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Ford to Offer Buyouts to Factory Workers
The move is part of a revised and accelerated rescue plan. Meanwhile, two top executives quit.
By John O'Dell, Times Staff Writer
September 15, 2006
Moving to speed and possibly expand its plan to slash 30,000 jobs from its manufacturing payroll, Ford Motor Co. will offer retirement incentives and buyout packages of as much as $140,000 to all employees at its U.S. factories.
More than 75,000 blue-collar workers are eligible for the programs, disclosed Thursday by the United Auto Workers union and acknowledged by Ford.
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The offer is similar to a retirement and buyout plan offered this year by General Motors Corp. and accepted by 34,000 of its 135,000 union workers.
Separately, two top executives, both manufacturing specialists, quit Ford on Thursday, a week after the automaker hired manufacturing ace Alan Mulally, 61, from Boeing Co. as chief executive.
One of the departing managers, Anne Stevens, chief operating officer of Ford's Americas unit and a coauthor of the company's 8-month-old Way Forward turnaround plan, is one of the highest-ranking women in the auto industry. Also leaving is Dave Szczupak, group vice president of manufacturing for the Americas unit.
"It's change or die at Ford," said David Cole, head of the nonprofit Center for Automotive Research in Ann Arbor, Mich. "What we'll be seeing now is Way Forward on steroids."
Ford, scheduled to unveil details this morning of a revised rescue plan for its shrinking and money-losing North American automotive operation, acknowledged the all-inclusive job-cutting program Thursday but did not provide details.
The union, however, posted a synopsis on its website. The document said Ford wanted workers who accepted the offers to leave the company by Sept. 1 of next year.
Previously, Ford had been taking a slower approach to payroll trimming, offering limited buyouts to workers at selected plants and setting 2012 as the deadline for achieving its goals.
Whereas Cole predicted that 30,000 or more workers would take advantage of Ford's retirement and buyout plans, analyst Craig Hutson of GimmeCredit in New York put the likely number at 20,000 — about one-fourth of its payroll. That's because Ford has fewer U.S. workers than GM, 25% of whose manufacturing employees accepted its offers.
Ford "probably would like almost everyone to take it," Hutson said. The company could then hire temporary workers and pay them lower hourly wages and offer fewer benefits than it was obligated to provide permanent employees under its union contracts.
GM has used temporary workers to replace several thousand employees who accepted its buyouts.
Ford has lost $1.4 billion in the first half this year and is expected to lose far more in the second half from declining sales and charges for its restructuring. A report Thursday in the Detroit News said Ford losses could hit $9 billion.
The automaker recently said it would slash production by 21% in the fourth quarter because of sagging sales of its large sport utility vehicles and pickups and was under pressure from analysts and investors to speed and expand its recovery efforts.
In a statement on the union's website, UAW President Ron Gettelfinger said members were "stepping up to make hard choices under difficult circumstances."
"Now," he said, "it's Ford Motor Co.'s responsibility to lead this company in a positive direction."
According to the UAW document, Ford will offer half a dozen programs, with cash payments to departing workers of $65,000 to $140,000.
The union said the packages also were being offered to its members at Automotive Components Holdings, a group of factories once owned by Visteon Corp., Ford's former parts unit.
"They didn't have any alternative" to broadening the blue-collar buyout and retirement incentive plan, said Sean Egan, auto analyst at Egan-Jones Ratings, a Philadelphia-based corporate bond research firm.
"Ford has to cut expenses, and this could save them billions," he said.
Labor specialists were divided over the value of the program.
It's a "lose-lose" scenario for stockholders, said management consultant Bill Adams of Adams, Nash, Haskell & Sheridan in Cincinnati. "You are going to give away all this money and hope to put yourself in a position to survive, but there is a limit to how long you can."
Labor law specialist Jay Waks, chairman of Kaye Scholer in New York, called the plan a "win-win for Ford and the union."
Ford will probably get volunteers to leave "from among the most senior and highly paid, and it will be left with less senior but probably more productive workers," he said. And the union, Waks said, is able to help Ford without antagonizing members and avoiding a costly strike.
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http://www.latimes.com/business/careers/work/la-fi-ford15sep15,1,4780963.story?coll=la-headlines-business-careers