We are keenly aware of the interconnections between our Company and its employees, business partners and the communities in which we operate. Our investment in manufacturing facilities and our employment of hundreds of thousands of people has helped to build and sustain vibrant, stable communities. We value this contribution, so it is painful to restructure our North American operations. Because of our commitment to our employees and communities, it is critical that we handle the downsizing in a responsible way. Some of the steps we have taken to do this are detailed below.
Workforce Reductions
Hourly Employees
During 2006, all of our UAW-represented hourly employees were offered the opportunity to leave the Company. As an incentive, we offered these employees eight different voluntary packages to select from, including four traditional offers (such as early retirement) and four innovative programs designed to help employees transition to new jobs requiring new skills.
For example, Ford is offering specialized support to employees who elect to separate from the Company to attend college. Pursuant to our Educational Opportunity Program, hourly U.S. employees with at least one year of service were eligible for up to $15,000 in tuition reimbursement per year for up to four years, paid directly to an approved college or vocational school. The program also offered an annual stipend worth about 50 percent of the employee's annualized straight-time wage rate and continued health insurance and other benefits while the employee was enrolled in the program. (Further details of this plan and the full list of offers to hourly employees are available here).
At each plant, we invited employees, schools and prospective employers to an "Opportunity Fair" as a way to match employees who were making decisions about leaving the Company with educational opportunities and prospective employers. We also offered training to employees in searching for jobs, relocating and weighing their options, such as further education.
Our approach was to communicate extensively – to employees directly, to plant management, to the national and local UAW leadership, who represent our hourly employees, and to the affected communities.
Ford began the year with about 83,000 UAW-represented employees, not including ACH employees. Through year-end 2006, about 37,000 of our UAW-represented hourly workers had accepted (and not rescinded) package offerings for voluntary separations from the Company. The vast majority of these employees are expected to separate from the Company by September 2007, though many of the offers include an opportunity for the employee to rescind acceptance until the time of separation. This figure includes the buyout offers preliminarily accepted during the open enrollment period and about 8,000 acceptances received earlier in 2006 during targeted plant-by-plant buyout offerings to Ford and ACH employees. Of the acceptances, approximately 6,000 were by hourly employees at ACH.
Just over half of the buyouts accepted during the open enrollment period were by employees who accepted one of the nontraditional packages, which provided options such as pre-tax lump sum payments, tuition reimbursements or scholarship funds for family members.
The acceptances are preliminary, as all buyout offers are voluntary and include an employee's opportunity to rescind acceptance up until the time of their separation from the Company.
Salaried Employees
We continued to offer separation packages to salaried employees in 2006. Salaried employees who received offers for voluntary separation or early retirement were also given information about what their separation package would be if the Company did not receive enough volunteers and had to move to involuntary separations.
Most of the employees accepting a voluntary package left the Company by the end of the first quarter of 2007, though some departures will be later in the year due to critical business needs. We tried to maintain open communication throughout the process and accommodate employee needs during this difficult time. For example, in response to the requests by a number of departing employees to stay connected and continue supporting the Company's turnaround, the Ford Employee Network is being made available to all employees leaving pursuant to the U.S. Salaried Separation Programs. Employees who have left will continue to have access to the Web site for Company news and activities, and links to the employee purchase plan Web sites.
All managers were informed of the company's knowledge retention tools to ensure continuity and avoid the loss of critical knowledge and experience from exiting employees.
Health and Safety Challenges
As our manufacturing facilities lose full-time employees, we may use temporary employees to fill in as needed.
To prevent safety-related incidents and maintain high levels of product quality, we worked with the UAW joint committees on safety and quality to develop a week-long, standardized training for temporary employees before they begin work. Through the first quarter of 2007, facilities using temporary employees have experienced unchanged or improved safety records.
Facility Closures
Closing a facility – whether a manufacturing plant or an office building – presents a set of challenges that must be handled responsibly, from working with the host community to ensure a smooth transition to a new use for the property, to handling any needed environmental remediation and disposing of surplus fixtures and furniture.
Communicating with the Community
When the decision is made to close a facility, environmental professionals assess the facility and surrounding land. This assessment reveals the environmental condition of the site and the actions needed to ensure that future use of the site will not pose any risk to human health or the environment.
Ford consults with real estate partners and representatives of the local community about potential uses for the property. In some cases, Ford redevelops the property itself; more often it seeks a well-qualified developer to buy and convert it. Some properties remain in industrial use. In other cases, the surrounding communities have changed since the plant opened, and new uses, such as retail, commercial or residential, are possible and desirable. The use of the property is selected with regard to Ford's goal to maximize returns from the sale of the property, the existing environmental footprint of the property and the community's needs and concerns, which often include appropriate development and tax revenues.
For example, Ford's Twin Cities Assembly Plant in Saint Paul, Minnesota, will be idled in 2008. The 143.6-acre site, located near the Minneapolis/Saint Paul International airport, overlooks the Mississippi River, and is surrounded by desirable neighborhoods.
The city has convened a task force that includes community and Ford representatives and is facilitated by consultants experienced in community "visioning" projects. The task force's mission is to develop three to five redevelopment options for the city to weigh as it decides on new zoning for the property. The goal is to have a plan in place before the plant's scheduled shutdown. Many developers are interested in the site, and one possible scenario involves developing it as a "green" community complete with its own renewable energy source.
Environmental Assessment
We assess the condition of each facility to be closed to determine the need for environmental remediation and inform decisions about redevelopment options. All properties are cleaned up to the standard appropriate for its future use, whether industrial, commercial or residential. In some cases, Ford conducts any needed cleanup; in others, the purchaser of the property will perform the remediation. In certain instances, environmental monitoring of the property will take place even after redevelopment.
Consolidating Operations
With fewer employees, we have the opportunity to consolidate functions that now stretch across multiple buildings into fewer locations, which also improves communication and collaboration. A project to consolidate Ford's Product Development functions in Dearborn, for example, involves moving 8,000 to 10,000 employees into different office spaces to reduce facilities costs. When the project is completed, Ford's Product Development teams will be housed in far fewer buildings. The Powertrain group alone has been consolidated from 19 buildings to just five. In this case, the benefits of relocating go beyond the dollar savings. The moves have allowed Product Development to better locate related functions to increase opportunities for interaction, sharing of knowledge and efficient collaboration.
Many facilities to be closed contain valuable property, whether industrial equipment or office desks and chairs. We have developed an information system to inventory and manage the surplus by reusing it at other Ford facilities or providing it to a broker to sell.
Computer equipment is returned to Ford's Information Technology function for reuse or recycling.
