Wednesday, March 31, 2010

Ford’s Mulally Not Taking Cost Over Health-Care Law (Bloomberg)

(Adds analyst’s comment in the fourth paragraph.)
By Keith Naughton and Katie Merx

March 31 (Bloomberg) -- Ford Motor Co. Chief Executive Officer Alan Mulally said the automaker won’t record a cost related to the new U.S. health-care law. Ford isn’t affected by the way the legislation reduces the corporate benefit for contributing to retirees’ Medicare and prescription-drug costs, Mulally said today at the New York auto show. The automaker is avoiding charges disclosed by companies including Boeing Co. and AT&T Inc. because liability for United Auto Workers retirees’ health expenses was shifted to a so- called Voluntary Employee Beneficiary Association, or Veba, in 2007. General Motors Co. and Chrysler Group LLC have the same contract provisions. “Ford, GM and Chrysler are no longer responsible for current or future retirees’ health-care or prescription-drug costs because of the VEBA,” said Kristin Dziczek, director of the labor and industry group at the Center for Automotive Research in Ann Arbor, Michigan.

Health-care costs related to the law may shave as much as $14 billion from U.S. corporate profits, according to an estimate by benefits consulting firm Towers Watson. Ford fell 59 cents, or 4.4 percent, to $12.69 at 11:28 a.m. in New York Stock Exchange composite trading. The Dearborn, Michigan-based automaker has gained 27 percent this year.

--With assistance from Bill Koenig in Southfield, Michigan, and Will Daley in New York. Editors: Jamie Butters, Ed Dufner