Mack Trucks Inc. on Sunday, May 17, announced that the company and the United Auto Workers reached a tentative agreement on terms of a new 40-month Master Agreement that would cover about 1,700 UAW members at seven facilities in three states.
The tentative agreement includes a successor collective bargaining agreement and the creation of a UAW-managed independent trust, known as a Voluntary Employee Beneficiary Association (VEBA). The VEBA would permanently assume the sole obligation of providing retiree health benefits to current and future Mack-UAW retirees, spouses, surviving spouses and their dependents.
The successor collective bargaining agreement and the VEBA are conditional on ratification by the UAW membership. Thereafter, the VEBA will be subject to an approval order from the U.S. District Court for the Eastern District of Pennsylvania, which could take up to 12 months.
The parent company of Lehigh Valley, Pa.-based Mack, Sweden-based AB Volvo, has agreed to fund the VEBA with $525 million in cash, which would be paid in equal installments over a five-year period. The first payment would be made no earlier than July 1, 2010.
The establishment of the VEBA would allow for continued health care benefits for the roughly 9,000 current Mack-UAW retirees, surviving spouses and dependents, as well as for future UAW retirees, while eliminating Mack’s health care liabilities for this group.
The proposed Master Agreement covers members of UAW Locals No. 677 in Allentown, Macungie, and Middletown, Pa.; No. 171 and No. 1247 in Hagerstown, Md.; No. 2301 in Baltimore; and No. 2420 in Jacksonville, Fla. The ratification meetings are being scheduled by the UAW, and will be held within the next few weeks.