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Ford wants to cut 1,400 jobs through voluntary retirement



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In this June 2018 interview, Bill Ford Jr. talks about Ford buying the Michigan Central Station and his plans for its future.

Detroit Free Press

Ford Motor Company alerted its employees early Wednesday during a weekly virtual global meeting that the automaker plans to trim its headcount by 1,400 salaried workers by offering them an opportunity to retire this year if they meet certain qualifications.

Kumar Galhotra, president, Americas & International Markets Group, who oversees the profit and loss of the business units, told workers the news. He then followed up with an email containing details around 9 a.m. 

The letter from Galhotra emailed to Ford employees said:

We’re in a multiyear process of making Ford more fit and effective around the world.

We have reprioritized certain products and services and are adjusting our staffing to better align with our new work statement.

Toward this goal, we plan to offer a voluntary incentive program for U.S. salaried colleagues in some functions who are retirement eligible as of Dec. 31, 2020:

  • The program will be available across certain skill teams, including in corporate functions that support the North America businesses and Ford credit
  • Some skill teams will limit eligibility based on critical skills and/or critical talent
  • Eligible employees will get details about the voluntary incentive program on Sept. 8 and can accept the program offer up to Oct. 23, and
  • Approved participants would leave Ford by the end of the year

Your skill team leader will inform you today if your team is participating in the program. Our hope is to reach fitness targets with the voluntary incentive program. If that doesn’t happen, involuntary separations may be required.

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Details of who qualifies were not released publicly Wednesday but a source close to the situation confirmed that salaried workers may apply for the “Voluntary Incentive Program” (VIP) with:

  • 30 years of service for those hired or rehired before Jan. 1, 2004
  • 55 and older with 10 years of service
  • 65 with 5 years of service

Early retirement is not automatic. Salaried employees must apply and then be accepted. The window opens for those who qualify on Sept. 8. Eligible employees will receive more details from the company on that day.

“This is not an early retirement. This is an incentive for people today who are already retirement eligible,” said Ford spokesman Ian Thibodeau.

The Free Press reported Tuesday that Ford planned to cut 1,000 jobs in North America because of financial challenges not exclusively related to the pandemic.

More: Report: Ford plans to slash 1,000 jobs in North America as restructuring drags on

More: Ford offers 30,000 U.S. employees option to work from home until New Year’s

More: Ford wants employees to sign COVID-19 contracts

The company has said that people whose work is not “place-dependent” may work remotely until January 2021.

A directive to return to the office during the ongoing pandemic could influence a decision to take the offer, as health officials have said that people with heart conditions, asthma, high blood pressure and diabetes fall into the high-risk group for COVID-19. 

Ford has not determined when employees will return to the workplace, said spokesman Ian Thibodeau.

What’s allowed

Bona fide retirement plans that have an age component are considered to be legal under the Employee Retirement Income Security Act;  age discrimination does not apply.

If layoffs are made on the basis of age without an ERISA-compliant plan, that is clearly age discrimination. This kind of retirement offer is favorable to companies because they can get rid of the higher paid workers – usually people who have seniority and experience.  Those employees can then be replaced at some point by new hires at a much lower cost.

Contact Phoebe Wall Howard at 313-222-6512or phoward@freepress.com. Follow her on Twitter @phoebesaid. Read more on Ford and sign up for our autos newsletter.

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