Ford Buyouts Begin, but What's Next?

Nov. 29, 2006 — -- For Roger Beernauert of Brooklyn, Mich., it was a no-brainer.

"It's just time to go," said the 51-year-old United Auto Worker union member and longtime Ford Motor Co. employee. "I'm getting out 10 years earlier than I'd hoped to, but this is an excellent opportunity."

Beernauert is among the 38,000 or so union members that Ford announced today had accepted buyout or early retirement offers from the struggling automaker.

That figure, which represents nearly 46 percent of Ford's 83,000 unionized employees, outpaces the 25,000 to 30,000 target the company had set.

"From a cost perspective, they want more people to take the offer than not," said George Magliano, director of auto industry research at financial analysis provider Global Insight. "But the question becomes: 'Do you lose too many good people?'"

Ford, which has seen years of slumping sales, offered eight buyout packages ranging from $35,000 to $140,000 based on seniority and age of the worker.

Some of the plans provided health insurance, a portion of the worker's pay, and partial payment of college tuition.

"I talked to my family," said Michigan UAW member Carol Howey, who opted for the buyout. "We did all the reasoning, and I talked to a financial adviser."

The company says those who accepted the deals will begin their departures in January.

"While I know that in many cases, decisions to leave the company were difficult for our employees, the acceptances received through this voluntary effort will help Ford to become more competitive," Ford president and chief executive Alan Mulally said in a statement.

At the 16 Ford plants slated for closure by 2012, buyout acceptances appeared to be heavy.

At the St. Paul, Minn., facility -- which makes the Ranger pickup truck and will close its doors in 2008 -- union officials said an estimated three-quarters of the union workers, or about 1,400 to 1,700 members, had signed the deal.

"These cuts are a painful last resort," said former CEO Bill Ford Jr. during the official announcement of the cuts earlier this year. "By taking these actions, we're creating more stable and secure jobs. We all have to change, and we all have to sacrifice."