General Motors’ decision to pre-pay outstanding debt to the Auto Sector Retirees Health Care Trust (asrTrust) in Canada was not unexpected, and confirms the North American auto industry is recovering rapidly, said Jerry Dias, the National President of Unifor.
“This payment puts to rest any fear that GM might somehow walk away from its funding obligations to the health care trust,” said Dias, head of the union representing autoworkers in Canada.
The asrTrust was created as a result of the restructuring of GM Canada during the 2008-09 financial crisis. Under the plan, responsibility for payment of health care benefits to current GM retirees (as well as for current GM employees at that time, after they retire) was transferred to the independent trust.
Unifor is the new union created on Labour Day weekend through the merger of the Canadian Auto Workers (CAW) and the Communication Energy and Paperworkers (CEP) unions. The asrTrust was negotiated between the then-CAW, GM Canada, and the federal and Ontario governments in 2009. Under the deal, GM retained an option to pay off its debt to the trust faster than required, if its financial condition recovered faster than had been expected under the original 2009 timetable.
Trust officials are now reviewing the implications of GM’s pre-payment for the trust’s management strategy. Its ability to cover future retiree health benefits depends on the amount of capital invested in the fund, investment returns, future health care cost inflation, and other factors.
“GM’s payment of the notes removes one of the risks we originally faced when the asrTrust was created,” Dias said, “namely the risk that GM might not complete its schedule of payments into the trust.”
“This is another sign that economic and financial conditions in the North American auto industry are improving rapidly,” Dias noted. “And it reaffirms the wisdom of the 2009 restructuring deal.” Dias recognized the sacrifices of both retired members and active employees at GM Canada, for their contributions to that restructuring.