In a presentation for financial analysts, the U.S. automaker discussed the Voluntary Employees Beneficiary Association trust being formed with the United Auto Workers union as part of a just-ratified labor contract.
DETROIT (Reuters) - Ford Motor Co <F.N> said on Thursday the annual net cash savings from a trust fund being established to take over retiree health-care liabilities is estimated at $1 billion.
In a presentation for financial analysts, the U.S. automaker discussed the Voluntary Employees Beneficiary Association trust being formed with the United Auto Workers union as part of a just-ratified labor contract.
The UAW announced on Wednesday that Ford workers had ratified the four-year contract, wrapping up a contentious round of negotiations between the union and U.S.-based automakers that included short strikes at General Motors Corp <GM.N> and Chrysler LLC.
Ford said it would pay $2.7 billion up front to fund the health-care trust, which is expected to be created by January 1, 2010. The trust needs court approval and U.S. Securities and Exchange Commission accounting clearance.
!ADVERTISEMENT!Ford expects a total contribution to the trust of $13.2 billion, including a transfer of $3.8 billion from existing health-care programs.
Under the new Ford contract, Entry-level wages start at $14.20 per hour; including benefits, wages amount to $26 to $31 per hour. New hires will pay more for health care than current workers and will have cash-balance pensions, such as 401(k) plans, and defined contributions to retiree health care.
Ford and the union have agreed to an additional buyout program, and the company expects to offer buyouts in the near future.
Ford said it would keep five plants open that it had previously planned to idle, and it no longer plans to build a low-cost North American assembly plant.
(Reporting by Poornima Gupta in Detroit, writing by David Bailey; editing by John Wallace)
