The Ford Motor Co. has succeeded in trimming its hourly work force by almost half, as 38,000 of its U.S. employees have accepted buyout packages to leave the company or take early retirement.
But whether it’s enough to save the financially troubled automaker is uncertain.
Ford said yesterday the number includes about 30,000 buyouts during the open enrollment period that concluded Monday, plus an additional 8,000 employees who took deals offered at several plants earlier this year.
The buyouts will reduce Ford’s unionized work force, which totaled 83,000 at the start of the year, by almost 46 percent.
Some industry watchers were surprised at the large number of participants, particularly since many of the 14 plants Ford is closing won’t be shut for several years.
“My initial concern was, how are they going to run their plants?” said Laurie Harbour-Felax, a Michigan automotive analyst. “They’re going to have to hire temporary people, I’m guessing.”
Still, the success of the buyout program will buy Ford time and money to focus on developing new products to recapture the competitive edge it once enjoyed, Ms. Harbour-Felax said.
The Dearborn, Mich., automaker’s share of the U.S. market has declined from about 26 percent in the early 1990s to 17.6 percent at the end of October.
“Does Ford need to concentrate on product engineering and saving costs in other areas? Absolutely,” she said. “But sometimes you’ve got to do some of the short-term actions to free up the money to even be able to do some of the long-term actions.”
The company was hoping 25,000 to 30,000 workers would take one of eight packages so it could reduce labor to better match lower demand. The packages range from $35,000 to $140,000, depending on employees’ years of service, age and how close they are to retirement.
Less than half of those employees participating in the program are retirement age, Ford spokeswoman Marcey Evans said. She declined to give specifics on the ages and seniority of the employees.
Those who accepted a buyout package will leave the company between January and Sept. 1, Ford said.
Industry analyst Roland Zullo said it’s understandable so many employees accepted the buyout because many probably assumed layoffs were imminent.
“Many hourly workers in the auto industry realize the threat out there,” said Mr. Zullo, an assistant research scientist at the Institute of Labor and Industrial Relations at the University of Michigan. “Many of them feel it’s safer to take the money and go on to new things.”
Because the buyouts will lead to fewer union jobs, the economies of communities with Ford plants will suffer, he added.
“But for Ford, it probably helps them to stay afloat,” he said.
The buyout program is part of the automaker’s “Way Forward” restructuring plan. Ford lost $7 billion in the first nine months of the year, and the company on Monday announced that it plans to secure about $18 billion in financing to pay for restructuring, address cash flow shortfalls and to provide security against a recession or other unanticipated events.
The company expects to cut its costs by $5 billion through 2008, with further unspecified reductions in 2009.
Ford announced earlier this year plans to close 16 manufacturing facilities during the next six years as part of the restructuring. Two plants in St. Louis and Atlanta already have closed.
Ford’s truck assembly plant in Norfolk is slated to close sometime next year. Company officials wouldn’t disclose how many of the plant’s 2,200 hourly workers accepted a buyout.
Instead of cutting union jobs, another option for Ford would have been to end its practice of outsourcing the manufacturing of parts, transferring the work back in-house. Outsourcing, while using less expensive nonunion labor, poses quality-control problems, Mr. Zullo said.
Ford President and Chief Executive Alan Mulally praised the United Auto Workers union for its cooperation in helping the company streamline its work force.
“Ford and the UAW have addressed several important issues throughout the year, which have allowed the company to reduce costs and achieve efficiencies,” said Mr. Mulally, who took control of the company in September. “Though there is more work to be done, recent history demonstrates that together we can significantly improve Ford’s business.”
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