It’s been a while since we’ve heard the word “buyout” echoing out of Detroit, as 2008 marked the year in which auto industry employees finally started to be fired like everyone else: without a hefty severance kiss-off. Ford, on the other hand, did not get a shot at free house-cleaning in bankruptcy court, so it’s bringing back buyouts. According to Market Watch, the Blue Oval is offering blue-collar employees a $50,000 lump sum payment and a $25,000 voucher for a new vehicle or another $20,000 lump sum, as well as six months of health insurance coverage. There’s even an extra $40k for workers of “a certain age.” But this being Detroit, employee benefits are either feast or famine. While Ford’s workers are being offered cash for their jobs, the former Ford parts division Visteon announced today that it is seeking to dump pensions for 21,000 retirees in bankruptcy, following Delphi into yet another stealthy yet popular form of indirect automaker bailout.
According to the Detroit News, the pension plans Visteon has asked a bankruptcy judge to drop have a combined shortfall of $544 million, and will result in at least $100m in benefit reductions. The Pension Benefit Guarantee Corporation has not yet approved the benefit dump, nor has Visteon’s bankruptcy judge, but the deal seems likely to go through. Visteon has already been allowed to drop health and life insurance benefits to 6,500 current and future retirees. By assuming these most recently-abandoned pensions, the PBGC would receive a $460 million general unsecured claim and 3.8 percent of Visteon’s new stock in bankruptcy.
But that’s small potatoes for a government safety net that is running a $21 billion deficit for 2008. That includes the assumption of $6.7 billion in Delphi benefits (covering some 70,000 individuals) that were abandoned by the GM spin-off earlier this year. Because both Visteon and Delphi were formerly divisions of Ford and GM respectively and are integral to the viability of their former parents, these pension dumpings are the ugliest, most stealthy elements of 2009’s auto industry bailout. No that you’ll ever see an OEM take responsibility for any of it. Shameful doesn’t even begin to describe it.
The image used in this story is from protests against Visteon UK’s equally shameful bankruptcy