30% salary cut at Ford

Talk about getting religion and sending a message to Washington.

Tuesday afternoon Ford [F 2.11 0.11 (+5.5%) ] took another huge step in showing it's committed to cutting costs and "sharing the pain".

The company agreed to cut the salaries of Chairman Bill Ford and CEO Alan Mulally by 30% for the next two years, waived cash compensation of the board of directors, and is eliminating performance bonuses for global salaried employees and senior executives for 2009.

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more at http://www.cnbc.com/id/29385456

It seems someone actually has a clue as to where to trim the fat to begin with. Way to go Ford!

Alan Mulally is the real deal. Unlike the buffoons who run Chrysler and GM. He was a bigwig at Boeing before he came to Ford.

That's not going to do much for the company. In the grand scheme of things it's a small amount of money. It's an attempt to get public support. They need to cut line workers' pay and benefits by 30% or more to actually get back on track.

Are you kidding me. Yeah let's cut the man that is at the lower end of the pay scale. How would you like it to have your benefits and pay cut by 30 percent.

AKBroncoII said:

Are you kidding me. Yeah let's cut the man that is at the lower end of the pay scale. How would you like it to have your benefits and pay cut by 30 percent.

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Exactly. Not only that if line workers were paid zero dollars and no health care it wouldnt affect the pricing of their vehicles much.(about $500) Which in turn wouldnt increase sales.

cut fat at top and work down and line works??? come on not all but lots make 35 plus and hour plus health care i make 17.50 and work out side hard work 6 days a week im not saying cut them in half but some would help but most of the cuts should be at the top

ex91 said:

cut fat at top and work down and line works??? come on not all but lots make 35 plus and hour plus health care i make 17.50 and work out side hard work 6 days a week im not saying cut them in half but some would help but most of the cuts should be at the top

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Actually the line workers make just over $28 an hour. Skiled tades a few more. I dont think any of us would like a pay cut no matter what we do. We would all complain as well.

AKBroncoII said:

Are you kidding me. Yeah let's cut the man that is at the lower end of the pay scale. How would you like it to have your benefits and pay cut by 30 percent.

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Actually, I wouldn't mind it if I knew I was being payed a unionized inflated wage. Their current wages are NOT sustainable. They either need to take a substantial wage/benefit cut, or they'll loose their jobs. Eventually the government (defined as our tax dollars) will stop bailing them out, and they'll loose the jobs completely if they don't take a cut. Those jobs will go overseas, forever, just as all union-destroyed jobs do.

The average cost for a line worker including wage, pension, medical, etc. is $70. Toyota and other non-union companies have a cost near half of that.

Cuts at the top do NOTHING, because that's such a small cost overall.

Dar70 said:

Exactly. Not only that if line workers were paid zero dollars and no health care it wouldnt affect the pricing of their vehicles much.(about $500) Which in turn wouldnt increase sales.

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Let's assume your number is correct, even though it's not....it would still translate into $500 more profit per vehicle sold. Which is substantial.

And much of the labor cost comes from legacy union pension plans and medical benefits for retirees. Eliminate those and it goes up to thousands of dollars per car.

Exactly. When the guy who barely graduated high school (no offense to those in this position) standing on a line bolting parts together is getting the same hourly rate and benefits as the salaried guy who toughed it out through 4 years of engineering school, you know the union guy is making an unsustainable wage and the company can't operate like that.

It sucks because so many workers have relied on union wages for their livlihood for so long and it's hard to take a cut. But the unions have to realize that they're simply not worth what they're currently making. If they want to have a job at all in five years they better take a cut now.

As for executive pay, I agree they shouldn't make more than a low base salary when the company is losing money. When the company has a good year and makes lot of money, then by all means they deserve a nice bonus. But big bonuses and salary for the people running a failing company is not right.

