Daimler will be coughing up $480 million in payment to settle a dispute with the United Auto Workers union over medical benefits for retired employees at its North American trucks operations, according to documents filed in a federal court in Tennessee.
The German carmaker has agreed to make contributions to a trust to finance a post-retirement health care plan that will support active and recently retired UAW-represented employees, court documents show.
The documents also show that the agreement was inked following a claim made by a group of retirees that the truck unit – divulged to be as Daimler Trucks North America LLC -- illegally cut their benefits.
A spokesman for the carmaker referred to its quarterly earnings report that said Daimler Trucks North America LLC and the UAW had signed an agreement over a health care plan as part of a collective bargaining agreement in May. The report said that the cash outflow as a result of the agreement was expected in the fourth quarter of 2014.
The United Automobile Workers (UAW) – formally known as the International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America –is an American labor union that represents workers in the United States, including Puerto Rico, and Canada. It was founded as part of the Congress of Industrial Organizations (CIO) in May 1935.
The UAW experienced rapid growth from 1936 to the 1950s. It was recognized by General Motors and Chrysler in 1937. In 1941, UAW forced Ford to ink a collective bargaining agreement. Nonetheless, the UAW has seen its membership dwindle since the 1970s. Its membership peaked at 1.5 million members in 1979. Nearly three decades later, the UAW only had 540,000 active members in 2006. Membership further dropped to 390,000 active members in 2010, with over than 600,000 retired members covered by pension and medical care plans.
While the UAW has been credited for supporting the auto industry in its revival in the 21st century, it was heavily blamed for partly causing the automotive industry crisis of in 2008 and 2009, as the union had always sought generous benefit packages.
Based in Portland, Oregon, Daimler Trucks North America, LLC is considered as a leading heavy-duty truck manufacturer in North America. It builds and markets commercial vehicles under the Freightliner, Western Star and Thomas Built Buses nameplates. It is a subsidiary of Stuttgart, Germany-based Daimler AG, which divisions include Mercedes-Benz Cars, Mercedes-Benz Vanz, Daimler Trucks, Daimler Buses and Daimler Financial Services.