WASHINGTON - Ford Motor Co. will offer its 75,000 hourly workers packages of incentives to leave the company, as the No. 2 automaker pushes to accelerate its North American turnaround plan.
The buyout packages, ranging from $35,000 to $140,000, are similar to those offered to union workers at General Motors Corp. earlier this year. Workers have been awaiting details of the plan ahead of another big restructuring announcement from Ford, scheduled for Friday.
Reeling from global competition and high gas prices, Ford and GM have initiated massive programs to slash costs. In recent years, the Detroit automakers relied heavily on pickup trucks and large sport-utility vehicles, but sales of those vehicles are down, and profits have plunged. The companies have been forced to make deep cuts as they try to shrink their way back to profitability.
The brunt of the downsizing has been felt by members of the United Auto Workers, which stands to lose tens of thousands of high-paying jobs in Detroit's latest round of cuts.
The UAW has agreed to the latest plan after negotiating with Ford.
“Once again, our members are stepping up to make hard choices under difficult circumstances,” Ronald Gettelfinger, president of the UAW, said Thursday in a statement. “Now, it's Ford Motor Company's responsibility to lead this company in a positive direction.”
As part of Ford's “Way Forward” plan, outlined in January, the company had set a goal of slashing as many as 30,000 employees and closing 14 plants by 2012. Under the accelerated plan, Ford is expected to shut down more plants or close them sooner. Reports are swirling that Ford's plan will include cutting thousands of white-collar jobs, too, but the company won't comment.
Several analysts said Ford is likely to reach its job-reduction targets through the buyout offer without layoffs, as General Motors did earlier this year.
“The GM experience showed us that, faced with an uncertain future, workers are glad to take the money and run,” said Gary Chaison, professor of industrial relations at Clark University and a specialist on the auto industry.
But cutting jobs may be the easy part. “Ford's problem, like GM's, is not primarily a cost problem or a labor-relations problem,” Chaison said. “They have to re-establish themselves as the brand they were years ago, recapture market share, sell cars again. That's a lot harder than cutting costs.”
The company needs to clear a path toward profitability before its contract with the UAW comes up for renegotiation next year. The union has already acceded to cuts in retiree health benefits to help the automakers survive.
The automakers will seek more concessions in the 2007 contract, and the union is bitterly divided over the prospect, though analysts say workers are more likely to cooperate if they believe the companies are moving in the right direction.
David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said Ford was being forced to move with “a very high level of urgency” given conditions in the industry. He said Ford faces tougher competition from GM, which he said was emerging from its restructuring as a stronger competitor. In the second quarter, GM narrowed losses in its North American division and boosted revenue. Ford shocked Wall Street in the three months ended in June with a bigger loss than analysts had expected.
Cole described GM as Ford's “most dangerous competitor.” The two Detroit companies compete in many vehicle categories and focus on the same groups of customers, he said.
“The big issue with Ford is not Toyota or Honda - it's GM,” Cole said. “GM is turning around more rapidly than anybody anticipated.”
The buyout deal comes at a critical time for Ford, which lost $1.4 billion in the first half of the year. Earlier this month, chairman William C. Ford Jr. stepped aside as chief executive, handing day-to-day management to industry outsider Alan Mulally, who had been with Boeing Co.
The UAW provided a summary saying Ford will offer eight early retirement and buyout packages to workers, depending on seniority and age. The offers are voluntary. Workers will have from Oct. 16 to Nov. 27 to consider them. Those who take the most generous packages will lose health-care and pension benefits.
Ford is also offering tuition assistance for workers who opt for two- or four-year college programs. Under the plan, workers who keep a C average could receive tuition payments of up to $15,000 per year and 50 percent to 70 percent of their wages. The workers would keep health insurance and other benefits while in school.
With the company-wide buyouts, Ford is borrowing from GM's playbook. About 35,000 workers at GM accepted buyout offers or early retirement packages. GM leaders said the acceptance rate was much higher than the company expected.
Cutting workers through buyouts and early retirement packages has proven tricky for auto companies. Ford will have to redirect workers into the empty slots left by the buyouts. Some workers at plants targeted for closure could move into those jobs. But Ford might also have to hire and train new workers, as GM has said it may have to do.
Separately, Ford said Thursday that Anne Stevens, who had been overseeing Ford's restructuring, will retire. A Ford spokesman said Stevens is leaving to pursue other opportunities. Stevens held the role of chief operating officer for the Americas.
Ford officials declined to comment in detail on the latest plan. In a statement, Marty Mulloy, Ford's vice president for labor affairs, said the company was pleased to reach agreement with the UAW, emphasizing that Ford and the union are working together.
A Ford spokeswoman would not specify how much the new plan will cost Ford, adding that the company will have more to say Friday.
The Ford buyouts represent another blow to the UAW. Even before the buyouts at GM and Ford, the union has had to contend with shrinking membership.
