DETROIT - WORKERS at Ford Motor Co have ratified cost-cutting changes to their contract and health care benefits, the United Auto Workers union said on Monday.

The announcement comes as the US government's 'working group' on the automobile industry was meeting with the UAW and top managers of General Motors and Chrysler as they try to chart a way to restructure the two companies to avoid bankruptcy.

A similar deal will likely be made with GM and Chrysler because the United Auto Workers union maintains similar contracts at each of the Detroit Three.

The tentative agreement will allow Ford to meet up to 50 per cent of its outstanding obligations to a trust fund for retiree health care benefits with common stock instead of cash, Ford said.

Ford owed US$13.2 billion (S$20 billion) to the fund as of Aug 29.

'Once again UAW members have stepped up to make the difficult decisions necessary to deal with the reality of the current economy, the deteriorating auto industry as a whole and specifically the negative impact the economic climate is having on Ford Motor Co,' said UAW President Ron Gettelfinger.

The UAW said 59 per cent of production workers and 58 per cent of skilled-trades workers voted for the agreement.

'We are focused on doing everything possible to rebuild a great industry and keep manufacturing jobs in the United States,' Mr Gettelfinger said in a statement.

'As we have stated many times, in order to succeed, shared sacrifice will be required from all stakeholders, including executives, directors, shareholders, bondholders, dealers and suppliers.' The Detroit Three reached a deal with the UAW in 2005 to transfer responsibility for retiree health care befits to the union by setting up a Voluntary Employee Beneficiary Association (VEBA).

Ford said at the time that it would be able to reduce its overall health care liability by five billion dollars as a result of the deal, which it estimated would also produce an average annual net corporate savings of about US$650 million. -- AFP