An agreement between Mack Trucks and the United Auto Workers (UAW) union will hit second quarter operating income by about US$110m, parent Volvo Group said.
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The 40-month master agreement includes the creation of a trust that would completely eliminate Mack´s retiree healthcare liabilities.
It will see a successor collective bargaining agreement and the creation of a UAW-managed independent trust, known as a Voluntary Employee Beneficiary Association (VEBA) which would permanently assume the sole obligation of providing retiree health benefits to current and future Mack retirees, spouses, surviving spouses, and their dependents.
The successor collective bargaining agreement and the VEBA are conditional on ratification by the UAW membership. Thereafter, the VEBA will be subject to an approval order from the US District Court for the Eastern District of Pennsylvania, which could take up to 12 months.
Volvo has agreed to fund the VEBA with $525m in cash, which would be paid in equal instalments over a five-year period. The first payment would be made no earlier than 1 July 2010.
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