Judge Nods Goodyear Health Trust Fund

An Akron, Ohio District Court judge gave its nod for the Goodyear trust fund that will pay the health care bills of union members.  The trust fund is set up by Goodyear Tire & Rubber Company and United Steelworkers Union.

A $1 billion fund will be put up by Goodyear calling the trust fund as voluntary employees’ beneficiary association.  Current and future retirees will benefit from the fund company sources said.  The fund will cover the $1.2 billion health care payments of Goodyear.

Goodyear’s negotiated initiative is similar to trust funds created last year by General Motors and United Auto Workers and Chrysler LLC and Ford Motors.  In all cases, the voluntary beneficiary funds will be transferred and administered by union trusts.  These negotiated initiatives will remove billions of corporate liabilities from their books.

Retiree Benefits Protection

Current Goodyear Chairman Robert J. Keegan said that the move will protect the benefits of retirees and American businesses will be free from legacy obligations.  Keenan added that the initiative will result to $100 million savings for the company could experience a fresh $130 million cash flow annually.  

Goodyear expects the trust fund to be utilized at the end of third quarter this fiscal year if appeals against it will not be filed in court.  The savings projected from the deal can be felt by the company at the last quarter of the year.  

Negotiations after the Strike

The negotiated deal for creating a billion dollar retiree’s trust fund came after a three months workers’ strike at Goodyear in 2006.  Judge John R. Adams approved the creation of the trust fund on Friday.  Nearly 20,000 USW retirees, dependents and spouses stand to benefit from the Goodyear trust fund deal.

Leo Gerard, President of the United Steelworkers Union said that Goodyear retirees who have spent all their productive lives working for the company can be assured of getting their health care benefits.  Gerard added that the funding needed for the retiree’s health care and prescriptions will be protected and will not be taken away from them.

Historic Decisions

The successful negotiations and approval of the Goodyear and steelworkers trust fund pushed the historic deals in the auto industry with similar contracts negotiated last year by the United Auto Workers.

Favorable decisions have been handed by Federal judges for the creation of similar trust funds for UAW by General Motors and Chrysler.  The two auto companies will start to transfer their health care obligations for retirees to UAW trusts by 2010.  The transfer could proceed smoothly if no appeals are filed in court.

Meanwhile, a similar negotiated trust fund case for the Ford Company is still pending in a Federal court.  Court intervention has been sought by the parties because the retirees were not included in actual negotiations but they are the ones being affected by the deals.