updated 12/22/2005 6:20:39 PM ET 2005-12-22T23:20:39

Ford Motor Co. hourly workers Thursday narrowly approved an agreement between the automaker and the United Auto Workers that requires active employees and retirees to pay more for their health care, Ford and the union said.

Workers approved the deal by a 51 percent majority, the UAW said. Ford, which has been struggling with skyrocketing health care costs, said the deal will save it $850 million annually and will shave about $5 billion off its long-term retiree health care liability.

Last month, hourly workers at General Motors Corp. approved a similar agreement by a 61 percent majority. GM came a step closer to finalizing that agreement Thursday when a federal judge gave preliminary approval to the deal. U.S. District Judge Robert Cleland granted the approval and said a 19-page formal notice should be sent to retirees and surviving spouses.

At least one GM retiree is challenging the agreement in court, saying the UAW doesn’t have the authority to represent retirees. Cleland scheduled a March 6 hearing to consider arguments for and against the agreement.

Ford and the UAW said they also will need to seek approval for the agreement in federal court.

The UAW said it was necessary to provide some relief to GM and Ford, which have suffered billion-dollar losses in North America this year due to falling U.S. market share, growing health care costs and overcapacity at their plants. The UAW also has begun negotiating a similar agreement with DaimlerChrysler AG. The three automakers expect to spend about $11 billion on health care this year.

Under the agreements, retired autoworkers would start paying monthly contributions, annual deductibles and co-payments for some medical services up to a maximum of $370 a year for individuals and $752 for families. They don’t pay such fees now.

Hourly workers won’t be required to pay deductibles or monthly contributions, but they will have to contribute some of their future wage increases to a trust for future health care expenses. Ford said it will contribute $108 million to that fund by 2011.

Both the Ford and GM agreements exempt retirees whose pension incomes are $8,000 a year or less. Ford said it has around 28,000 low-income retirees.

Unlike the GM agreement, Ford also agreed to invest $900 million over five years into new technology such as hybrids and improvement projects. Ford said that commitment wouldn’t have been possible without the agreement.

Ford’s UAW-represented active workers began voting on the plan last week. Ford wouldn’t provide a breakdown of the number of hourly workers, retirees and dependents it covers but said it covers 550,000 salaried and hourly workers, retirees and their families.

Jim Stoufer, president of UAW Local 249 in Pleasant Valley, Mo., said the Ford workers he represents rejected the health care deal by a 60 percent margin earlier this week. He said members wanted more time to consider the deal and wanted proof that Ford is making other sacrifices to cut costs.

“Most of the membership feels they would rather take the hit than having retirees take the hit because they’re on a fixed income,” Stoufer said.

Stoufer said workers at his area’s three Ford plants also may not have seen an urgent need for the deal, since their plants are running on overtime making popular vehicles like the Ford Escape and the F-150.

Stoufer said his union represents 5,400 active workers and 2,800 retirees. Stoufer met with retirees this week and found they were more amenable to the deal because they’ve seen automakers ask for concessions before.

“They know when times are tough you have to help the company stay afloat. You can’t choke it,” Stoufer said.

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