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Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

Ford Aims to Cut Union Work Force Through Buyouts

  • Summary: In its quest to lower payroll costs by about a third, Ford (NYSE:F) announced that it will present buyout offers to all its 75,000 domestic factory workers. Similar to the packages offered to General Motor’s (NYSE:GM) factory workers, Ford’s package will require the workers who leave to relinquish their retiree health benefits. The eight different buyout packages will pay as much as $140,000 to a departing worker, with the richest packages going to workers who have been at the company for 30+ years, or workers at least 55 year old with 10+ years at Ford. These buyouts are on top of accelerated plant closing and the recent announcement of the goal to exact 30% savings from its white-collar work force. Separately, Ford announced that it was retaining all its domestic brands (there has been speculation on Mercury’s future), and that Anne Stevens, the auto industry’s highest ranking female executive, will be departing the company.
  • Comment on related stocks/ETFs: Aside from the workers, the big loser here is the United Auto Workers (“UAW”). The Ford and GM buyouts will reduce their membership by as many as 50,000 workers, the same number of UAW workers currently at DaimlerChrysler (DCX). While Ford has its share of bulls and bears, the question remains – is that enough? As they transform themselves into smaller companies, can Ford & GM build cars that the public will want to buy. The big threat is Toyota(NYSE:TM), which just announced they are delaying some new model rollouts in order to focus on improving vehicle quality. Toyota can afford this “luxury” – they made $12.6 billion last year.

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