Even though it lost $2.7 billion last year, Ford Motor Co. will pay performance bonuses to all hourly and salaried workers in the U.S. and Canada, and to its management team around the globe, the automaker’s chief executive announced Wednesday.
In an e-mail message to workers sent Wednesday morning, Chief Executive Alan Mulally said the bonuses will come in paychecks this month because the company is making significant progress toward becoming profitable again.
“We worked together as never before to deliver results in several key areas despite tough business conditions,” Mulally wrote.
Although the Dearborn-based Ford fell short of its market share goals in North and South America and Asia, the company met objectives in all other categories including cost performance, quality, automotive cash flow and financial results in these regions, the message said. It also met market share and all other goals in every other region worldwide.
But Mulally wrote that in order to meet cost objectives this year, Ford will delay payment of merit raises for salaried workers in the U.S. and Canada from April 1 to July 1. And he warned of tough times ahead this year.
“While 2007 was a year of progress, the economic and business environment will be tougher than ever in 2008,” he wrote. “There is no doubt we have a challenging year ahead.”
In addition to last year’s red ink, Ford posted a $12.6 billion loss in 2006, and it has mortgaged its assets to borrow money to fund its turnaround plan.
But Mulally said in the message that Ford is poised to become profitable again in 2009.
Hourly workers will get lump-sum bonuses of $1,000 this year, while bonuses for salaried workers will vary by pay grade and leadership level, the message said.
About 98,600 workers across the globe will get the performance bonuses, company spokeswoman Marcey Evans said in an e-mail message.
It’s not that unusual for companies in the midst of restructuring to pay bonuses, but they walk a fine line between rewarding workers and getting them to understand the company’s financial condition, said Chuck Moore, senior managing director at Conway, MacKenzie and Dunleavy, a restructuring advisory firm in Birmingham.
“If the employees become discouraged or frustrated or believe that the targets are unrealistic, you really face the risk of higher than normal attrition, as well as the employees just losing their motivation,” he said.
Ford would not reveal the total cost of the bonuses. Last year Ford gave similar bonuses, ranging from $300 to $800 for employees below the title of manager.