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On Aug. 14, Michigan-based Visteon Corp. reportedly sought permission from the Delaware bankruptcy court for cutting health and life insurance benefits for about 7,700 retirees and employees. The auto-parts maker currently employs 31,900 workers worldwide and 5,769 workers in the U.S.
Visteon stated that the retiree health and life insurance subsidies constitute a liability of about $310 million and projected cash costs of $31 million in 2009. The company claims these benefits to be one of its larger liabilities and retaining these expenses would make it tough for the company to reorganize.
Termination of these benefits would affect retirees in the company’s Michigan headquarters, the Pennsylvania and Indiana facilites as well as the Puerto Rico plant. Visteon has already closed its Indiana and Puerto Rico plants and plans to shut down the Pennsylvania plant by the end of 2009.
Dwindling sales and production in the automotive industry have forced carmakers and parts suppliers to reorganize in bankruptcy court and cut retiree benefits. Michigan-based parts maker Delphi, which had filed for bankruptcy in October 2005, had also sought and won approval to cut benefits for 15,000 employees. Carmaker General Motors also sought to cut benefits for its 122,000 nonunion retirees and their dependents as part of its bankruptcy.
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