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Old 11-02-2006, 08:33 AM   #1
NYCshopper
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Default Ford to Require Salaried Employees to Pay More for Health Care

Ford to Require Salaried Employees to Pay More for Health Care

http://www.bloomberg.com/apps/news?p...d=a7dRrVkSPcBg

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Nov. 2 (Bloomberg) -- Ford Motor Co., after posting its biggest quarterly loss in 14 years, plans to reduce expenses for U.S. salaried workers by abolishing merit-pay raises, requiring bigger payments for health benefits and reducing health-care payouts for retirees.

Mark Fields, chief of the No. 2 U.S. automaker's Americas unit, told employees about the plan in a memo yesterday. The changes will take effect June 1, company spokeswoman Marcey Evans said in an interview.

The moves follow Ford's September announcement that it won't make a profit in North America until 2009, a year later than previously forecast. They come on top of a plan, also announced in September, to cut 10,000 salaried jobs in the region by the end of next year's first quarter.

``Ford has declared the next two years off-limits for profits,'' said Sean McAlinden, an economist with the Center for Automotive Research in Ann Arbor, Michigan. ``Companies that aren't going to make money for years can't pay benefits.''

In reporting a $5.8 billion third-quarter loss last week, Chief Executive Officer Alan Mulally, 61, said Ford's financial condition would worsen through year's end. The Dearborn, Michigan-based automaker's North American auto operations have lost money in eight of the past nine quarters.

Mulally joined Ford from aircraft-maker Boeing Co. two months ago and assumed the CEO post from Chairman William Clay Ford Jr.

Out of Pocket

Ford will require active salaried workers to increase monthly health-care contributions and pay higher deductibles, Evans said. Specifics will vary because the company offers those employees five health-care plans, she said.

Ford also will now provide salaried retirees and their spouses 65 and older $1,800 each for health-care expenses. The automaker currently provides such employees company-paid supplemental health insurance beyond U.S. Medicare benefits. The affected retirees can use the $1,800 payments to purchase supplemental insurance, Evans said.

In addition, Ford will no longer provide supplemental health insurance for dependent children of retirees older than 65, Evans said.

Active salaried employees won't receive merit-pay increases, Evans said. The raises were granted this year, she said. Ford will reinstate matching contributions for the salaried employee 401(k) retirement plans.

Ford had suspended such matching payments in July 2005. The company will pay 60 cents for each dollar employees contribute for the first 5 percent of a worker's base pay.

The company spent about $3.5 billion on U.S. health-care expenses in 2005. Evans declined to specify what the outlay will be this year.

Later Paycheck

One change will be made before next year. Until now, workers had received paychecks on the last day the company was operating prior to its Christmas vacation. Employees now will be paid on the last business day of December. That means employees this year will be paid Dec. 29 instead of Dec. 22.

Ford is making buyout offers to achieve the 10,000 salaried job cuts. If enough people don't accept the offers, Ford has told workers it will resort to firings.

In addition to reducing its salaried workforce, Ford is making buyout offers to all 75,000 factory workers represented by the United Auto Workers union.

McAlinden, of the Center for Automotive Research, said the moves are a signal Ford will seek an additional boost in out-of- pocket health costs for retired UAW workers during 2007 contract talks with the union. Ford's current four-year contract with the union expires in September.

Last year, the UAW agreed active workers would cut future wages by $1 an hour and retirees would pay as much as $752 per year per family to reduce health costs at Ford and General Motors Corp.

Early Announcement

Ford typically announces employee benefit changes for the following year in the fourth quarter, Evans said. The company made the announcement early in the fourth quarter this year to give employees time to plan for the delayed December paycheck, she said.

``Also, many employees are making decisions on whether or not they want to take a voluntary separation package,'' she said. ``We wanted to make sure they have enough information on what to expect in terms of benefit changes to help them make an informed decision.''

Ford's shares gained 24 cents yesterday to $8.52 in New York Stock Exchange composite trading. They're up 10.4 percent this year.
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Old 11-02-2006, 09:35 AM   #2
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I feel especially bad for the retirees. At least working-age folks getting screwed have an option (albeit a ****ty one) of getting a job elsewhere (like at Toyota or Honda). Pretending an over-65 aged retiree can easily get anything resembling good medical insurance is a joke. At least their profits will take off once people realize there's no merit pay any more. Oh wait...
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Old 11-02-2006, 09:42 AM   #3
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Originally Posted by registering View Post
I feel especially bad for the retirees. At least working-age folks getting screwed have an option (albeit a ****ty one) of getting a job elsewhere (like at Toyota or Honda). Pretending an over-65 aged retiree can easily get anything resembling good medical insurance is a joke. At least their profits will take off once people realize there's no merit pay any more. Oh wait...

I agree, messing with retirees who have put in their time and no longer have options is just plain wrong. There is too much of that going around lately. I understand they are having financial problems, but that's just not the way to do it.
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Old 11-02-2006, 05:30 PM   #4
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I feel bad for the retired, but I also don't. I'm not sure what the best move is.

Is taking care of the retired worth current employees with a families losing their jobs? Then again, old-timers did not have 401k options and the like. On the flip side of that, their retirement benefits are way out of market, so cutting them to "normal" levels does not seem so bad.

At the end of the day, they need to normalize this kind of stuff to market levels. Ford cannot survive without cuts.
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