The union, which had 1.5 million members at its peak in the 1970s, had dropped to 600,000 active members by last year. The latest exodus of GM and Ford workers could sap the union of millions of dollars per year in dues payments.
-0-
Staff writer Dale Russakoff contributed to this report.
AP-NY-09-14-06 2116EDT
Reeling from global competition and high gas prices, Ford and GM have initiated massive programs to slash costs. In recent years, the Detroit automakers relied heavily on pickup trucks and large sport-utility vehicles, but sales of those vehicles are down, and profits have plunged. The companies have been forced to make deep cuts as they try to shrink their way back to profitability.
The brunt of the downsizing has been felt by members of the United Auto Workers, which stands to lose tens of thousands of high-paying jobs in Detroit's latest round of cuts.
The UAW has agreed to the latest plan after negotiating with Ford.
“Once again, our members are stepping up to make hard choices under difficult circumstances,” Ronald Gettelfinger, president of the UAW, said Thursday in a statement. “Now, it's Ford Motor Company's responsibility to lead this company in a positive direction.”
As part of Ford's “Way Forward” plan, outlined in January, the company had set a goal of slashing as many as 30,000 employees and closing 14 plants by 2012. Under the accelerated plan, Ford is expected to shut down more plants or close them sooner. Reports are swirling that Ford's plan will include cutting thousands of white-collar jobs, too, but the company won't comment.
Several analysts said Ford is likely to reach its job-reduction targets through the buyout offer without layoffs, as General Motors did earlier this year.
“The GM experience showed us that, faced with an uncertain future, workers are glad to take the money and run,” said Gary Chaison, professor of industrial relations at Clark University and a specialist on the auto industry.
But cutting jobs may be the easy part. “Ford's problem, like GM's, is not primarily a cost problem or a labor-relations problem,” Chaison said. “They have to re-establish themselves as the brand they were years ago, recapture market share, sell cars again. That's a lot harder than cutting costs.”
The company needs to clear a path toward profitability before its contract with the UAW comes up for renegotiation next year. The union has already acceded to cuts in retiree health benefits to help the automakers survive.
The automakers will seek more concessions in the 2007 contract, and the union is bitterly divided over the prospect, though analysts say workers are more likely to cooperate if they believe the companies are moving in the right direction.
David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said Ford was being forced to move with “a very high level of urgency” given conditions in the industry. He said Ford faces tougher competition from GM, which he said was emerging from its restructuring as a stronger competitor. In the second quarter, GM narrowed losses in its North American division and boosted revenue. Ford shocked Wall Street in the three months ended in June with a bigger loss than analysts had expected.
Cole described GM as Ford's “most dangerous competitor.” The two Detroit companies compete in many vehicle categories and focus on the same groups of customers, he said.
“The big issue with Ford is not Toyota or Honda - it's GM,” Cole said. “GM is turning around more rapidly than anybody anticipated.”
The buyout deal comes at a critical time for Ford, which lost $1.4 billion in the first half of the year. Earlier this month, chairman William C. Ford Jr. stepped aside as chief executive, handing day-to-day management to industry outsider Alan Mulally, who had been with Boeing Co.
The UAW provided a summary saying Ford will offer eight early retirement and buyout packages to workers, depending on seniority and age. The offers are voluntary. Workers will have from Oct. 16 to Nov. 27 to consider them. Those who take the most generous packages will lose health-care and pension benefits.
Ford is also offering tuition assistance for workers who opt for two- or four-year college programs. Under the plan, workers who keep a C average could receive tuition payments of up to $15,000 per year and 50 percent to 70 percent of their wages. The workers would keep health insurance and other benefits while in school.
With the company-wide buyouts, Ford is borrowing from GM's playbook. About 35,000 workers at GM accepted buyout offers or early retirement packages. GM leaders said the acceptance rate was much higher than the company expected.
Cutting workers through buyouts and early retirement packages has proven tricky for auto companies. Ford will have to redirect workers into the empty slots left by the buyouts. Some workers at plants targeted for closure could move into those jobs. But Ford might also have to hire and train new workers, as GM has said it may have to do.
Separately, Ford said Thursday that Anne Stevens, who had been overseeing Ford's restructuring, will retire. A Ford spokesman said Stevens is leaving to pursue other opportunities. Stevens held the role of chief operating officer for the Americas.
Ford officials declined to comment in detail on the latest plan. In a statement, Marty Mulloy, Ford's vice president for labor affairs, said the company was pleased to reach agreement with the UAW, emphasizing that Ford and the union are working together.
A Ford spokeswoman would not specify how much the new plan will cost Ford, adding that the company will have more to say Friday.
The Ford buyouts represent another blow to the UAW. Even before the buyouts at GM and Ford, the union has had to contend with shrinking membership.
The union, which had 1.5 million members at its peak in the 1970s, had dropped to 600,000 active members by last year. The latest exodus of GM and Ford workers could sap the union of millions of dollars per year in dues payments.
-0-
Staff writer Dale Russakoff contributed to this report.
AP-NY-09-14-06 2116EDT
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