WASHINGTON -- Ford Motor Co. won court approval late Thursday to implement a plan to charge its hourly retirees health care coverage, which clears the way for the Dearborn automaker to begin charging its retirees more on Aug. 1.
In a 77-page-opinion, U.S. District Court Judge Paul Borman approved the deal expected to translate into an annual pretax savings to Ford of $650 million, for cash savings of about $200 million annually. It also will reduce Ford's overall retirement obligations by $5 billion.
Borman called the new fees were "modest."
"The potential loss of all benefits, due to either Ford's financial difficulties or Ford's prevailing on the merits, would be far worse for all class members than the relatively modest charges they will be required to pay," Borman wrote.
Under the health care deal between Ford and the United Auto Workers union, hourly retirees will pay no more than $370 a year for individuals and $752 per family. That figure could not rise more than 3 percent a year. Currently, Ford's hourly retirees do not pay any fees for health care coverage.
The agreement was ratified by the UAW in December, with 51 percent of active Ford members voting for it. Court approval is required because the UAW cannot negotiate on behalf of retirees.
Earlier Ford had hoped to get final court approval in time to execute the cuts by July 1.
Ford spent $3.5 billion last year to provide health care to 590,000 people, including employees, retirees and dependents. The automaker's health care costs have soared 67 percent since 2000 and the company spends $1,100 per vehicle on health care but less than the $1,500 per car General Motors spends on health care.
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