STOCKHOLM (AP) ¿ Allentown, Pennsylvania-based truck maker Mack Trucks Inc. has signed an agreement with the United Auto Workers union to create an independent trust responsible for the health care of retirees, Swedish parent company AB Volvo said Monday.
Volvo said it will fund the trust with $525 million (¿389 million) in cash, which will be paid in equal installments over a five-year period.
The agreement is part of a new collective bargaining agreement and requires approval by United Auto Workers members, as well as an approval order from a U.S. district court.
If approved, the first payment of $110 million (¿82 million) will be made in the second quarter 2009.The creation of the trust will allow continued health care benefits for current and future Mack Trucks retirees while completely eliminating Mack's health care liabilities, Volvo said. The company didn't want to disclose further details of the collective bargaining agreement until it has been ratified by local bargaining units.