Evan said:

Actually, I wouldn't mind it if I knew I was being payed a unionized inflated wage. Their current wages are NOT sustainable. They either need to take a substantial wage/benefit cut, or they'll loose their jobs. Eventually the government (defined as our tax dollars) will stop bailing them out, and they'll loose the jobs completely if they don't take a cut. Those jobs will go overseas, forever, just as all union-destroyed jobs do.

The average cost for a line worker including wage, pension, medical, etc. is $70. Toyota and other non-union companies have a cost near half of that.

Cuts at the top do NOTHING, because that's such a small cost overall.

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i agree with you on most points, BUT if you are talking about ford taking bailout money you would be wrong they have borrowed money from a secure line of credit, not the government, they say they can make it through 2009 without borrowing money from their secure credit line but if they cant then they will borrow more, i think if more Americans heard this they would by ford vehicles so they should make it

its simple, if you just hand out money with no consequences they will think they can just take money as much money as they want, throwing money at something cant solve the problem, they wont change what they are doing

I saw a PMI commercial dishwasher plant go to Mexico after a UAW dispute in 1995. That was in Troy, Ohio. My wife was an engineer at PMI before she went back to grad school and that was one of the plants she did things at. The workers were nice to her and made her neat things on the laser cutter. Then they were all laid off and the plant closed and production moved to Mexico. By law, the building couldn't be used for anything after that so last I heard it was still empty.

I do not like unions. They had a part to play in our history. We don't need it anymore. Sure, if I were making $30/hr to sit in a chair and stand up once in a while to tighten a screw, I wouldn't want to take a cut. I watched the old Plant One at Cummins one day and it made me want to heave. Any one of us could build the whole darn engine in an hour. These guys have rules that you wouldn't believe. I'm sure they were disgusted too. It seriously cobbles production. It's retarded. In the past the unions represented the workers competing with industry. Now they are hampering our country's ability to compete in the world. If you aren't disgusted by stupendous inefficiency watching a union production line will add that experience to your repetoire. It did mine.

It's not going to get better for the worker. You better get your education.

And about executives. These guys deserve their money. That 30% cut isn't anything. That's their salary. They make 10x more in other ways besides their salary. Getting stock is a major way. But it's a tough, tough job to be a high executive. The hardest part about doing anything is the thinking. Just like these forums, you plan and decide what you are going to do to your truck--at least I do. You get all the info you can--what has worked and hasn't worked--and then you put together a plan and you do it. The doing it for me goes by so fast I don't even remember it. Once the plan is in my hand the work is done. I don't sit there with the torch in my hand and start thinking. I do it on my computer for days before and then do it in a methodical way. DO you have any idea how many steps there are between the dragline scraping up ore to the car in the dealership? The CEO of Ford does. He frets every detail. To get into his seat you need mental talent and organizational skills beyond imagination. There is no go home and drink a beer. My wife's boss is a VP and she is on the phone or getting emails from him up until 9 or 10 at night and then again starting at 5am. They have about 200 people that design engine controls for future engines--things that aren't possible now HAVE to be working in three years when the EPA says you need to have your emissions down to here. They have to come up with ideas out of thin air, use their experience and science to pick the best ideas, get people developing it--is it possible to make these parts even? Can we control the system once it's made? You put millions toward something without being certain of the outcome. These things keep you up at night. I know. It always comes down to the wire. That's just a small part of a whole car--let alone a whole car company. The CEO of Ford has to worry about every level of it--frontal crash, OSHA in his plants, the friggin UAW, steel prices, tire manufacturers, faltering suppliers. The list is crazy and endless. He desrves millions and if you are a worker that is responsible for simply putting a damn bolt in a hole, you should be kissing his aas, not complaing about his salary. WIthout the executives, there's no Ford. Your job depends on the business success of the company.

Googling, Ford has about 45,000 UAW employees. Average pay is $28 per hour. At 2k hours per year, a UAW employee makes $56,000 gross.

Mulally's pay cut amounts to about $6.5 million per year, which is the equivalent of 116 UAW workers' gross pay.

