DETROIT — In a deal that could set the pace for the auto industry, Ford and the United Auto Workers have come to terms on reducing billions of dollars in payments due to a trust for retiree health-care coverage.
In related news, financier Steven Rattner will become an adviser to the U.S. Treasury Department and join the panel overseeing the auto bailout.
The Ford pact announced Monday will allow the automaker to make as much as half of its payments to the fund in equity rather than cash.
Ford’s obligations to the Voluntary Employees Beneficiary Association total $13.2 billion.
Reducing its obligations to VEBA “will allow Ford to become competitive with foreign automakers’ U.S. manufacturing operations,” said Joe Hinrichs, Ford’s head of global manufacturing and labor affairs.
The deal is certain to get the attention of Chrysler and General Motors. Under terms of the $17.4 billion in federal loans the companies received in recent months, both must reduce cash obligations to the fund by March 31.
GM owes $20.4 billion to VEBA, and Chrysler owes $8.8 billion. Both hope to cut their cash commitment in half.
Last week, both submitted revised restructuring plans to the Treasury Department, including signed deals with the UAW to reduce labor costs, but both omitted agreements on VEBA payments, saying they were still negotiating.
“We appreciate the solidarity, understanding and patience the members have demonstrated throughout the bargaining process,” UAW president Ron Gettelfinger said Monday.
Word that Rattner would be joining efforts to save the automakers wasn’t unexpected. His name had been floated as a candidate for a “car czar” position since early January.
Last week, the White House said it wouldn’t name a single person to oversee the bailout; rather, it will use a panel, including Treasury Secretary Timothy Geithner, economic adviser Lawrence Summers and Ron Bloom, an experienced labor negotiator.
Rattner, a former reporter with years of experience in finance, is a co-founder of the Quadrangle Group, a private- equity fund with expertise in mergers and acquisitions.
