More than 30,000 hourly workers have agreed to accept early retirement under a new offer of buyouts and early retirements that expired this week at Ford Motor Company.
The new round of buyouts means that 38,000 Ford employees have now accepted the buyouts this year and will likely force Ford to hire hundreds of temporary workers over the next several months in order to keep the company’s plants operating, said Sean McAlinden of the Center For Automotive Studies in
The buyouts were the latest step in Ford’s restructuring effort that began last January but picked up momentum when Ford announced it intended to shorten the timetable for closing plants and eliminating jobs. Ford originally said it planned to complete the restructuring in 2012 but will now complete the changes earlier.
The likely outcome of the restructuring is that Ford will shrink from a company that once controlled nearly 25 percent of the
In a filing with Securities Exchange Commission, Ford also said that it expected to run through $17 billion in cash in the next two years as it restructures and fights to stabilize its business and market share.
Part of the cost of the ongoing restructuring will be an end to cash dividends from its profitable Ford Motor Credit subsidiary. In the future, the profits from Ford Motor Credit will be used as part of the collateral for an $18 billion package of loans being arranged by a consortium of
Ford offered buyouts to all of its nearly 75,000 hourly workers. Employees who accepted any of the eight different packages offered will begin leaving the company in January 2007 and the process is expected to be completed by September 2007.
The company said the numbers are preliminary as all buyout offers are voluntary and include an opportunity for workers to rescind acceptance up until the time they leave the company.
Laurie Harbour-Felax of the Harbour-Felax Group said the financing package secured by the company earlier this week indicated that Ford’s new chief executive, Alan Mulally, wanted to restructure the company as quickly as possible. At the same, however, Ford has to make sure it has interesting product in the showrooms.
“It all comes down to product,” she said.
Mulally, however, said the buyouts will also create new opportunities for Ford.
"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," he 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,” he said.
Mulally also praised the cooperation the company got from the United Auto Workers in putting in motion the plan for early retirements and buyouts that will allow the restructuring to proceed.
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