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Old 11-02-2006, 04:42   #1 (permalink)
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US:Ford slashes benefits for U.S. salaried workers and retirees

Ford slashes benefits

No raises, big health care cuts for salaried staff

David Shepardson / Detroit News Washington Bureau

Cutting back

Benefit changes for Ford salaried workers and retirees include:
Raises suspended for 2007.
Health care coverage to be cut in 2008 for retirees and surviving spouses who are 65 and older or eligible for Medicare. Ford will pay $1,800 a year for supplemental coverage to Medicare. No coverage for dependents.
Matching contributions to 401(k) accounts reinstated June 1, with Ford contributing 60 cents on the dollar, up to 5 percent of an employee's base salary.
Vesting period for retirement cut to 3 years from 5 on Jan. 1.
Monthly health care contributions to go up an average 30 percent. Deductibles, drug co-pays rise.
Changes to sick days, disability, long-term care insurance and other policies.
Source: Ford


Ford Motor Co., struggling to preserve cash amid deep losses, launched a sweeping new round of benefit cuts Wednesday for U.S. salaried workers and retirees.

The cutbacks, according to information packets distributed to workers and obtained by The Detroit News, include two especially painful measures:

The elimination of company health insurance for Medicare-eligible salaried retirees in 2008 and the suspension of merit pay raises for salaried workers next year for the first time in 13 years.

In addition, the automaker is hiking health care premiums in June 2007 for the vast majority of salaried workers by about 30 percent -- the second straight year of such increases.

The benefit changes included some good news -- Ford will begin a partial match on employee 401(k) contributions next year.

Overall, the moves will save hundreds of millions of dollars and send a signal to the United Auto Workers that all employees must make sacrifices to help revive Ford. Detroit's automakers enter crucial labor negotiations with the UAW next year.

Ford lost $5.8 billion in the third quarter of this year and is mired in possibly the deepest crisis in its 103-year history. The company is burning cash quickly -- an estimated $6 billion in the second half of this year -- stoking fears of a liquidity crunch.

In response to relentless market share declines, the company is in the midst of shedding 14,000 salaried workers and 30,000 hourly workers in North America.

Ford this week began offering buyouts to senior managers in nine of 15 business units.

Ford will offer salaried buyouts in the remaining six departments and to some lower-level salaried employees in all departments in December, a spokeswoman said.

While the buyout offers were expected, the breadth of the benefit reductions left many salaried employees and retirees shaken Wednesday.

"Morale is in the tank," said one Ford manager who asked not to be identified.

In 2008, the Dearborn automaker will stop providing traditional health coverage for salaried retirees over 65 who are eligible for Medicare, replacing it with a $1,800 annual stipend that they can use to buy supplemental coverage through a Health Reimbursement Agreement or to directly pay out-of-pocket medical costs.

Ford said the Medicare coverage plus the $1,800 supplement should give retirees coverage comparable to what they have now and allow the company to reap significant savings.

Ford also will stop paying for any health care coverage for dependent children of Ford retirees over 65 -- which will primarily affect college-age individuals. Dependents can get coverage until they are 25 if they meet certain criteria. Ford spokeswoman Marcey Evans declined to say how many people would lose coverage.

DaimlerChrysler AG's Chrysler Group also is moving older salaried retirees to health accounts and providing $1,750 a year per retiree. Chrysler also is requiring salaried retirees to pay between 50 percent and 100 percent of premium increases. The moves have caused an uproar among Chrysler retirees.

According to the informational packets, the health care moves include coverage changes and increases in employee monthly contributions, deductibles, and co-pays for various health care plans.

For example, Ford is eliminating private home nursing on some plans and partial coverage of erectile dysfunction drugs such as Viagra. It's also paring dental benefits.

Ford spent $3.5 billion to provide health care in 2005 for 590,000 employees, retirees and dependents.

Two-thirds of Ford's health care costs in 2005 went to retiree health care; total health care costs are up 67 percent since 2000 and retiree costs accounted for 80 percent of the increase.

Ford Americas President Mark Fields said in an e-mail to employees Wednesday that cancelling merit pay for next year is "difficult but necessary."

Since at least 1993, Ford has offered a pool of money for merit raises -- though it excluded the highest-level employees from merit pay in 2003. Last May, Ford awarded its employees merit pay raises from a pool that accounted for 3 percent of salaried payroll.

