By Staff Report
Jul. 24, 2009
About 1,000 members of the United Auto Workers accepted Ford Motor Co. buyouts last quarter, and Ford says it doesn’t plan more.
The workers’ departure, scheduled to be completed “in the next few weeks,” will cut the number of active UAW employees to 47,000, Ford spokesman Mark Truby said in an e-mail. That’s down from 95,000 in 2003.
Participation in the recent buyout offer was in line with Ford’s expectations, CEO Alan Mulally said during a conference call Thursday, July 23. No more UAW buyouts are coming, he said.
“We’re about right,” Mulally said.
The deadline to sign up for that buyout had been June 26, which was an extension from the previous deadline of May 22.
Ford, which has not taken federal funding, on Thursday posted a second-quarter pretax operating loss of $424 million and a net profit of $2.3 billion. The profit stemmed from a gain related to recent debt reduction. The automaker also said it burned through $1 billion in operating cash, down from $3.7 billion in the first quarter and $7.2 billion in the final quarter of 2008.
Ford discussions with the UAW “continue like they always have,” Mulally said, referring to the automaker’s attempts to cut labor costs. GM and Chrysler received cost concessions from the union ahead of their recently ended bankruptcies.
Mulally was asked whether Ford would seek an agreement with the UAW to align the Ford terms with those of the new GM contract.
Mulally said, without offering explanation: “We will not be disadvantaged going forward.”
GM’s agreement with the UAW includes a suspension of bonuses and cost-of-living adjustments. It also gives GM greater flexibility for hiring lower-cost entry-level workers and permits the company to use equity instead of cash to fund most of a $20 billion health trust for retirees.
Ford also announced Thursday that it has modified its agreement with the UAW on funding its payment obligations to a trust fund for retiree health care.
An agreement earlier this year gave Ford the option to fund up to half the payments using Ford common stock at prices that were tied to Ford’s stock price at the time. The fixed prices were $2 per share in 2009, $2.10 in 2010 and $2.20 in 2011. However, Ford’s stock price has rebounded, closing Wednesday at $6.38.
The modified agreement will allow the automaker to fund up to half of its VEBA obligation with stock at market prices instead of the fixed prices. Ford must make payments of $610 million to the VEBA in each of the next three years, Truby said.
Filed by Amy Wilson and Chrissie Thompson of Automotive News, a sister publication of Workforce Management. To comment, e-mail email@example.com.
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