Final Approval for Goodyear Retirement Fund Not Reached

Goodyear employees, union representatives and the tyre major will have to wait longer for a final settlement to issues relating to their 2006 strike action. US District Court Judge John R. Adams stated on April 11 that he needed more and better information on the long-term viability of the Voluntary Employees Beneficiary Association (VEBA), which was set up by the United Steelworkers and Goodyear as part of negotiations regarding the 85-day strike.

The US$1 billion plus independent healthcare trust is intended to pay benefits to approximately 30,000 USW member retired Goodyear employees, and Adams gave preliminary approval to the trust in December. Goodyear said it will pay $1 billion into the trust, after which it will no longer be responsible for retiree healthcare benefits. The tyre major expects to save $110 million a year and remove $1.2 billion in liabilities from its books through the VEBA’s creation.

After ending a two-hour hearing at the US District Court in Akron, Ohio, the judge said he will review the latest paperwork and might call another hearing in a week or ask for more evidence. He stated he has a heightened sense of duty and obligation over the creation of the trust because of the number of people it will affect. ”My task here today is to decide if the proposed settlement is fair.” He added that he needed to examine information such as the projected number of retirees over at least the next five years, inflation rates and the age of retirees. The VEBA agreement, in part, appears to be based on the anticipation that the US federal government will be involved in healthcare at some point, he said.

USW members still currently working will be required to pay a proportion of their earnings into the VEBA to keep it viable, Adams said. These workers will pay part of their cost-of-living increases and profit sharing into the fund. For this reason, the VEBA has the potential to place the interests of current workers against the interests of retirees, Adams said. ”You say everything will be fine for three or four years. After that, I don’t know. That’s a problem,” Adams said.