Mack, UAW Reach Tentative Agreement on New Contract

New Mack agreement provides healthcare trust fund
The Associated Press.... 9:54 AM EDT, May 18, 2009
STOCKHOLM (AP) - Mack Trucks Inc. and the United Auto Workers have reached a tentative agreement on terms of a new 40-month labor contract that provides a $525 million trust fund to cover health care for current and future retirees, according to a company news release.

The agreement is part of a new collective bargaining agreement and requires approval by United Auto Workers members as well as federal court approval.

The agreement, if approved, would cover about 1,700 employees in three states, including those employed locally in Macungie and Allentown.

Mack employees have been working under an extension of the existing labor contract, which expired in October 2007. The tentative agreement includes a successor collective bargaining agreement, and the Voluntary Employee Beneficiary Association (VEBA) fund to provide for retiree health benefits for about 9,000 current Mack retirees, spouses, surviving spouses and their dependents as well as future retirees.



Swedish parent company AB Volvo said it will fund the trust with $525 million in cash, to be paid in equal installments over a five-year period. The first payment would be made no earlier than July 1, 2010. It is expected federal court approval will take up to 12 months.

A company-wide reorganization at Mack announced last August, which includes shifting highway truck production from Virginia to Macungie, has been delayed because of the lack of a labor agreement. Mack has said the shift will add 200 jobs at the Macungie plant.

Volvo said it would not release additional information about the proposed agreement until after it is ratified by the bargaining units. The votes should be scheduled within the next few weeks, the news release said.

The agreements cover UAW Locals 677 in Allentown, Macungie, and Middletown; Locals 171 and 1247 in Hagerstown, Md.; and Local 2301 in Baltimore, Md.; and Local 2420 in Jacksonville, Fla.