LOS ANGELES - Nissan North America Inc. will drop comprehensive health care coverage for retired manufacturing employees age 65 and over.
Instead, Nissan will pay retirees an annual stipend starting at $2,500. The stipend will rise 3 percent each year. Retirees who turned 65 before Jan. 1, 2006, will keep comprehensive coverage.
Employees will still be eligible for federal Medicare health coverage. The $2,500 stipend will pay premiums for supplemental Medicare coverage and other medical expenses. The employee's spouse gets another $2,500.
Carlos Ghosn, CEO of Nissan Motor Co., is getting ahead of a problem that haunts General Motors and Ford Motor Co. GM estimates that health care for its U.S. workers and retirees adds $1,525 to the cost of each vehicle.
The changes apply to 12,200 salaried and hourly employees at Nissan's manufacturing division.
Employees at company headquarters in California and at the technical center in Michigan are not affected.
In a letter to employees, Nissan said it has about 500 retirees. The company says that number is expected to grow to 3,500 by 2015.
"Some of our Detroit competitors were very strong just a few years ago," Nissan wrote in the letter. "Today they are struggling. We want to manage our costs."
Steve Keller, a former Nissan employee who retired in 2000 and turns 65 this year, says he feels "screwed."
"When I retired, Nissan said they would continue our current health care plan," he said. "Twenty-five hundred dollars won't go very far."
You may e-mail Kathy Jackson at [email protected]