In an informational letter sent to retirees, the company stated the “administrative change enables Medicare-eligible participants to use Medicare prescription drug benefits first and the Shy plan as a supplement.”
The change would add an additional monthly premium of $35 per person, so for a retiree and a spouse, that’s a more than $800 per year cost increase, said UAW Local 402 President Jason Barlow.
On April 26, the International UAW filed a motion in U.S. District Court asking that the company be enjoined from making the announced changes because the organization believes an existing agreement prohibits the company from making such a change.
In a letter dated April 28 sent to all eligible participants, the International UAW stated the company’s “attempt to unilaterally change to the Shy plan’s prescription drug benefit is a blatant violation of the health care Settlement Agreement agreed to by Navistar the UAW and retirees in a litigation settlement in 1993.”
The Shy agreement
The current retirees health care coverage is governed by the parameters of an agreement known as the Shy Agreement, which was the result of a lawsuit brought against the company by a group of UAW members that included lead plaintiff Arthur Shy, a UAW Local 402 member.
“Back in the late 1980s, the company decided to end retiree insurance and the UAW filed a lawsuit because under the language of the master contract, if you retired from Navistar, you and your dependents would be provided with health insurance for life,” Barlow said.
The company refused to offer the health care coverage, so the matter went before the court.
A 1993 ruling stated Navistar did have to provide insurance since it was a promised benefit.
The plan covers anyone, company-wide, who was hired at Navistar prior to October 1995, regardless of status. All union members, exempt employees and managers are included, Barlow said.
Navistar is now interpreting the language in the Shy plan that addresses coordination of benefits with Medicare to mean they have the right to require retirees to participate in Medicare Part D.
Barlow said the union believes that language addresses only coordination of medical benefits, but does not apply to prescription drug benefits.
A trust was established to fund the Shy plan, funded by the sale of 26 million shares of Navistar stock, Barlow said, which is currently worth over $550 million.
Those funds help pay for vision, dental and hearing benefits and offset the rise in medical premiums, he added.
Company-wide, there are currently 38,644 retirees, spouses and dependents utilizing the company’s health care plan. About 22,000 are over the age of 65, with retirees at an average age of 76.
There are 3,100 employees eligible to grow into the plan, Barlow said, but after that, no one else will be added.
Any Navistar retiree hired after October 1995 will not be guaranteed health benefits, but may be offered basic health care at current rates.
“Right now, those on plan pay $27 per month premium plus Medicare deductibles, but the last time I heard, current pricing is about $340 per month,” Barlow said.
A decision or some action is expected by late June or early July.
“We just don’t want them to be able to open up the Shy plan,” Barlow said. “They’ve tried numerous times in the past. They’ve asked if the UAW would entertain changing things and we don’t want to touch that because we’re lucky to have that.”
Navistar spokesperson Roy Wiley could not offer comment, stating company policy that precludes the discussion of pending litigation.
Issues facing active employees
Active UAW Local 402 members, while not focused on health insurance issues, have other things on their minds.
There are about 488 UAW members working in the main plant and 67 at the Truck Services Center. There are 72 members of UAW Local 658, which represents clerical and technical workers.
Last week, Navistar Vice President of Manufacturing Dave Beebe came to speak to leadership of UAW Local 402 and Local 658, updating union membership on the company’s continuous improvement strategy.
“He offered a look at the current state of the business including the truck market itself. He said this is the worst market they’ve seen in more than 50 years, but said the bright spot is that 70 percent of all freight is still transported by commercial trucks, so there is still a need for it out there,” Barlow said.
In two other meetings, Beebe met with non-union employees and community leaders to share the information.
The company is working to implement its vision for all Navistar truck production facilities which revolves around flexibility — being able to produce all trucks at all facilities, said Kyle Rose, company spokesperson.
New product lines will be built off similar platforms which requires less tooling and investment from that perspective, Rose said.
For the new plan to be successful, Navistar is asking all facilities to give the company the ability to move work in and out as needed, but Barlow voiced a concern that such a move could take too much work from Springfield.
Currently, workers at the Springfield plant build Class 6 and 7 trucks, the 4,000 series, something that is protected by the existing contract, which expires in October.
“We gave them (the company) a letter about a year and a half ago — an agreement between the union and management — letting them know they can bring other products in here and pull them out of the plant as they needed. ...They would like to have complete flexibility with all products, which means they would like to be able to take out 4,000 series truck and build them at other plants, too,” he said.
For Springfield to remain competitive, the company’s view is that the plant needs to be more flexible and cost-competitive. “Some of that will involve contractual changes that will happen at the bargaining table,” Rose said, adding there has been strong progress in those areas over the past few years.
The Springfield facility received recognition in 2009 for being the most-improved truck production plant in terms of lean practices.
Union members and the company are already gearing up for contract negotiations that will begin in August.
Barlow said UAW members are concerned that past concessions have been made in response to the promise of new products being brought to Springfield, something that hasn’t materialized.
“We just want a fair and equitable contract,” Barlow said. “The (UAW) leadership and membership have definitely thought outside the box and we’ve shown that with our votes, too. We’ve given numerous concessions and at the end of the day, there have been times the company hasn’t come to the table to fulfill their side of the bargain. ...For whatever reason, those were business decisions they decided not to go with, but we negotiated contracts around them.”
New work
There is some new work trickling into the Springfield facility, but it isn’t enough to bring UAW members back to work from layoff.
Navistar introduced the TerraStar, a Class 4 and 5 truck, in March. Orders will taken in July, with delivery expected to begin in October.
The TerraStar is the same class as the General Motors product that never materialized. It is Navistar’s own product developed after that deal fell through.
“Companies still needed that product and were buying it elsewhere, so the company felt it was a market they could be successful in,” Barlow said.
Cabs for the new truck will be stamped in Springfield and sent the Garland, Texas where the truck will be assembled.
The former Springfield Ford lot near the Urbana Road facility is filled with Navistar trucks that will be processed at the Truck Services Center.
The TSC, located across the road from the Springfield production facility, customizes and makes minor alterations to Navistar trucks from other production facilities.
“Those trucks are here because they were brought from our Garland and Escobedo, Mexico facilities for delivery to various East Coast locations,” Barlow said.
Contact this reporter at (937) 328-0371 or elroberts@coxohio.com.
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