Ford cuts white-collar health benefits, merit pay

Thursday, November 2nd 2006, 11:51 am

By: News On 6

DEARBORN, Mich. (AP) _ Salaried workers at Ford Motor Co. won't get pay raises next year and they'll pay more for health insurance under benefit changes announced by the struggling automaker.

In addition, Ford will stop providing health insurance for Medicare-eligible salaried retirees over 65 starting in January 2008, company spokeswoman Marcey Evans said Thursday.

Ford will give the retirees $1,800 that can be used to buy supplemental medical coverage, she said.

``The company wants to continue to be able to provide quality health benefits for employees and retirees and is just trying to find ways to balance the increased costs that we face each year,'' Evans said.

Ford lost $7.24 billion in the first nine months of the year and is cutting thousands of jobs and closing plants to cut costs over the next few years.

The latest cuts, announced to employees on Wednesday and reported by The Detroit News and Detroit Free Press, also include some good news. Ford is restoring a company match to its 401(k) plan, paying 60 cents on the dollar up to 5 percent of an employee's base salary.

But the merit pay cut and a 30 percent increase in health insurance contributions will mean that white-collar workers will receive less money from the company in 2007 than they received this year.

Ford also is ending its practice of paying employees before its annual holiday shutdown in December. This year the company will issue paychecks on Dec. 29 rather than Dec. 22, the company's last business day in December, saving $70 million in cash flow, Evans said.

Ford paid about $3.5 billion in 2005 for health insurance for about 550,000 people including retirees and surviving spouses, active employees and their dependents.

``As you look at all of our Way Forward actions _ from our accelerated product plans to our attack on costs _ you can see that we are meeting our challenges head-on,'' Mark Fields, president of Ford's Americas division, said in a memo to employees. ``We recognize that, in doing so, this is a period of uncertainty and anxiousness for the entire Ford team. But we remain committed to candid and open communications throughout the process. Rest assured that, by working together, we are building a much stronger Ford Motor Co. and a more secure future.''

Ford has 25,000 to 30,000 salaried workers in North America and is seeking to reduce that number by 10,000 with buyout and early retirement offers.

It also has 92,000 blue-collar employees in North America, including 75,000 in the U.S. represented by the United Auto Workers. Ford has offered buyouts or early retirements to all 75,000 and is hoping to reduce its blue-collar work force by 25,000 to 30,000 in an effort to shrink itself to match reduced demand for its products.

Evans would not comment when asked if the company will seek the similar concessions in negotiations with the UAW. The union's master contract with domestic automakers expires next year.

Ford is not the only Detroit automaker to reduce benefits. In March, DaimlerChrysler AG's Chrysler Group said it would link its health care plan for active and retired salaried employees to their salaries, with top executives responsible for up to 100 percent of their premiums.

General Motors Corp. has said that it will cap its salaried retiree health care costs at 2007 levels.

Ford shares slipped a penny to $8.51 in midday trading on the New York York Stock Exchange.