In addition, salaried employees will see their December paycheck delayed by one week -- from Dec. 22, the date of the holiday shutdown -- until Dec. 29. Ford traditionally paid salaried employees early in December in consideration of holiday expenses. The move allows Ford to delay its payment of federal withholding taxes until January.

"This change alone will save the company $70 million of cash flow this year without reducing compensation to employees," Fields said in the e-mail.

General Motors Corp said it would cap the amount of money it spends on salaried retiree health care at 2006 levels, but hasn't moved to eliminate supplemental retiree health insurance.

Paul Fronstin, a senior researcher at the Washington-based Employee Benefit Research Institute, said the retiree cuts were to be expected.

"Employees are cutting back left and right, and across the board retirees are getting whacked," Fronstin said.

Evans said Ford conducted a "very careful, thorough review" to ensure that it offers competitive benefits. Ford surveyed employees earlier this year to determine the benefits they most valued. Matching funds for 401(k) was one benefit employees said they wanted, Ford said.

Ford also announced new disability, bereavement and sick leave policies. Ford will pay for only 10 sick days in a calendar year, and they won't carry over.

On the positive side, Ford will begin next year contributing 60 cents per dollar up to 5 percent of an employee's base salary in the 401(k) program.

Unlike in years past, Ford will not automatically pay the match in Ford stock.
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Old 11-02-2006, 04:43   #2 (permalink)
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Re: US:Ford slashes benefits for U.S. salaried workers and retirees

Ford retirees face tough medicine

White-collar retirees will get Medicare and $1,800 per year instead of traditional coverage.

Sharon Terlep / The Detroit News

Tough choices lie ahead for thousands of Ford Motor Co. Medicare-eligible white-collar retirees who will get bumped from the company's health plan in 2008. They will instead receive $1,800 to pay for Medicare coverage and other health costs ranging from co-pays to prescription drugs.

In exchanging health coverage for stipends, Ford is following the lead of DaimlerChrysler AG's Chrysler Group and other U.S. companies looking to gain control over soaring health costs by no longer directly covering medical care.

Beginning Jan. 1, 2008, the Dearborn-based automaker will provide retirees who are 65 and older or disabled with $1,800 that will be placed in a health retirement account, according to information packets distributed to Ford employees and obtained by The Detroit News.

Retirees with an eligible spouse or domestic partner will get an additional $1,800. The cash will replace the Ford medical, prescription drug and dental coverage that retirees now receive. They also can use it to pay for vision and hearing coverage.

Dependent children will no longer be eligible for company-paid health care.

"It's probably not going to be as comprehensive as the coverage they had before," said Helen Ann Halpin, a professor of health policy at the University of California-Berkley. "If the senior is relatively healthy, this could be a gain. But if they have any type of serious condition, they're going to be left short."

Medicare recipients on average pay about $3,300 a year for medical and prescription coverage, including deductibles, co-pays and premiums, she said.

Ford retirees currently rely on the company to pay for costs beyond what's covered by Medicare.

But that's changing for many retirees as companies rein in spiraling costs by shifting more of the burden to retirees.

Ford, which lost $5.8 billion last quarter, spent $3.5 billion in 2005 to provide health care to 590,000 people, including employees, retirees and dependants. Its health care costs have soared 67 percent since 2000.

The shift parallels a similar trend away from traditional pensions toward 401(k) plans, putting the purchasing decision into individuals' hands.

Chrysler riled retirees when it made a similar move earlier this year to drop company-paid coverage.

Ford retiree Cecil Crider, 76, hadn't heard of the change Wednesday. He said he's not sure whether he'll be paying more under the new system to cover himself and his wife, but he understands the automaker needs to reign in costs.

"The company's got real trouble and if this means the difference between staying in business and not staying in business, then we're going to have to accept it," said Crider, who retired after more than 38 years as a model builder at the Ford Design Center. "Either that or pay 100 percent of it when the company goes out of business."

Even without the change, Ford retirees would have likely faced higher costs in the coming years. Last year, Ford capped health care spending for retirees and their surviving spouses at the 2006 average, beginning next year. Any increases in insurance premiums after this year would have been paid entirely by the retirees or their survivors.
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My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.

My next Ford.....
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