Ford Is Pushing Buyouts to Workers

 

 

Fabrizio Costantini for The New York Times

Kevin Ford, left, and Troy Marks, right, talk with a job recruiter Friday at the Ford stamping plant in Woodhaven, Mich.

February 26, 2008

Ford Is Pushing Buyouts to Workers

By BILL VLASIC

WOODHAVEN, Mich. — The Ford Motor Company is applying the hard sell these days — piling on incentives, doling out marketing DVDs and brochures, and making offers it hopes are too good to pass up.

But Ford’s big new push is not to sell cars. Instead, it is trying to sign up thousands of workers to take buyouts, partly by convincing them that their brightest future lies outside the company that long offered middle-class wages for blue-collar jobs.

So, Ford is pitching a buffet of buyout packages that are easily among the richest ever offered to factory workers, including one-time cash payments of $140,000 or college tuition plans for an entire family.

The automaker is also putting on job fairs in its plants and mailing each of its 54,000 hourly workers a feature-length DVD, titled "Connecting With Your Future," that extols the promise of new careers beyond the assembly line.

Last Friday, inside a huge sheet-metal stamping plant in this industrial center south of Detroit, Ford workers spent their lunch hour perusing opportunities to go back to school, hire on at growing companies and open fast-food franchises.

"I am taking it seriously, but it’s really hard to think about leaving," said Jerry Thomas, a 37-year-old millwright with 12 years at Ford. "The only thing that would make me do it is the uncertainty. We just don’t know what’s going to happen with Ford."

The push to move workers out reflects the tough times in Detroit. Ford has lost $15 billion in the last two years, and General Motors and Chrysler are also revamping after heavy losses.

While Detroit’s Big Three have already cut about 80,000 jobs through buyouts and early retirements since 2006, a new blitz is under way to shrink employment even further to make way for lower-paid workers in the future.

The aggressive approach to buyouts is particularly striking at Ford.

In the early 1900s, the company founder, Henry Ford, transformed the American workplace by pioneering $5-a-day wages on the assembly line. And the company’s paternalistic culture still lingers in the way workers often refer to the company as "Ford’s," in reference to the family that provided them a comfortable income.

Ford executives say the buyout packages, which are the most lucrative and diverse ever offered in the industry, reflect a belief that Ford should look after its workers and ease their transition into different careers.

"We need to restructure, and it’s important to our business to do so," said Joseph R. Hinrichs, Ford’s head of global manufacturing. "But we want to do it in the best way for our employees."

But there is no mistaking Ford’s message that this is the last companywide offer, and there could be layoffs if further downsizing becomes necessary.

Ford is not saying how many workers it expects to take the buyouts by a March 18 deadline. But Wall Street analysts say the company has set a goal to get 8,000 employees to sign up.

General Motors is also extending buyout offers to all of its 74,000 hourly employees, while Chrysler is offering buyouts to workers on a regional and individual plant basis.

The belt-tightening comes after years of declining market share and increased competition from foreign automakers, led by Toyota.

"These companies are trying to do in the last 24 months what they should have done over the last 24 years," said John A. Casesa of the automotive consulting firm Casesa Shapiro Group. "That’s why it’s such a shock to the system."

Ford has eliminated more than 32,000 jobs over the last two years through buyouts and early retirements. But it needs to cut more to improve productivity, make room for transfers from its former Visteon parts plants, and pave the way for new hires at wages of $14 an hour — roughly half of current pay scales.

"We always prefer for people to voluntarily leave and that’s why we put the energy and effort into this package of buyouts," said Martin J. Mulloy, Ford’s vice president for labor affairs.

The buyout deals were developed with the United Automobile Workers union. In fact, one senior union official endorsed the downsizing effort in a cover article titled "Fresh Opportunities" in the company’s internal Ford World magazine.

"Because of the loss of market share and because the economy is so bad, there aren’t enough jobs for everybody," said the official, Bob King, the U.A.W.’s Ford division vice president.

The company is offering a broad range of buyout and early retirement packages.

Employees with as little as one year of seniority can receive $100,000 cash, although they give up all health benefits after a six-month period. For employees at least 55 years old and with at least 10 years on the job, the payout jumps to $140,000.

Ford, which has a younger work force than G.M., also included many educational options. One buyout offer provides a worker four years of tuition reimbursement up to $15,000 annually, plus health care coverage over that period and a stipend equal to 50 percent of base wages.

At the Woodhaven stamping plant, the 1,142 hourly workers are wrestling with the many choices facing them.

"They want to give people incentive to walk away," said Jim Irey, who has worked in the plant for 40 years. "It’s the reality of the business, whether you like it or not."

Another worker, Andy Linko, contrasted the buyout deals to how he fared when his previous job as a steel worker disappeared.

"We never had this type of opportunity when I was in the steel industry," Mr. Linko said. "We knew for years that the industry was in trouble, and one day the doors just shut."

The job fair at Woodhaven offered a mix of career prospects, from truck driving to electrician work at the local utility to franchise opportunities at the Little Caesars pizza chain.

One recruiter, Heidi Daniels of DTE Energy, said the plant was a "great opportunity" to find skilled labor. "I’ve heard of offering out-placement assistance, but this is unique," Ms. Daniels said. "It’s almost unheard-of."

Ford has also gone to great lengths to promote the promise of life after the auto industry.

In its DVD, Ford employs actors to urge workers to take "the opportunity to step out and try something new." Various segments of the DVD highlight former Ford workers who have started their own businesses after taking buyouts.

The company does not track the fortunes of all its former employees, but said it was proud of the "success stories" of people who have taken buyouts.

One such worker, Dale Beck, took a $100,000 buyout in 2006 to open a Little Caesars outlet in St. Louis.

"I went from making cars to making pizzas, and it’s turned out pretty well for me," Mr. Beck said. "I also know some people who took the money and spent it, and now they’re struggling."

Workers in the Woodhaven plant seem to split among younger workers who see the buyouts as a window to a new life, and older employees who cannot imagine giving up their Ford paychecks.

"I’m taking the $100,000," said Stacy Haynes, a 34-year-old mother of four children. "I’ve been here 12 years, and I can’t believe I lasted this long."

Bill Fender, a 58-year-old tool and die maker with 37 years on the job, sees it differently.

"I’d like to retire, but it’s just not enough money for me now," Mr. Fender said. "I’m making almost $80,000 a year, and I can’t see leaving that behind."

One thing Ford workers are proud of is that their buyout options are more extensive and, in some instances, better paying than those at G.M.

Those bragging rights seem a poignant commentary on the depth of Detroit’s difficulties, said the historian Douglas Brinkley, author of a book on Ford titled "Wheels for the World."

"There was a time in the 20th century when you flashed a Ford badge in Detroit and it meant you were a man on the rise," Mr. Brinkley said. "Now, the new status symbol of the Rust Belt is they are downsizing people better than other companies are."

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