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Bill Ford says health care co-op possible in union negotiations

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(Bloomberg) — Ford Motor Co. Executive Chairman Bill Ford said the company is considering a health care co-op, an issue the United Auto Workers union has raised in negotiations on a new contract.

“We’re discussing it and we’ll see where it goes,” Ford said of a co-op, which could pool care for about 295,000 union and nonunion workers. “There are always issues and it’s early days, but I feel great.”

Ford, who spoke Wednesday at an Inkster, Mich., event honoring company volunteers, said he’s optimistic about reaching a settlement on a replacement for the four-year accord that ends Sept. 14.

The UAW has turned its attention to a health care pool based on the success of a $61 billion fund started in 2010 that provides medical coverage for more than 750,000 retired auto workers. The UAW Retiree Medical Benefits Trust has cut drug costs, added preventive care and restored benefits such as dental and vision while also increasing assets.

See also: UAW wants health care pool of three U.S. automakers to cut costs

UAW President Dennis Williams raised the idea of creating a health care cooperative for active union and nonunion employees at Ford, General Motors Co. and Fiat Chrysler Automobiles NV’s U.S.-based unit in a June roundtable with reporters.

In addition to the health care issue, Ford Motor has complained that its labor costs have ballooned above those of its domestic competitors because it isn’t subject to the same terms in a wage system that has enabled the Detroit Three to hire 39,150 workers in the past four years.

Higher costs

Ford’s average U.S. labor cost, including benefits, is about $57 an hour, $10 more than at the U.S. operations of Fiat Chrysler or Toyota Motor Corp. and $2 more than GM, according to the Center for Automotive Research in Ann Arbor, Mich.

Ford has Detroit’s most expensive labor contract because it didn’t seek bankruptcy protection in 2009 like the predecessors of GM and Fiat Chrysler. Those companies have since been allowed to hire as many so-called second-tier employees as they want at starting pay of $15.78 an hour, while only a limited slice of the workforce at Dearborn, Mich.-based Ford can be paid less than the $28.50 rate for veteran workers.

The union will soon pick one automaker to negotiate with exclusively to set the pattern of major economic terms for all three companies. Ford is aiming to be that company to get its costs back in line with those of GM and Fiat Chrysler.

—With assistance from Jeff Green in Southfield, Mich.