46% of Ford's Unionized Workforce Take Buyouts
Thursday, November 30, 2006
DETROIT, Nov. 29 -- Almost half of Ford Motor's hourly production workers -- 38,000 -- have accepted buyouts or early retirement offers this year as the nation's second-biggest automaker shrinks in the face of multibillion-dollar losses and competition from Asian carmakers.
The figure includes about 30,000 employees who took buyouts during the open sign-up period that concluded Monday, and about 8,000 who took deals offered at individual plants this year.
The automaker also said Wednesday that it expected to post cumulative cash outflows of about $17 billion from 2007 to 2009.
Ford had hoped that 25,000 to 30,000 workers would accept the latest buyout offer.
The 38,000-worker reduction would amount to 46 percent of the 83,000 unionized employees on Ford's payroll at the start of the year.
Those who accepted the buyouts will begin to leave the company in January, the company said.
The buyouts ranged from $35,000 to $140,000 depending on workers' years of service, age and how close the workers are to retirement.
Pete Hastings, vice president of corporate fixed income at Morgan Keegan in Memphis, said the buyout announcement "represents one step among many on a long road" to Ford's turnaround. He said the automaker still must address a loss of market share and structural costs when it renegotiates its contract with the United Auto Workers next fall.
"They'll probably need another round of restructuring to adjust to the lower capacity from falling market share," Hastings said. "They face tremendous challenges. It's going to be tough for them to achieve the turnaround. It's certainly a multiyear process, and I'm sure we'll see plenty of changes in the upcoming months."
Ford plans to close 16 plants as part of its restructuring. Nine of the plants have been identified.
The company has said it doesn't expect to be profitable again until 2009, and that its results would get even worse in the fourth quarter as market share continues to drop and Ford pays for more plant closings and job cuts.