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Ford completes transfer of retiree healthcare to VEBA, makes extra $500M payment

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Ford completes transfer of retiree healthcare to VEBA, makes extra $500M payment

by John Neff (RSS feed) on Jan 4th 2010 at 4:57PM

Everything's coming up roses for Ford. That's what we keep hearing in the news anyway. Ford can now add one more feather to its cap of accomplishments with today's announcement that it has completed transferring all of its retiree healthcare obligations to the VEBA trust run by the United Auto Workers union. The official press release from Ford after the jump is dense, but the gist is that Ford has made its required payments to the VEBA fund and thrown in an extra $500 million payment that isn't due until later for good measure. That last part not only gets The Blue Oval ahead of the game, but also demonstrates the degree of confidence that Ford has in both its turnaround plan and what its balance sheet will look like in the coming years.

The net effect of this news is that Ford can practically erase retiree healthcare off its books. Sure, the company takes a big hit now with the billions of dollars it just paid into the UAW-run VEBA account, but over the long term Ford won't be forced to roll the rising cost of retiree health care into the price of its vehicles. Both General Motors and Chrysler LLC have the same obligation as Ford to pay into VEBA accounts and transfer control of retiree healthcare to the UAW, but neither has completed that process to date.



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