TOLEDO, Ohio (AP) -- Dana Corp. has reached settlement agreements with its two largest unions that will save the bankrupt auto parts maker more than $100 million per year, the company announced Friday.þþUnder the deals struck with the United Steelworkers and the United Auto Workers, voluntary trusts will take over Dana's obligations for providing health care for retirees and long-term disability coverage for other employees. Dana will contribute $700 million cash and approximately $80 million in common stock to the trusts, the company said in a news release.þþThe settlements include four-year extensions of Dana's current contracts with the USW and the UAW at its union plants in the U.S., as well as new agreements with several recently organized facilities. The agreements also establish a two-tier wage structure at some Dana operations and changes in disability benefits, the company said.þþThe settlement could be a template for domestic automakers that are considering shifting future retiree health care costs to union-controlled trust funds.þþDetroit's Big Three say the increasing cost of health care has hurt their ability to compete with foreign manufacturers, and they are studying a new contract between Akron-based Goodyear Tire & Rubber Co. and the United Steelworkers union with a similar health care trust fund.þþGoodyear estimates it will save $275 million over the next three years by setting up a trust fund that eliminates the tiremaker's future health care obligations for retired union workers.þþThe company made a one-time $1 billion contribution to an independent fund that was created as part of the labor deal reached with workers late last year.þþDetroit automakers are expected to propose a similar fund in national contract talks with the UAW that formally begin later this month.þþThe Detroit Three say they have a $30 per hour labor cost gap with Japanese competitors, and much of that is due to long-term retiree health care costs. They want to significantly reduce or eliminate the gap in this year's contract talks.þþAlso on Friday, Dana announced a deal with Centerbridge Capital Partners, which will invest $500 million in Dana preferred convertible stock following the company's bankruptcy reorganization. Centerbridge also has agreed to help line up investors for an additional $250 million in shares.þþDana, one of world's largest automotive suppliers, filed for bankruptcy protection in March 2006 amid pressure from American automakers to obtain price cuts from suppliers. Dana has said its U.S. operations lost $2 billion over the past five years.þþIn March, the company asked a U.S. bankruptcy court judge for the right to force cuts on the unions, but the judge urged more work toward a negotiated settlement.þþDana sells brakes, axles and other parts to most major automakers, including General Motors Corp. and Ford Motor Co.þþDana has faced increasing pressure from big car makers to sell parts at lower prices in recent years. That coupled with rising energy costs and less demand for sport utility vehicles and pickup trucks put the auto parts supplier in a financial bind. þþ
Source: NY Times
