELY A PROBLEM, they are not quite sure what this will do or has already done to other parts of the engine.
Can't sell it, can't trade it, We are just stuck!!!
88,000 miles on a diesel, and it's of no use to us. I am afraid to take it to the corner market!
We have purchased several GM products and feel with this particular truck we feel we have been treated VERY POORLY.
All we have ever wanted was for GM to stand behind their product. Consumers these days have several options and we opted to choose GM and American Made Vehicle and we have been left high and dry, feeling alone with a faulty truck!
Lawrie Mantwell
o2beclean@aol.com
9-13-2007 @ 3:58PM
robert harvell said...
Baby Boomers,they didn't all invest , I saved a little, but spent most on kids, expensive extras and now college costs and insurance for kids and us. I never had ideas of being wealthy,but to retire today is not an option, if you don't catch a super investment deal,or left wealthy from dead relative or hit the lottery, you're screwed!!! I'm just now learning to invest wisely,instead of gambling at the boat and trying to save money in a bank account. If I'm lucky I might have enough to pay for the funeral and all the medical bills.
9-17-2007 @ 3:09PM
Van said...
I'd buy GM stock if it is possible by you......It will double by the end of the year....Put all pasts in the past and buy for the profit and future........