DETROIT – Almost half of Ford Motor Co.’s hourly production workers – 38,000 so far this year – have accepted buyouts or early retirement offers as the nation’s second-biggest automaker shrinks in the face of multibillion-dollar losses and fierce competition from Asian carmakers.
The figure includes approximately 30,000 buyouts during the open signup period that concluded late Monday, plus about 8,000 who took deals offered at limited plants earlier this year.
Also Wednesday, the Dearborn-based automaker said it expects to post cumulative cash outflows of about $17 billion during the 2007-09 period.
Faced with lower demand for its products, Ford had hoped that 25,000 to 30,000 workers would sign up during the just-expired round of buyout offers so it could reduce manufacturing capacity to better match demand. The number of people who did was at the top end of that range.
The 38,000-worker reduction this year would amount to nearly 46 percent of the 83,000 unionized employees that Ford had at the start of the year.
Ford shares slipped a penny to $8.14 in afternoon trading on the New York Stock Exchange.
Those who accepted the buyout packages will begin to leave the company starting in January, the company said.
The eight packages offered to employees ranged from $35,000 to $140,000 depending on how many years of service they have, how old they are and how close they are to retiring. One four-year package offered up to $15,000 per year for college tuition, plus half of the workers’ salaries and health benefits. Another offer paid 70 percent of employees’ salaries and tuition for two years.
“One of Ford’s priorities, and a large cost component of our ‘Way Forward’ plan for North America, is our ability to adjust manufacturing capacity with demand, while continuing to reduce operating costs and becoming more efficient,” Ford President and Chief Executive Officer Alan Mulally said in a statement. “While I know that in many cases decisions to leave the company were difficult for our employees, the acceptances received through this voluntary effort will help Ford to become more competitive.”
The latest buyout enrollment period began in October. The offers included traditional packages for employees eligible for retirement, as well as nontraditional packages for employees with at least one year of service.
The company said just more than half of the employees accepted the nontraditional packages, which provided options such as lump-sum payments, tuition reimbursements or scholarship funds for family members.
Pete Hastings, vice president of corporate fixed income at Morgan Keegan in Memphis, Tenn., 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 imposed by unions when it renegotiates 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 lost $7 billion in the first nine months of the year, and the company on Monday announced that it plans to get about $18 billion in financing due to negative operating cash flow and to pay for its restructuring. Ford’s share of the market has declined from about 26 percent in the early 1990s to 17.6 percent at the end of October.
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