Word from Detroit is that the Ford Motor Co is getting ready to offer lump-sum pension buybacks to close to 100,000 white-collar retirees and former employees within the next month or two. Proving that Ford truly is the automaker that is dedicated to fixing its long-term problems now and on its own, the buyback offer is being made to mitigate a nearly $50 billion risk it is facing.
Depending upon how many pension receivers take the buyout offer, Ford could reduce its $49 billion long-term U.S. pension liability by up to one-third. Talking about this plan, Chief Financial Officer Bob Shanks said, “We think if we can get at least a meaningful number of employees, this will take billions of dollars of obligations potentially off the table.”
However, there is no way of gauging just how many folks will go for the offer. Speaking about this, Rick Popp, Ford’s director of employee benefits, said, “I feel schizophrenic at times. There are times when I think it will be very popular. Other times, I think nobody will take it. To us, it’s an opportunity.”
If the number two American automaker’s offer works, it should be expected that other American automakers will follow suit to help them get out from under their own pension dangers.