North American Restructuring
We continue to make the tough decisions necessary to lower production to match our production capacity to demand for new vehicles. Over the last three years, Ford has significantly reduced employment levels in our North America business unit, lowering payroll from 135,700 individuals at the end of 2005 to about 75,200 individuals at the end of 2008. (These figures do not include dealership personnel.) We reduced U.S. salaried personnel costs by about another 10 percent in early 2009, cut contract personnel by 50 percent over the last three years and offered another round of buyouts to United Auto Workers (UAW) in the spring of 2009.
The majority of the personnel reductions over the last three years were the result of early retirement offers or separation packages to U.S. employees, including Ford employees at our Automotive Components Holding (ACH) plants. However, in order to reduce operating costs even further, we took the difficult but necessary step of involuntary separations among salaried workers.
Although we achieved our previously announced goal to operate with between 55,000 and 60,000 hourly non-ACH employees in North America by the end of 2008, we embarked on additional personnel reduction actions last year to achieve even lower hourly employment levels and better match our vehicle assembly operations to consumer demand. By the end of 2008, our hourly non-ACH workforce totalled 49,600.
Since 2005 we have closed 12 manufacturing facilities in North America (including ACH facilities), and we have announced four additional plant closures slated to take effect between 2009 and 2011. Two of these planned facility closures involve ACH facilities, with one ACH plant closing in 2009 and another in 2011. We are exploring our options for the four remaining ACH plants and intend to transition these businesses to the supply base as soon as practicable.
We have attempted to handle workforce separations and plant closings with respect for the people and communities affected. For example, we have offered UAW-represented employees a selection of voluntary separation packages, including traditional offers of early retirement as well as innovative programs designed to help employees transition to new jobs requiring new skills. Other actions we took to handle downsizing and facility closures responsibly are detailed in the Economy section of this report.
In February 2009, our two top executives, Bill Ford and Alan Mulally, voluntarily agreed to accept a 30 percent reduction in salary for 2009 and 2010. As previously announced, Mr. Ford has requested that his total compensation be set aside, to be paid only at a point when the company's global automotive operations have returned to profitability. In addition, our Board of Directors has voluntarily agreed to forgo all cash compensation for 2009.
We took a number of additional steps to reduce salaried personnel costs, including:
- Eliminating 2009 merit pay increases and performance bonuses
- Suspending 401(k) matches, tuition assistance and dependent scholarships
- Capping retiree life insurance at $25,000
- Increasing employee cost sharing in benefit programs