Ford ‘sweetens’ deal for retirees in 2018; GM offer is less generous

While General Motors offered a buyout and now faces layoffs to trim its white-collar ranks, Ford quietly presented salaried employees with an early retirement package through the first half of 2018.

Ford's offer was open to most salaried employees in North America 55 or older with at least 10 years with Ford, those 65 or older with at least five years with the company or any age with 30 years of service, said Karen Hampton, Ford spokeswoman.

Ford declined to provide the total number of white-collar workers who have retired through the incentive program this year, though people close to the situation confirmed fewer than 1,000 participants. Employees say the farewell parties have flowed in a steady stream.

The deal was offered in the first half the year and closed, Hampton said.

GM said this week that 2,250 of its salaried workers took a buyout, but the company had a target of 8,000. Layoffs are expected next month. Financial advisers say the Ford deal was better than what GM workers were offered.

"Comparing the two packages back to back? Ford is more generous. It's a great deal," said David Kudla, CEO and chief investment strategist with Mainstay Capital Management, a Grand Blanc investment adviser who manages $2.5 billion in assets. "We work with a lot of Ford clients."

An employee taking the deal either worked half time for the last six months of the year or left Ford by Oct. 1 and took the final three months of the year off with pay.

A similar package is offered every year. This year, though, "The North American team decided to add a lump-sum payment for retirees, a payment equal to nine months of base pay," Hampton said.

Kudla, who works with hundreds of Ford clients of all ages, said, "These are sweeteners to compel them to go."

Meanwhile, GM offered its employees a buyout deal of six months' pay for workers with 12 years or more experience, the same amount of severance as if they were involuntarily terminated. Sources say those in the latter group will be escorted out in mid-January.

"Predominantly, these people are all ready to retire," Kudla said. "But I think there are some people who are concerned about what comes next. Jan. 15 is a big day at GM. That's the day the involuntary plan will go into action. That will be a sad day for some."

Institutional knowledge

Some people have lined up new jobs, others are job hunting. Some experienced GM workers may end up being rehired for their institutional knowledge, which can be essential in manufacturing and engineering.

"A certain amount of wisdom will walk out the door," Kudla said. "You have a guy who sat here 35 years and a problem comes along, the same problem that was on the exhaust bracket of an '87 Riviera. A 27-year-old hot shot can do the research but the graybeard fixes it in 20 minutes. Those are the people they sometimes end up bringing back as consultants."

While industry analysts have skewered Ford for announcing a restructuring plan that stretches into the spring of 2019 and involves consolidation but no clear details, GM announced Nov. 26 that it planned to shutter three assembly plants and two propulsion plants and cut an estimated 8,000 white-collar jobs plus about 6,200 factory jobs.

"Ford didn't really advertise or publicize the way GM did," Kudla said. "Why did (GM CEO) Mary Barra come out and do this? Make the pronouncement? What happens to the (stock) share price when companies come out and reduce head count? Stock went up that day."

Market economist Jon Gabrielsen, a 40-year industry veteran who trained at the University of Michigan, predicted early this month that GM would make the cuts over two years; he was stunned that the announcement came all at once and included more than 14,000 GM workers in 2019 throughout North America.

"I'm appalled by GM, by the packages they've offered to people," said Gabrielsen, who advises automakers and suppliers in North America. "Ford is treating its employees like Neiman-Marcus customers and GM is treating its employees like Kmart in its last dying days. Who would take the GM package? They pay the same without a buyout as termination."

Overall, industry observers said tariffs had less to do with market pressure on the auto industry than a cyclical downturn in sales with a sales forecast that continues to darken after a record 2016.

Further Ford changes

Meanwhile, Ford is weighing where to make changes.

Ford reports having 70,000 salaried employees globally. The Dearborn-based carmaker has grown since the Great Recession, which industry analysts at Kelley Blue Book and Autotrader and Cox Automotive have noted frequently.

Ford had 202,000 employees in 2017, up from 181,000 in 2013, according to annual reports.

The company has said nothing of layoffs. Executives have talked about fewer employees over time based on performance and necessity. Global employment numbers will be released in early 2019 as part of the annual report.

Gabrielsen, who provides market forecasts for clients, predicts that Ford will slowly contract its operations and trim what he expects to be thousands of salaried workers in metro Detroit and an estimated more than 10,000 throughout North America. He bases his analysis on Securities and Exchange Commission filings, investor calls, annual reports, sales data and employment trends.

Ford emphasized that it is not running a head count the way GM is.

"As we said when we started our redesign process a few months ago, we are taking a targeted and thoughtful approach to the redesign of our salaried workforce," Hampton said.

"Teams across the business will determine the right structure based on the work and skills required to ensure we are performing at the highest level and creating value for all our shareholders. Our goal is to flatten the organizational structure and empower leaders at all levels. We are reducing the size of our workforce through the redesign, but we have no estimates at this stage."

Gabrielsen said he understands the pushback.

"I have never seen a company cut all those it eventually had to cut in such a situation in one fell swoop at the start," he said. "Indeed, at the start they would have said a larger number was insane and would never be necessary, and then things keep happening and they are necessary. When I forecast I am basing it upon numerous historical data series that show what happened in the past after all the rounds of cuts happened."

Either way, buyouts and retirement suggest to workers that it's time to re-evaluate and consider applying for new jobs, said Nancy Segal, a human resources expert who advises job seekers and is president of Solutions for the Workplace LLC.

"If a company is telling you this is the direction they're going, you should not ignore it and stick your head in the ground and assume it has nothing to do with you and only affects other people. This is not about your personal performance, your personal value, how hard you work or how committed you are to the company. You should see this as a warning sign and protect yourself and your family," she said.

"I don't care how much people say we're bringing manufacturing back. Bullcocky," Segal said.

If you have options, take them

Engineers and other salaried workers in the auto industry must seriously assess their potential. Not only do they need to get a modern email and get rid of AOL for job searching, but also eliminate their birth year from their email address, and have a presence on social media including Twitter and LinkedIn and Facebook.

"Appropriate social media, not a crazy-person presence," she said. "If you have options, you should take them. The period of forever employment is over, whether you want to believe it or not."

No word from Fiat Chrysler Automobiles on potential job cuts, but it is raising money. The company announced plans to sell its Magneti Marelli components business for $7 billion. Automotive News reported this week that it is considering selling its robotics arm Comau for $2.3 billion.

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