Ford To Offer Employees Buyouts, Early Retirement Packages

Main Category: Health Insurance / Medical Insurance
Also Included In: Seniors / Aging
Article Date: 27 Jan 2008 - 0:00 PDT

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Ford Motor on Thursday announced it will offer buyout and early retirement packages to its hourly workers as part of a restructuring plan to bring in new workers that will receive lower pay and benefits, the AP/Richmond Times-Dispatch reports. The new wage system was established during last year's contract negotiations with United Auto Workers (AP/Richmond Times-Dispatch, 1/25).

Under the contract, which was ratified in November 2007, Ford will transfer $23.7 billion in retiree health care liabilities to the union through a voluntary employees' beneficiary association. The VEBA is expected to bolster Ford's cash flow by about $1 billion per year and cut annual health care costs by $2 billion. The contract also created a two-tier wage system (Kaiser Daily Health Policy Report, 12/4/07).

According to the Wall Street Journal, the automaker will offer some buyout packages that are similar to those offered in 2006. The 2006 packages included a $100,000 lump-sum payment and temporary health care benefits for younger workers, and a $140,000 lump-sum payment and pension benefits -- but no health benefits -- for older workers who retired immediately. Ford also in 2006 offered packages that pay for education and include health care benefits while the former employee is attending school (Spector, Wall Street Journal, 1/24).

The automaker will offer buyout or early retirement packages to all of its 54,000 hourly workers in the U.S., the Detroit News reports. About 12,000 of those employees are eligible for retirement (Hoffman, Detroit News, 1/25).

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