HALF TAKE FORD BUYOUT

MASS EXIT: More than 35,000 blue-collar workers to leave | SAVINGS: Stunning exodus could fuel comeback | FUTURE: Temporary workers will step in
Bryce G. Hoffman / The Detroit News

More than 35,000 Ford Motor Co. hourly workers -- almost half of the automaker's U.S. factory work force -- have accepted buyouts and will leave the automaker by next September, according to people familiar with the final tally.

That figure, which will be announced as early as this week, exceeds the company's goal of cutting 30,000 hourly positions by 2008 and should provide a major boost to Ford's effort to slash costs and return to profitability by 2009.

The staggering downsizing of Ford's hourly ranks narrowly exceeds rival General Motors Corp.'s historic buyout program this year, and outstrips Wall Street's most optimistic scenario.

"The market is going to be very happy," said Bradley Rubin, an analyst with BNP Paribas. "That will be a significant step in helping Ford and getting its capacity right-sized for retail demand."

Ford spokesman Oscar Suris would not confirm the count and would only say that the company will announce the final figure "at an appropriate time."

Ford expects 35,000 to 36,000 of its hourly workers to leave the company. The number of workers who signed up is higher but the company expects a certain number to change their mind.

Ford has approximately 75,000 hourly workers represented by the United Auto Workers. The company offered those workers a choice of eight buyout packages in an effort to cut its payroll costs and better align production capacity with market demand.

Those packages ranged from a $35,000 early retirement offer that allowed workers to leave with full pension and retirement benefits to a $140,000 lump sum payment for workers who agreed to walk away and give up all benefits except for pension already accrued.

Another program paid workers' college tuition for up to four years while giving them half their pay and health insurance. The take rate for that package was quite high, sources said. That is more good news for the company because, as with the lump sum payment, Ford will no longer be responsible for those workers' retirement benefits beyond any pension they have already earned.

Ford announced an $18 billion financing deal Monday that will help cover the cost of the buyouts.

Temp workers will fill gap

Workers had until Monday to sign up for one of the programs. All of those who signed must leave the company by September, although Ford may keep some past that date to ensure production is not interrupted.

The company will have to hire part-time and temporary workers to make sure that does not happen, sources said. Those workers will receive a starting wage of $18.50 an hour and no benefits. Ford says the average wage for permanent hourly employees is $31.64 an hour. After 90 days, the temporary workers will be eligible for holiday pay. After about seven months, they will become eligible for health insurance and higher wages.

Because it is producing fewer cars and trucks, Ford will not have to replace every worker who leaves. Moreover, the company expects to fill most vacancies with replacement workers from factories that were once part of Visteon Corp., Ford's former parts unit. Ford is responsible for those workers under a bail-out agreement it signed with Visteon last year.

Blue-collar workers are not the only ones leaving the company. Ford is also well on its way to cutting some 14,000 white-collar jobs. Thousands of workers were laid off in February; Ford hopes to convince another 10,000 to take voluntary buyouts. If not, the company has said more layoffs will be coming.

Either way, some 50,000 U.S. Ford employees will leave the company over the next year, making this downsizing the biggest in the automaker's 103-year history.

Finding its footing

Ford is struggling with mounting financial losses and declining domestic market share. The company, which once owned 25 percent of the U.S. new car market, now commands just over 16 percent. Ford hopes to find its footing as a smaller, leaner company with between 14 percent and 15 percent of the U.S. light vehicle market. That all but guarantees Japan's Toyota Motor Corp. will pass Ford to become the nation's No. 2 automaker after General Motors Corp.

Even with the cutbacks, Ford says it does not expect to return to profitability until 2009. Some analysts see that as a stretch goal, but President and CEO Alan Mulally told The News in a recent interview that it is a goal Ford must meet in order to survive.

Ford, which has lost $7 billion this year, hopes to cut its North American operating costs by $5 billion over three years.

In January, the automaker unveiled a plan to close 14 factories and eliminate 25,000 to 30,000 factory jobs by 2012. Ford began offering buyout packages to workers at select facilities as part of a broader strategy to reduce production, but Wall Street quickly lost patience with the slow pace of Ford's downsizing -- especially after rival GM offered a similar buyouts to all of its U.S. workers.

