The current round of early retirement and buyout offers to most Ford US hourly workers will give them options to move on with their lives and help the automaker’s bottom line, Ford executives have said in an interview with a US news agency.
Go deeper with GlobalData
But the automaker’s group vice president of global manufacturing, Joe Hinrichs, and vice president for labour affairs, Marty Mulloy, told the Associated Press (AP) that moving to the lower-tier wage scale [agreed recently with the key United Auto Workers (UAW) union] was not the prime reason for offering the packages.
They said that, while they want to improve the company’s profitability, they also believe the packages will keep up morale as workers adjust to a new, smaller Ford re-sized to match current customer demand for its cars and trucks. The buyouts come in addition to a 2006 round in which 33,600 workers left the company, AP noted.
The news agency noted that Ford has about 12,000 US hourly workers eligible for retirement, or about 22% of its hourly work force, but hasn’t said how many workers it wants to leave, though it wants to empty out the much-criticized ‘jobs bank’, in which laid-off employees get most of their pay for not working.
“In doing this in a voluntary and very humane way, it makes it a lot easier for our employees who are staying with us to transition to a different Ford,” said Hinrichs.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe Associated Press said Ford is offering 10 different packages to a total of 54,000 workers, or 93% of those represented by the United Auto Workers union. Packages include a $US50,000 lump-sum payment for non-skilled workers near retirement and a $70,000 lump-sum payment for skilled workers. That’s a better deal than 2006, when non-skilled workers were offered a $35,000 lump sum.
Cross-Detroit rival General Motors last week said it would offer similar deals to all 74,000 of its own UAW-represented employees.
GM’s programme offers a variety of pension and buyout items such as retirement pension incentives of $45,000 for production employees or $62,500 for skilled trades. Eligible employees can select from a variety of ways to receive their incentive.
Ford’s packages, meanwhile, also include options for education, and two were recently added for workers who want to start their own businesses, AP noted. Under the new programmes, those with one to less than 25 years of service can get $50,000 plus five years of full health care or seven years of catastrophic care benefits if they leave.
GM also is offering a ‘pre-retirement programme’ in which employees with 26, 27, 28 or 29 years of service can grow into a full ‘30 and out’ retirement. Until they reach 30 years of credited service, participating employees would receive a fixed monthly payment with full benefits [including healthcare, which is a huge concern for American workers in a country with no taxpayer-funded state-run system].
GM is also offering cash buyouts of up to $140,000 for employees who agree to voluntarily quit and sever all ties with the automaker.
Ford’s Mulloy told the Associated Press its new offers came from employee focus groups and surveys. Many of them are interested in starting their own businesses and they’re worried about health care,” he said.
AP noted that the ‘jobs bank’, called ‘Gen’ at Ford for ‘guaranteed employment numbers’, was viewed derisively by US motor industry critics as a sign of company waste. Ford, as well as Chrysler and General Motors, spent millions paying workers who didn’t contribute to making cars and trucks.
But Ford’s Hinrichs told the news agency that should now come to an end with the latest buyout package.
“The people who are in that pre-existing programme are gone after they make a decision in this window,” he said, adding that this round of buyouts would be the last offered company-wide.
UAW vice president Bob King, who led last year’s Ford wage contract negotiations for the union, told the Associated Press the buyouts were necessary to help Ford and the other companies return to profitability.
The union had agreed to another round of buyouts and early retirement offers at all three Detroit-based car makers.
AP noted that the latest Ford buyouts, unveiled in January, came as the company lost $2.7bn last year and $12.6bn in 2006. The company expects to post another loss this year, but return to profitability in 2009.
The first round will apply to workers at closed plants in Atlanta, St. Louis, Edison (New Jersey), and Norfolk (Virginia) which close in the week of 28 February, with employees leaving by 1 March.
The second round applies to all other US Ford locations beginning today (18 February) and closing in the week of 17 March. Those workers could start leaving the company from 1 April, with all gone by year’s end, the Associated Press said.
According to the news agency, Ford also wants to ‘close the books’ this year on 11 former Visteon plants it took back from its former parts-making unit, which was spun off as a separate company in 2000. About 5,200 workers at the plants are eligible to take jobs at factories that Ford plans to keep, although Ford is offering incentives for them to stay with the new owners.
Ford plans to sell or close the plants – 10 in the U.S. and one in Mexico – by the end of the year, AP added.
If it gets enough takers to clear out just under 700 workers in jobs banks and accommodate workers at the old Visteon plants, then Ford will fill vacancies with new workers hired at lower wages – they will make get half the $28 per hour now paid to production workers, AP said.
