Ford hourly workers to get buyout, retirement offers

February 25, 2009 at 12:00a.m.

DETROIT (AP) — Hourly workers at Ford Motor Co. will get yet another round of buyout and early-retirement offers, and the company’s top two executives will take 30 percent pay cuts as Ford tries to find a way out of the worst auto sales slump in 26 years.

Chief Executive Alan Mulally and Executive Chairman Bill Ford Jr. will see the salary reductions this year and next, according to a memo obtained by The Associated Press.

In addition, local union leaders were told Tuesday that the company will make buyout or early-retirement offers to all 42,000 U.S. hourly workers. The offers are part of a series of contract concessions in a tentative agreement reached between the United Auto Workers and the company, according to two union officials briefed on the deal.

Top UAW leaders explained the concessions to plant-level officials from across the country at a meeting in Detroit on Tuesday afternoon. The union officials didn’t want to be identified because the deal has not been explained to the membership.

Other concessions include suspension of cost-of-living pay raises, lump-sum performance bonuses and end-of-the-year bonuses in the remaining three years of the union’s contract with Ford, the officials said.

The union also agreed to take as equity 50 percent of the payments that Ford is required to make into a union-run trust fund that will take over retiree health-care expenses starting next year. The company owes the fund roughly $13.2 billion on a $23.7 billion liability.

One of the union officials said Ford will guarantee a certain level of payments during the first three years of the trust even if the stock value drops. He said the union was able to preserve the workers’ base pay.

The Ford deal likely will be the template for similar concessions at Chrysler LLC and General Motors Corp., although the union reached a deal with Ford first. Chrysler and GM must meet concession targets as part of the federal loans that are keeping them afloat.