Like many U.S. manufacturers whose foreign competitors pay less for labor, Goodyear has been slashing costs to remain competitive. So, when 2006 negotiations with the United Steelworkers (USW) rolled around, the $19.6 billion tire company investigated ways to find a cure for its retiree healthcare costs.
They found their answer in a Voluntary Employee's Beneficiary Association (VEBA). This VEBA differed from other companies' VEBAs in that it shifted the responsibility for retiree healthcare to an independent trust. They have been used in the past to augment employee healthcare programs, but Goodyear took it one step further--by creating a plan, since copied by many companies, that would eliminate all its USW retiree healthcare benefit (OPEB) obligations.