GM spokesman Dan Flores said Tuesday that 34,410 out of about 120,000 union workers at GM accepted buyouts this year. Nearly 30,000 have left the company. GM's buyouts will be completed by January.

As Ford's losses mounted, the company had no choice but to follow suit. In September, Ford announced it would open the attrition plan to all UAW-represented employees. It also accelerated its timetable for idling factories and said it would close or sell all of the plants it took back from Visteon by the end of 2008. Ford has yet to sell any of these facilities, and many of the workers at these plants are eager to get jobs at Ford plants.

I got to talk to an Upper Middle Mgmt, (his description) Ford Exec at the Orlando car show and here is some highlights of our discussion:

He approached me about my opinion of the Edge I was looking at on the floor....my comments were that it appears underwhelming, when in a setting with all of it's competition close by for side by side evaluations.
The Mazda twin looks somewhat classy to me, and had no big apparent advanage over the Edge, but was swarmed with people.

The driver's seat "Leather" was wearing off the outside edge of the driver's seat already and the stitching was spiltting also.
His answer was that it was from the extreme usage on the car show circuit.
I told him that as consumer's, that answer is unacceptable, he did not disagree, citing budget issues cause these problems.

I said this has happened to 3 of myFord vehicles within the first 12,000 miles, it was fixed under warranty with no problem, but begs the question, why don't you use better materials. His answer, (as we all figured), was that the level of the quality of materials is tied to the required selling price point.....

So I pointed out all the other cars in the show and told him NONE of them exhibited that problem, and it was particularly bad on a new model being introduced in 2 weeks....he again did not disagree with my observations and said getting these kinds of issues addressed and corrected was a seemingly insurmountable task due to cost being the main discussion issue controlling decisions at the upper levels.

At this point I dragged him off and bought him a cup of coffee and explained about this website, (he is VERY aware of it), and he dismissed the crazies and trolls here, but said that much of the complaints and desires expressed here are widely known and discussed endlessly internally, but resolutions seem glacially slow in arriving.

I suggested Ford immediately implement the 4 yr/50,000 bumper to bumper warranty as a start, he said it was ruled out at this point due to cost considerations that would be incurred.
I said you already do it with your identical models of Mazdas....he said it's a numbers game, many more Fords, much higher liability...
His unsolicited comment was that supplier quality is being worked and must be much better before that will happen.

He stated that it is generally acknowledged (very quietly) that Honda is the best car company on the planet at this point because they focus on the customer and the product, and do what it takes to make that work, they have problems, but seem to address them better than others.
His opinion of the dealer network's business practices and service was unprintable, even here...

His personal frustration is that all the big 3 companies could out engineer, out produce and overtake the rest of the industry, but seem more concerned with stockholders opinions than the actual customers.....pandering to P/E ratios and cost per unit is nice, but not while you are getting your *** kicked....they just seem unwilling to take the risks needed to jump ahead of the pack.

He loves the company, has worked there over 30 years and wants much better across the board from them.
I said we are in agreement and wished him luck....
I also suggested that they push to be first and best, rather than just competitive and cheap as priorities.

I said most people would willingly pay a few hundred $$ to get a higher quality and, more durable car...
one only needs to look at Honda, who is able to get higher prices for comparable models due to reputation and history of quality. Perception rules, facts are incidental to most people.

I feel my Focus ST is as good and probably better than a Civic, but most people laugh at me when I say that.
16,500 miles so far, 0 problems, and about $4,500-$5000 less than a Civic Si which it compares to equipment and power wise...

I did use his name or actual title as I had not asked his permission to do so.

I feel if the majority of employees in decision making positions were like him, we would see a vastly improved Ford Motor Company products.

I feel this issue is across the business world, not just car companies. All big corporations seem to be squeezing employees and suppliers to inflate the bottom line that ties to multi-million $$ salaries and bonuses at the personal level, but over time I believe is damaging to the corporations.
They just seem very shortsighted about building a loyal customer base and keeping it on a sustained basis.