HALF TAKE FORD BUYOUT

MASS EXIT: 38,000 blue-collar workers apply to leave | SAVINGS: Stunning exodus could fuel comeback | FUTURE: Temporary workers will step in

Bryce G. Hoffman / The Detroit News

Ford Motor Co. announced today that about 38,000 hourly production workers -- almost half of the automaker's U.S. factory work force -- have accepted buyouts or early retirement offers.

The figure includes approximately 30,000 buyouts during the open enrollment period that concluded late Monday, plus about 8,000 who took deals offered at limited plants earlier this year.

Faced with lower demand for its products, Ford had hoped that 25,000 to 30,000 workers would take one of eight packages so it could reduce manufacturing capacity to better match demand.

The figure exceeds the company's goal of cutting 30,000 hourly positions by 2008 and should provide a major boost to Ford's effort to slash costs and return to profitability by 2009.

The staggering downsizing of Ford's hourly ranks narrowly exceeds rival General Motors Corp.'s historic buyout program this year, and outstrips Wall Street's most optimistic scenario.

"The market is going to be very happy," said Bradley Rubin, an analyst with BNP Paribas. "That will be a significant step in helping Ford and getting its capacity right-sized for retail demand."

Ford expects 35,000 to 36,000 of its hourly workers to leave the company by next September. The number who have applied for buyouts is larger, but Ford expects a certain number to change their mind.

Ford has approximately 75,000 hourly workers represented by the United Auto Workers. The company offered those workers a choice of eight buyout packages in an effort to cut its payroll costs and better align production capacity with market demand.

Those packages ranged from a $35,000 early retirement offer that allowed workers to leave with full pension and retirement benefits to a $140,000 lump sum payment for workers who agreed to walk away and give up all benefits except for pension already accrued.

Another program paid workers' college tuition for up to four years while giving them half their pay and health insurance. The take rate for that package was quite high, sources said. That is more good news for the company because, as with the lump sum payment, Ford will no longer be responsible for those workers' retirement benefits beyond any pension they have already earned.

Ford announced an $18 billion financing deal Monday that will help cover the cost of the buyouts.

Temp workers will fill gap

Workers had until Monday to sign up for one of the programs. All of those who signed must leave the company by September, although Ford may keep some past that date to ensure production is not interrupted.

The company will have to hire part-time and temporary workers to make sure that does not happen, sources said. Those workers will receive a starting wage of $18.50 an hour and no benefits. Ford says the average wage for permanent hourly employees is $31.64 an hour. After 90 days, the temporary workers will be eligible for holiday pay. After about seven months, they will become eligible for health insurance and higher wages.

Because it is producing fewer cars and trucks, Ford will not have to replace every worker who leaves. Moreover, the company expects to fill most vacancies with replacement workers from factories that were once part of Visteon Corp., Ford's former parts unit. Ford is responsible for those workers under a bail-out agreement it signed with Visteon last year.

Blue-collar workers are not the only ones leaving the company. Ford is also well on its way to cutting some 14,000 white-collar jobs. Thousands of workers were laid off in February; Ford hopes to convince another 10,000 to take voluntary buyouts. If not, the company has said more layoffs will be coming.

Either way, some 50,000 U.S. Ford employees will leave the company over the next year, making this downsizing the biggest in the automaker's 103-year history.

Finding its footing

Ford is struggling with mounting financial losses and declining domestic market share. The company, which once owned 25 percent of the U.S. new car market, now commands just over 16 percent. Ford hopes to find its footing as a smaller, leaner company with between 14 percent and 15 percent of the U.S. light vehicle market. That all but guarantees Japan's Toyota Motor Corp. will pass Ford to become the nation's No. 2 automaker after General Motors Corp.

Even with the cutbacks, Ford says it does not expect to return to profitability until 2009. Some analysts see that as a stretch goal, but President and CEO Alan Mulally told The News in a recent interview that it is a goal Ford must meet in order to survive.

Ford, which has lost $7 billion this year, hopes to cut its North American operating costs by $5 billion over three years.

In January, the automaker unveiled a plan to close 14 factories and eliminate 25,000 to 30,000 factory jobs by 2012. Ford began offering buyout packages to workers at select facilities as part of a broader strategy to reduce production, but Wall Street quickly lost patience with the slow pace of Ford's downsizing -- especially after rival GM offered a similar buyouts to all of its U.S. workers.

GM spokesman Dan Flores said Tuesday that 34,410 out of about 120,000 union workers at GM accepted buyouts this year. Nearly 30,000 have left the company. GM's buyouts will be completed by January.

As Ford's losses mounted, the company had no choice but to follow suit. In September, Ford announced it would open the attrition plan to all UAW-represented employees. It also accelerated its timetable for idling factories and said it would close or sell all of the plants it took back from Visteon by the end of 2008. Ford has yet to sell any of these facilities, and many of the workers at these plants are eager to get jobs at Ford plants.

You can reach Bryce Hoffman at (313) 222-2443 or bhoffman@detnews.com. The Associated Press contributed to this report.