Ford set to offer more buyouts

Ailing automaker wants to make room for lower-paid work force in its U.S. factories.

Bryce G. Hoffman / The Detroit News

Ford Motor Co. is preparing to offer another round of buyouts to all of its approximately 54,000 U.S. hourly employees, and sources say an announcement could come as early as Thursday.

The offers will be essentially the same as those Ford offered to United Auto Workers members in 2006, according to people familiar with the situation. However, a union official told The Detroit News that there is a proposal to offer more money to skilled trades workers, who are among the highest paid. The union source and the company said talks on final terms are continuing and the two sides are close to a deal.

"We have an agreement in principle to offer buyouts to our U.S. hourly employees," Ford spokesman Mark Truby said. "We have been working with the UAW regarding the packages to be offered and the timing of the offers. We will have an announcement relatively soon."

Ford CEO Alan Mulally said Tuesday that more details of the plan will be outlined Thursday when the automaker releases fourth quarter and full-year earnings for 2007, but did not say if a final deal was expected by then.

Ford’s contract with the UAW allows the Dearborn automaker to pay new hires substantially less than current hourly employees, and the company is eager to create as many openings as possible. But Ford still has to find positions for up to 5,000 former Visteon Corp. workers it agreed to take back as part of a bailout of its former parts subsidiary in 2005.

Sources said Ford does not expect to come close to matching the take rate of its previous buyout offer, which prompted nearly 25,000 workers to leave the company — partly because most workers who wanted to leave have already done so, and partly as a consequence of the grim economic environment.

"With the stock market acting so crazy, there’s more risk. And when there’s more risk, people are less likely to take risks themselves," said employment expert John Challenger of Challenger, Gray & Christmas Inc. in Chicago, though he added that working in an auto factory carries risks of its own, given the strong economic headwinds buffeting the industry today.

"There may be no safe harbor here," Challenger said.

Ford’s previous buyout packages ranged from a $35,000 early retirement offer to a $140,000 lump-sum payment. Another program paid workers’ college tuition for up to four years.

The UAW-Ford contract, ratified in November, creates two categories of hourly employees — existing workers and a new class that will receive lower pay and fewer benefits. The deal allows up to 20 percent of Ford’s UAW workers to be second-tier workers, though other contract provisions could allow that number to go higher.

Wall Street is eager to see Ford take advantage of those provisions, but analyst Bradley Rubin of BNP Paribas said the benefits have to be weighed against the industry’s weaker outlook.

"If they can get 20 percent, that would be nirvana," he said. "It will take some costs out, but considering the prospects for auto sales in ‘08, I don’t know if it will be enough to offset that."

Last week, General Motors Corp. announced it was extending buyouts to 46,000 more hourly workers in the United States.

Addressing reporters Tuesday at the Washington Auto Show, Chrysler LLC President Jim Press declined to say whether his company would extend buyouts to more workers this year.

"We sure hope we can avoid that," Press said, noting that Chrysler announced plans to cut some 10,000 factory jobs after its contract with the UAW was approved in November. "(But) you never know where the economy is going to wind up going."