By on December 21, 2009

Deja vu... British workers protest Ford/Visteon shenanigans (courtesy: bbc.co.uk)

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

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8 Comments on “Ford Brings Back Buyouts, Visteon Dumps Pensions on Public...”


  • avatar
    carguy

    Dumping the pension liability on the state (taxpayer) is not exactly new nor exclusive to the auto industry.

  • avatar
    mikey

     Shameful ? Yeah that would be one of many words that could describe this situation. I would be more inclined to use the word criminal.
    6500 families losing benefits, and pensions being slashed. Merry Christmas folks.

  • avatar
    late_apex

    You know what I’ll get if my job can’t afford me or decides they don’t want me anymore?  I’m guessing a handshake and a box to put my personal items in.  Thankfully I’m a highly skilled worker and would be able to find something else in a similar pay range.

    If I were a low skill / basic education kind of employee I can see how losing my job or benefits would be horrific.  I’d have to adjust my lifestyle to the income I was capable of making on the open market if I were being over-compensated.  What a blessing that $50K would be for anyone in this situation…a person could re-educate themselves nicely and obtain open market based employment. A very nice gesture on the part of Ford.

     

    • 0 avatar
      mikey

        In Canada, as our spinoff suppliers died.or just plain shut down,we absorbed most of the hourly/salary people into GM. All was good and well untill the fit hit the shan,in late 07.

      The senior, former GM salary and hourly,were for the most part, looked after. The junior hourly were offered,anywhere from 40 to 60k and a car. The smart ones took it and got themselves retrained. The not so smart are waiting for GM to recall them…..someday.

      The junior salary got  a handshake.

    • 0 avatar
      john.fritz

      “You know what I’ll get if my job can’t afford me or decides they don’t want me anymore? I’m guessing a handshake and a box to put my personal items in.”

      I would get the box. I think.

  • avatar
    ihatetrees

    I may be wrong about this, but GM and Delphi’s unionized pensioners didn’t take nearly the haircut (percentage wise) that a normal bankruptcy process produces. Although, if  UAW VEBA equity in the new-GM tanks, that may be the case eventually.
    I’m surprised Visteon’s union workers weren’t able to structure a similar sweetheart deal. They’re being treated just like Delphi’s non-unionized workers, who were  tossed under the (standard bankruptcy) bus.

  • avatar
    AccAzda

    Can I ask a open ended question…

    Who would “want” to take a buyout from a automaker.. and actually spend 25g on THEIR product.

    Also.. so is this what happens when the white collared get their benefits and raises back?

  • avatar
    detlump

    Don’t forget that buyouts are not tax exempt, so take that $50K and subtract taxes, you are around $35K.  Tuition at a decent school, not UM, is around $500-700/credit hour.  With other living expenses, that is not going to last long.
    The bailout should be conditional on honoring all employer obligations toward employees, union and non-union.  Otherwise, it makes more sense to fold up these companies and just give the bailout money right to the employees.  Or just nationalize them, clear out the board, and zero out the shareholders.  Why pay out unemployment, at least have the workers do something rather than sit at home.


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