800 Ford retirees formally object to deal that requires paying health premiums, deductibles
by : Bryce G. Hoffman
Sunday June 4, 2006 - 23:37
Ford, UAW retirees spar in court over health insurance cuts
by Bryce G. Hoffman
DETROIT — Dozens of Ford Motor Co. union retirees were in federal court Wednesday to ask a judge to reject an agreement between the automaker and the United Auto Workers that would cut their health benefits to help ease Ford’s financial troubles.
The retirees argued that they were denied a say in the deal, which could cost them hundreds of dollars a year in higher health care costs.
Larry Bronson, a former vice president of UAW Local 600 in Dearborn, described the long fight for retiree health benefits he waged with other union activists and said he never imagined he would lose them in retirement.
"It was written in stone basically, like the Ten Commandments," said Bronson, who accused UAW leaders who negotiated the Ford deal of sacrificing retirees for the sake of their careers. "They’re not acting on my behalf," he said. "They’re acting to perpetuate themselves in office."
Attorneys for the UAW said the union acted appropriately. Ford’s lawyers urged U.S. District Judge Paul Borman to approve the deal by July. They called the automaker’s financial situation "dire" and said the company needs the health care agreement to shave costs. Ford is in the midst of a restructuring that will cut 30,000 jobs and close 14 plants by 2012.
"Ford, your honor, needs this settlement approved with all deliberate speed," said Ford attorney Jonathan Abram. He called the plan "fair and generous" and added that Wall Street is counting on the deal being approved.
Bronson was the lead plaintiff in a lawsuit that sought to block the health care agreement. That case was not allowed to go forward. But attorney Mark Baumkel, who represented Bronson and other plaintiffs, was in court Wednesday to plead their case. "The UAW negotiated this deal without the power to do so," Baumkel said, arguing that the union has no authority to negotiate on behalf of retirees. "The union can’t give away their rights without getting their consent — and that didn’t happen here."
There were also dozens of retirees in court to support the deal, most bussed in by the union. Some said they were afraid Ford’s mounting financial woes could lead the company to bankruptcy and leave them without any retirement benefits.
Borman instructed attorneys on both sides to submit supporting documents by June 12 and said he would rule on the case after that date.
Under the terms of Ford’s agreement with the union, which was narrowly approved by active UAW members in December, retirees will be required to pay monthly health insurance premiums and deductibles that could total up to $370 a year for individuals and $752 for a family. That figure can go up by as much as 3 percent annually. In addition, some workers would pay more for prescription drugs.
Hourly retirees at Ford are not required to pay any fees for health care coverage now. Most retirees or their surviving dependents who receive pensions of less than $8,000 will not have to pay the new fees either.
Ford spent $3.5 billion last year to provide health care to 590,000 people, including employees, retirees and dependants. Its health care costs have soared 67 percent since 2000 and the company now spends $1,100 per vehicle on health care — more than what it spends on steel. Ford’s health care obligation to retirees totals $35 billion.
If approved, the deal with the UAW would reduce that obligation by $5 billion, Abram said. It will also improve pretax profits by $650 million and bolster the company’s cash position by $200 million annually.
Abram reminded the judge that one of his colleagues had approved a similar deal between the UAW and General Motors Corp. earlier this year. Without similar relief, he said Ford is at a competitive disadvantage.
The deal requires court approval because the UAW cannot negotiate on behalf of retirees. Some 800 of about 150,000 Ford retirees have filed formal objections to the deal. Some — from as far away as Oregon — made the trip to the federal courthouse in Detroit to voice their objections in person.
"I don’t think it was fair for them to vote on my cuts," said James Lynch, who retired in 1997 from the Rouge River complex. "What good does it do to retire with benefits if they can turn around and take them away from you?"
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