Ford agrees severance package with unions

15-09-2006

Some 75,000 US workers at carmaker Ford have agreed to a voluntary severance package, according to press reports.

Ford, which aims to axe thousands of factory jobs and close 14 factories by 2012 as part of its "Way Forward" plan, offered buyouts to the United Auto Workers union in a bid to cut costs ahead of a return to profit.

For some workers packages include a $35,000 (£18,570) retirement incentive, a lump-sum payment of up to $140,000 (£74,000) and six months of medical benefits for senior workers.

Retirement packages are also offered to workers at Automotive Components Holdings, a group of factories formerly held by Visteon Corp, Ford’s former parts unit.

But UAW vice-president Bob King said his union was "deeply concerned" about Ford's loss of market share.

Although the second-largest carmaker in the US reported a $123 million (£66.5 million) loss in the second quarter of 2006 and is expected to run up losses of $9 billion (£4.77 billion) this year.

Rebecca Lindland, auto analyst at research firm Global Insight, told the Today programme this morning that the predicted annual losses represented "an awful lot of money".

"I can certainly see where the argument could be made that this is panic, but by the same token we are looking at a company that is in dire financial straits," she said.

"So by offering this [redundancy package] and being able to reduce their workforce sooner rather than later, they are really making great effort to ensure the long term viability of Ford."

Ford is currently undertaking its third restructuring in five years. The firm's former chief executive, Bill Ford, recently stepped down in favour of Boeing boss Alan Mulally.

Ford's share price on the New York stock exchange fell by 1.19 per cent as expectation of its latest job cuts announcement heightened.


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