Mack, UAW reach new 40-month agreement

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Mack Trucks Inc. on Saturday, May 30, announced that employees represented by the United Auto Workers have ratified a new 40-month Master Agreement covering about 1,700 UAW members at seven facilities in three states. The new agreement is effective today, June 1, and will expire on Oct. 1, 2012.

“Mack and the UAW are committed to maintaining an effective working relationship focused on meeting the needs of our customers, and this agreement demonstrates that commitment,” says Dennis R. Slagle, president and chief executive officer of the Lehigh Valley, Pa.-based company. “In addition to helping us address the current challenges facing our economy and our industry, the agreement will improve our competitiveness, and help position us for growth.”

The 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 agreement includes a successor collective bargaining agreement and the creation of a UAW-managed independent trust, known as a Voluntary Employee Beneficiary Association. The VEBA permanently assumes the sole obligation of providing retiree health benefits to current and future Mack-UAW retirees, spouses, surviving spouses and their dependents. The VEBA is subject to an approval order from the U.S. District Court for the Eastern District of Pennsylvania, which could take up to 12 months.

Mack’s parent company, 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 allows 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.