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Member, Beacon International Group, Ltd.
AKRON, OhioGoodyear Tire & Rubber Co. said a recently ratified agreement with the United Steel Workers union to transfer retiree health care obligations to a trust will reduce retiree health care expenses by more than $100 million annually.
Under the agreement, Goodyear will transfer all USW retiree medical obligations to a voluntary employees' beneficiary association, subject to court and regulatory approvals. Goodyear will make an upfront contribution of $1 billion, with $700 million in cash and the balance in additional cash or common stock at Akron, Ohio-based Goodyear's option.
Goodyear will receive an immediate tax deduction for its VEBA contribution. Additionally, investment income earned on VEBA assets will not be taxed.
The agreement ends a nearly three-month strike against the tire maker by 14,000 USW-represented employees.