Ford Brings Back Buyouts, Visteon Dumps Pensions on Public

by Edward Niedermeyer

December 21st, 2009 5:13 PM

ford brings back buyouts visteon dumps pensions on public

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

#Bailout #Buyouts #Ford #PBGC #Pension #Suppliers #Visteon

Comments

Join the conversation

2 of 8 comments

Accs on Dec 21, 2009

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?

Like Reply
Detlump on Dec 21, 2009

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.

Like Reply

Recent Comments

Malcolm It's not that commenters attack Tesla, musk has brought it on the company. The delivery of the first semi was half loaded in 70 degree weather hauling potato chips for frito lay. No company underutilizes their loads like this. Musk shouted at the world "look at us". Freightliners e-cascads has been delivering loads for 6-8 months before Tesla delivered one semi. What commenters are asking "What's the actual usable range when in say Leadville when its blowing snow and -20F outside with a full trailer?
Funky D I despise Google for a whole host of reasons. So why on earth would I willing spend a large amount of $ on a car that will force Google spyware on me.The only connectivity to the world I will put up with is through my phone, which at least gives me the option of turning it off or disconnecting it from the car should I choose to.No CarPlay, no sale.
William I think it's important to understand the factors that made GM as big as it once was and would like to be today. Let's roll back to 1965, or even before that. GM was the biggest of the Big Three. It's main competition was Ford and Chrysler, as well as it's own 5 brands competing with themselves. The import competition was all but non existent. Volkswagen was the most popular imported cars at the time. So GM had its successful 5 brands, and very little competition compared to today's market. GM was big, huge in fact. It was diversified into many other lines of business, from trains to information data processing (EDS). Again GM was huge. But being huge didn't make it better. There are many examples of GM not building the best cars they could, it's no surprise that they were building cars to maximize their profits, not to be the best built cars on the road, the closest brand to achieve that status was Cadillac. Anyone who owned a Cadillac knew it could have been a much higher level of quality than it was. It had a higher level of engineering and design features compared to it's competition. But as my Godfather used to say "how good is good?" Being as good as your competitors, isn't being as good as you could be. So, today GM does not hold 50% of the automotive market as it once did, and because of a multitude of reasons it never will again. No matter how much it improves it's quality, market value and dealer network, based on competition alone it can't have a 50% market share again. It has only 3 of its original 5 brands, and there are too many strong competitors taking pieces of the market share. So that says it's playing in a different game, therfore there's a whole new normal to use as a baseline than before. GM has to continue downsizing to fit into today's market. It can still be big, but in a different game and scale. The new normal will never be the same scale it once was as compared to the now "worlds" automotive industry. Just like how the US railroad industry had to reinvent its self to meet the changing transportation industry, and IBM has had to reinvent its self to play in the ever changing Information Technology industry it finds it's self in. IBM was once the industry leader, now it has to scale it's self down to remain in the industry it created. GM is in the same place that the railroads, IBM and other big companies like AT&T and Standard Oil have found themselves in. It seems like being the industry leader is always followed by having to reinvent it's self to just remain viable. It's part of the business cycle. GM, it's time you accept your fate, not dead, but not huge either.
Tassos The Euro spec Taurus is the US spec Ford FUSION.Very few buyers care to see it here. FOrd has stopped making the Fusion long agoWake us when you have some interesting news to report.
Marvin Im a current owner of a 2012 Golf R 2 Door with 5 grand on the odometer . Fun car to drive ! It's my summer cruiser. 2006 GLI with 33,000 . The R can be money pit if service by the dealership. For both cars I deal with Foreign car specialist , non union shop but they know their stuff !!! From what I gather the newer R's 22,23' too many electronic controls on the screen, plus the 12 is the last of the of the trouble free ones and fun to drive no on screen electronics Maze !