Some folks advocate dropping UAW workers' pay across the board. Let's say $8.40, which is also a 30% cut. $16,800 per worker per 2k-hour year. $756 million for Ford's estimated 45,000 UAW workers together. So, yeah, cutting pay cross the bottom would amount to more savings to Ford than cutting pay at the top.

But, there is something to consider. Ford isn't the only one broke. So are the workers and their families. Remember, we're on the tail end of years of factory layoffs--may of those UAW workers are supporting their spouses, kids, parents, in-laws, etc. And all of these people live in broke communities, so if you go that route instead of taking $6.5 million from wherever Mulally spends his money, you'll be taking $756 million from broke communities all over.

So it's a lot more complex that just what's best for Ford's books.

To Ford's credit, they're one of the better balanced companies out there. Before the economy started crashing there were firms that were staffed with millionaires and billionaires at the top, and phone banks in India at the bottom.

The fact of the matter is that for decades now we've been concentrating wealth in the most stagnant part of the economy--the rich. That money had to come from somewhere, and it came out of the hands of the rest of the economy, which is the part that moves things. The economy isn't stagnant because the billionaires are strapped for cash. The economy is stagnant because the rest of us are strapped for cash.

You can argue endlessly about who deserves what and bla bla bla--none of that crap matters. Numbers matter, and the numbers are with the poor and middle class. One rich guy, no matter what, simply cannot consume as much food as 116 regular people's families and will not employ as many farmers as a result. One rich guy can't raise as many children, build as many houses, pave as many roads, or screw in as many bolts as 116 of the poor and middle class.

One $6.5 million pay cut doesn't amount to squat compared to 45,000 $8.40 pay cuts over 2,000 hours because no matter what one man won't do as much work and make as much of an impact as 45,000 people. One $60 million pay cut still wouldn't hold a candle to it.

Likewise, paying one guy an extra $6.5 million isn't as worthwhile as paying 45,000 people an extra $8.40 per hour, or even just saving 116 jobs.

Ford doesn't build expensive cars just for the rich because that market is too small. They build cheap and medium cars for the rest of us. And the workers don't owe shit to Ford or the execs. If Ford weren't around, cars, buyers, assembly lines, and workers would still exist--they'd all just have different logos.

And the point during all of this restructuring is not to mindlessly cut costs all over the place. That's what the economy has been doing for the last 30+ years and we wound up with all of our factories in China, Japan, Taiwan, and Mexico. The point during all of this is to move the money back into the part of the economy that will make use of it. Otherwise, who will Ford sell cars to?

For those of you terrified of communism, yes, this is wealth redistribution. It gets used because it works when the economy is this far out of balance. Look at the recovery from the great depression--they taxed the hell out of the most wealthy and practically gave money away to the lower and middle class. And you know what the economy did as a result? It grew. We all raised and educated a bunch of kids, built a bunch of industries, invented a bunch of technology, and created a bunch of artwork all at the same time. Among other things, that gave rise to a generation wise enough to deal with civil rights.

One of the worst things to come out of the republican party is the religious belief that only the wealthy drive the economy and all of the rest of us are a bunch of damned parasites. That's bull. The most basic economies function just fine with no wealthy people at all. Hell, many of the small economies don't even use money--they're strictly barter. OTOH, there are no economies anywhere that consist of only wealthy people.

The guy that owns my company didn't create my job--the customers who need their trucks repaired created my job. Rich people didn't create their truck-driving jobs--shippers needing to move goods created their jobs. Rich people didn't create the shippers' jobs--the customers buying all of that crap created the shippers' jobs. Some people simply got rich on the way; good for them, but they're the cart, not the horse.

I don't know of any rich people who can eat 40,000 pounds of onions, but I know of hundreds and even thousands of regular people who go to my local HEB and buy onions each day.

Pay cuts need to start at the top. I'm sure Mr. Mulally will survive just fine on his remaining $15million per year.

What's his motivation to put up with the bullcrap? He could have retired before that job?

Anyone but me ever read Atlas Shrugged?