US unions agree to impose cuts run benefits program at auto-supplier Dana

The UAW has been pushing for the auto companies to agree to shift responsibility for healthcare plans to the trade unions for several years, and the deal with Dana foreshadows much larger agreements with the auto giants. The deals (which establish Voluntary Employee Benefit Associations or VEBAs) involve the companies providing cash to cover part of existing obligations, while transferring management of the funds to the union bureaucracy.

In exchange for absolving the company of any obligation for the estimated $1.1 billion in unfunded long-term disability and retiree healthcare benefits, Dana has reportedly agreed to provide a one-time $700 million cash payment to the VEBA fund, along with an additional $80 million in stock after it leaves bankruptcy. The union-controlled fund would then be required to impose any cuts necessary to make up present and future deficits.

While smaller agreements to establish VEBAs have been set up in the past, according to a July 7 article in the New York Times, “The Dana deal is thought to be the first time the UAW has allowed a company to transfer its entire liability for retiree healthcare.”