GM, Ford to End Salaried-Employee Pay Freeze on Demand Recovery
Dec. 15, 2009
General Motors Co. and Ford Motor Co., the two biggest U.S. automakers, will end pay freezes for salaried employees next year, adding to evidence they foresee increasing demand amid an economic recovery.
Ford has set aside funding for merit raises and will resume matching 401(k) retirement savings for as much as 5 percent of base pay in 2010, Mark Fields, its president for the Americas, told employees in a Dec. 10 memo. GM, which resumed 401(k) matches of as much as 4 percent on Oct. 1, said yesterday it will disclose details of a merit-pay program in early February.
“It certainly indicates that they expect better things in 2010 than in 2009,” said Stephanie Brinley, an auto analyst for AutoPacific in Troy, Michigan.
The automakers plan to boost pay after they beat analysts’ estimates for U.S. sales last month, stoking optimism that demand may be recovering from a slump caused by the deepest recession since the Great Depression. The industrywide November auto sales rate was also higher than a year earlier, the first time that has happened this year without government support.
The changes by Dearborn, Michigan-based Ford, which also include tuition assistance, will apply to 17,000 U.S. salaried employees.
“Clearly our One Ford transformation plan is not complete, but our plan is working,” Fields told employees in his e-mailed memo, which was reported earlier in the Detroit Free Press. “In this challenging business environment, it is more important than ever that we remain focused.”
Surprise Profit
Ford, the only major U.S. automaker to avoid bankruptcy, posted a surprise $997 million profit in the third quarter and has gained U.S. market share this year. After losing a record $14.7 billion last year, Ford told employees it wouldn’t grant raises this year. It suspended tuition assistance in 2008 and 401(k) matches this year, said Marcey Evans, a spokeswoman.
“We did commit to our employees that we would reinstate them when business conditions allowed it,” she said.
Ford rose 8 cents to $9.08 in New York Stock Exchange composite trading yesterday. The shares have almost quadrupled this year.
GM suspended its 401(k) match on Nov. 1, 2008. The company suspended merit pay as it tried to conserve cash and avoid bankruptcy. General Motors Corp. filed for a U.S. government- backed Chapter 11 bankruptcy reorganization on June 1 and emerged as General Motors Co. on July 10.
Last month, 70 percent of Ford’s production workers and 74 percent of skilled trades rejected concessions that included a six-year ban on some strikes and a freeze on entry-level wages until 2015. Ford had attempted to gain the same concessions the United Auto Workers union granted GM and Chrysler Group LLC as part of government-backed reorganizations.
In March, Ford’s 41,000 hourly workers agreed to give up annual bonuses, cost-of-living increases and some unemployment benefits.
LINK:
GM, Ford to End Salaried-Employee Pay Freeze on Demand Recovery - Bloomberg.com
Linear Mode
