Ford Tuition Assistance May Cushion New Round of Job Cuts

January 24, 2006

There may be an inkling of good news for the thousands of workers at Ford who learned Monday that they might lose their jobs.

The Detroit auto company made the much-awaited announcement of its "Way Forward" plan, which will cut 25,000 to 30,000 jobs in the next six years.

But days before, Ford made an announcement that might ease the pain of its own employees as well as workers at its competitors: a new tuition program. Under it, workers at Ford’s Edison, New Jersey, plant, which closed in 2004, and the 1,500 workers who were laid off in December after Ford closed its Avon Lake, Ohio, plant, can receive up to $15,000 a year toward school as long as they go full time. They also will receive full medical benefits and half of their usual hourly salary.

Spokeswoman Marcey Evans says the company does not know whether it will extend the program to all 1,100 workers in the company’s Guaranteed Employee Numbers Program, more commonly known as a job bank, which provides laid-off workers with full salary and benefits. But observers predict that it will. They also anticipate that General Motors, Delphi and DaimlerChrysler will follow in its footsteps as the companies prepare for intense negotiations with the United Auto Workers.

Job banks have become increasingly costly for the Big Three automakers as layoffs increase. That’s why Ford’s move right now makes sense.

"This is going to be a huge negotiation point for the Big Three in 2007 when the UAW contracts expire," says Sean McAlinden, a director in the economics business group at the Center for Automotive Research in Ann Arbor, Michigan.

McAlinden estimates that job banks cost about $130,000 per worker. That adds up, considering that GM has 5,300 workers in its pool. Delphi has 4,000, and DaimlerChrysler has 2,300. Ford’s numbers are expected to rise dramatically, given its announced layoffs.

At the Automotive News World Congress this month, UAW president Ron Gettelfinger said that he does not believe that "it’s time to change" the jobs banks, but observers predict he might not get his way.

"If I was a Ford worker who had been laid off, I would take the tuition, because it is very likely that these job banks are going away," says Jim Gillette, director of supplier analysis at CSM Worldwide.

Evans concedes that the program will make it easier for Ford to manage its pool of idled workers, but would not say that the company made the move to ease negotiations with the UAW next year. "We did this to benefit the employee," she says.

GM plans to take a close look at Ford’s program before deciding whether it would make a similar move, says Stefan Weinmann, a GM spokesman. Delphi has no plans to follow Ford’s lead currently, spokeswoman Lindsey Williams says. And DaimlerChrysler has no plans to offer a similar program, company spokesman David Elshoff says.

Being the first to offer a tuition program may make negotiations easier with the UAW next year because it is a gesture of good will, says Arthur Wheaton, an industry education specialist at Cornell University’s School of Industrial and Labor Relations. "Unions are more willing to negotiate innovative contracts with someone they trust," he says.

--Jessica Marquez