Searching for ways to restructure the U.S. auto business without the devastating impact of bankruptcy filings, Detroit’s automakers and the United Auto Workers are mulling a plan that would shift the burden of retiree health-care liabilities to the union.
The Wall Street Journal reports Tuesday that while a deal is far from certain, even talk of the revolutionary plan is a strong sign of how determined the automakers and the union are to avoid the fate of many U.S. steelmakers and airlines.
Both sides agree that the status quo is unacceptable, and both argue that the government should shoulder some of the responsibility for health-care costs, saying that without an overhaul of the current system thousands of manufacturing jobs will be at risk.
While Ford and GM have made strides in increasing their productivity and quality, fighting off their lower-cost, non-unionized competitors overseas has been an uphill battle. Footing the bill for UAW health-care benefits adds about $1,500 a car to the cost of vehicles made in the U.S. by the Big Three.
According to an analyst quoted in the story, Ford and GM could buy themselves out of their combined $77 billion in health-care liabilities and set up a union-managed fund for somewhere between $46 billion to $54 billion.