Human Capital & Careers

Ford to Flatten Wages, Curb Benefit Spend

For the first time in 13 years, salaried workers will not get merit raises. The auto company will also replace retiree health coverage with cash de...
Stephen TaubNovember 3, 2006

“The Way Forward” — Ford Motor Co.’s plan to streamline its North American operation — apparently will include flatter wages and increased worker responsibility for benefits.

The struggling auto giant’s salaried workers learned that next year their wages will stay right where they are and that they will pay more for health insurance, according to The Detroit News.

For the first time in 13 years, salaried workers will not get merit raises, the paper elaborated. Further, health-care premiums will rise by about 30 percent in June 2007 for the vast majority of salaried workers — the second straight year of sizable increases.

What’s more, beginning in January 2008, Ford will no long provide health insurance to white-collar retirees who are over age 65 and eligible for Medicare, according to press reports. Instead, the company will deposit $1,800 in a health retirement account for each retiree, which they can use to pay for supplemental Medicare coverage and such things as medical co-pays and prescription drugs, according to the News.

“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,” Ford spokeswoman Marcey Evans told the AP.

Ford also said it would start supplying a partial match to employee 401(k) contributions next year, according to the AP. The company will reportedly pay 60 cents on the dollar up to 5 percent of an employee’s base salary.

Ford is now letting 14,000 salaried workers and 30,000 hourly workers in North America go, and offering buyouts to senior managers in 9 of its 15 business units, according to the newspaper.

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