The current round of early retirement and buyout offers to most of Ford Motor Co.’s U.S. hourly workers will give them options to move on with their lives, but it also will help the automaker’s bottom line, according to Ford executives.
The company won’t say how many workers it wants to leave, but it wants to empty out the much-criticized “jobs bank,” in which laid-off employees get most of their pay for not working.
Ford also wants to close the books this year on 11 former Visteon Corp. plants that it took back from its former parts-making arm, 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.
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 openings with new workers hired at lower wages. The new workers will make about half the $28 per hour now paid to production workers.
But Joe Hinrichs, group vice president of global manufacturing, and Marty Mulloy, vice president for labor affairs, said this week in an interview that getting to the lower-tier wage scale is not the prime reason for offering the packages.
Yes, they want to improve the company’s profitability, but they also believe the packages will keep up morale as workers adjust to a new, smaller Ford that is sized to match customer demand for its cars and trucks. The buyouts come in addition to a 2006 round in which 33,600 workers left the company.
“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.
The struggling automaker is offering 10 different packages to 54,000 workers, or 93 percent of those represented by the United Auto Workers union. Packages include a $50,000 lump-sum payment for non-skilled workers near retirement and a $70,000 lump-sum payment for skilled workers. That’s a sweeter deal than 2006, when non-skilled workers were offered a $35,000 lump sum.
The packages also include options for education, and two were just added for workers who want to start businesses. Under the new programs, 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.
Mulloy said the 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,” Mulloy said.
The jobs bank, called “Gen” at Ford for “guaranteed employment numbers,” was viewed derisively by auto industry critics as a sign of company waste. Ford, as well as Chrysler LLC and General Motors Corp., spent millions paying workers who didn’t contribute to making cars and trucks.
But at Ford, Hinrichs said it should come to an end with the latest buyout package.
“The people who are in that pre-existing program are gone after they make a decision in this window,” he said.
This round of buyouts will be the last that go companywide, Hinrichs said.
During contract talks last year that yielded landmark agreements with all three automakers, some union members criticized the UAW for giving up too much, especially by reducing its membership numbers.
But UAW Vice President Bob King, who led the Ford negotiations for the union, said the buyouts were necessary to help Ford and the other companies return to profitability. The union agreed to another round of buyouts and early retirement offers at all three companies.
“We understand that if companies aren’t viable, you’re going to lose a lot more members,” King said.
Ford and the union, he said, are working together to make the company strong again.
The Ford buyouts, unveiled in January, came as the company lost $2.7 billion last year and $12.6 billion in 2006. The company expects to post another loss this year, but return to profitability in 2009.
Chief Executive Alan Mulally predicted Ford’s U.S. market share will be at the low end of a 14 percent to 15 percent range in 2008, down from 14.8 percent in 2007 and 26 percent a decade ago. Ford fell behind Toyota Motor Corp. in U.S. sales last year, ceding its 75-year position as the nation’s No. 2 auto seller behind General Motors Corp.
The first of the new buyouts will come for workers at closed plants in Atlanta, St. Louis, Edison, N.J., and Norfolk, Va. Those offers close the week of Feb. 28 and employees would leave the company by March 1.
The second round will go to all other U.S. Ford locations, opening Monday and closing the week of March 17. Those workers could start leaving the company April 1, with all of them gone by year’s end.
Ford has about 12,000 U.S. hourly workers eligible for retirement, or about 22 percent of its hourly work force.