DETROIT -- Tower Automotive Inc. has moved to reject its union contracts and modify retiree benefit packages in federal bankruptcy court in New York.
On Wednesday, Jan. 4, the supplier filed a motion seeking to cut active union workers' wages and benefits and to eliminate future retirees' benefits, said Joel Weiden, Tower spokesman. He said the motion could be ruled on by the end of February. A scheduling hearing was set for Friday.
Current retirees would lose their health care coverage under Tower's proposal. The supplier would establish a trust to help cover some of its retirees' health care and would contribute $5 million to it initially, Weiden said. In court documents, Tower said it has about 1,800 retirees that would be affected.
Tower, of Novi, Mich., in corporate documents called its retiree benefit obligations "staggering," pegging them at $178 million, of which $133 million is estimated for current retirees and $45 million is projected for future retirees.
Tower said in court documents it wants to cut unionized wages to the prevailing market rates of the areas where its plants are, and its proposals vary by site.
Weiden said the first round of negotiations began in October but stalled in the last two weeks around the holidays.
"Honestly, we would have liked to make more progress than we did. We seriously hope that a consensual agreement can be reached," he said.
A message Automotive News left with a UAW spokesman was not returned immediately Friday morning.
Tower, a supplier of structural components, assemblies and suspension modules, filed for Chapter 11 protection last February, listing assets of $788 million and liabilities of $1.31 billion.
Tower ranks No. 45 on the Automotive News list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $3.2 billion in 2004.
You may e-mail Greg Migliore at [email protected]