TEXT OF STORY
Scott Jagow: The contract between the big three car makers and the United Auto Workers expires tonight at midnight. The UAW has chosen GM as the lead company in the talks. That means the union might strike GM if no deal gets done.
The UAW usually negotiates with the lead company and reaches a similar agreement with the other two. Alisa Roth tells us what’s at stake here.
Alisa Roth: Right now, the Big Three pay about $10 billion a year in health care benefits. That price could rise as workers and retirees get older and health care gets more expensive.
Erich Merkle is a consultant who works with the auto industry:
Erich Merkle: Quite honestly, there’s gonna have to be some sort of creative solution involved.
The most likely fix is a Voluntary Employee Benefit Association, or VEBA. It’s a kind of trust fund to pay for those health benefits. It would let the car makers take a big liability off their books, and protect workers’ health benefits if the employer were to go out of business.
Merkle says negotiating such a deal is complicated:
Merkle: It all depends on the terms and conditions by which the trust fund is set up, such as the amount of money that’s placed in the trust fund.
And whether the UAW can ask the car makers for more money later.
There are other issues on the table as well. Possible plant closures, for one. The talks will probably go past the deadline, but nobody expects a strike.
In New York, I’m Alisa Roth for Marketplace.
Marketplace is on a mission.
We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.
Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?