Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By NLPC (Reporter)
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

Will Underfunded VEBA Fund Enter Into GM’s UAW Negotiations?

% of readers think this story is Fact. Add your two cents.


The Wall Street Journal has reported that the UAW’s voluntary employees’ beneficiary association (VEBA) fund was underfunded by approximately $20.7 billion in 2014, which was the latest reported period. The shortfall has grown from the previously reported 2013 figure when the trust was estimated to be 93% funded. The latest funding figure, which was hurt by growing medical benefits costs, plummeted to 74% in one year.

The VEBA fund was established in order to transfer liability of retiree medical benefits costs from General Motors, Ford and Chrysler (now Fiat Chrysler Automobiles) to the UAW prior to GM going bankrupt in 2009. In fact, the fund was one of the primary driving forces of GM’s bankruptcy as the company agreed to fund the account with $30 billion as part of the agreement; money they didn’t have.

Total net assets for the VEBA trust stood at about $60 billion in 2014. GM’s portion is largely funded with common shares of the company, which the UAW was granted with as part of the Obama-orchestrated bankruptcy process. Funding for the trust is therefore partly dependent upon GM share performance (which has been lackluster) along with performance of the markets in general.

The VEBA agreement has been touted as a huge success with the risks of future downturns to funding being minimized. I pointed out that fact in June when I brought up the possibility of GM buying back some of the trust’s shares with the following statement:

Despite the generous funding of the VEBA by GM (i.e., American taxpayers), it is questionable as to how well-funded the account will continue to be. The fund currently is one of the largest holders of GM shares. It would not surprise me if the VEBA funding goes back on the negotiating table, perhaps with GM agreeing to repurchase some of the shares at a premium.

So we are now at the stage where the UAW will be entering negotiations with GM from a position of strength. As I also recently pointed out, GM CEO Mary Barra has helped the UAW’s bargaining position by boasting about the prospects for future profitability at GM. Given the additional fact that GM has the DNA of the UAW-friendly Obama Administration, it is likely that the UAW will get a better deal from GM than any deal negotiated with Fiat Chrysler Automobiles.

The latest report that the VEBA fund is being depleted has to bring into question whether or not GM has really been relieved of retiree health care costs for perpetuity. Given the current sizzling auto sales figures that have been coming in at the industry’s cyclical peak along with Barra’s rosy proclamations of future profitability, it would be a good time for the UAW to prop up funding for the VEBA trust as part of the latest contract settlement. GM shareholders will have to worry about the consequences at a later date if history repeats itself when the industry has its inevitable downturn and GM can again not afford the costs.

Mark Modica is an NLPC Associate Fellow.  


Source: http://nlpc.org/stories/2015/10/13/will-underfunded-veba-fund-enter-gm%E2%80%99s-uaw-negotiations


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!


Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST


Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)

Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen!

Nascent Iodine - Promotes detoxification, mental focus and thyroid health.

Smart Meter Cover -  Reduces Smart Meter radiation by 96%! (See Video).

Report abuse

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.