Ford CEO Alan Mulally: time to share the wealth.
About 20,000 Ford workers will have reason to celebrate after receiving their first combination of merit raises and bonuses since 2008.
The announcement – first revealed in a letter to workers last week – reflects the maker’s increasing fortunes, Ford reporting $6.6 billion in earnings for the first three quarters and expecting to add about $1.7 billion more to that tally, according to analysts’ estimates, when it reports earnings for the last quarter later this month.
The raises, which will take effect on April 1 should average about 2.7% and apply to 20,000 salaried employees – most of them in the U.S. and Canada.
Workers were given performance bonuses last year, and merit raises in 2010. The last time they received both bonuses and pay hikes was in 2008.
White-collar workers have normally received substantial financial packages in the Detroit industry but pay and benefits were sharply curtailed during the years leading up to the Great Recessions, when both General Motors and Ford were forced into bankruptcy. Ford was able to avoid a Chapter 11 filing by taking on about $30 billion in debt – which it is now rushing to pay down.
The maker hit bottom in 2006, when it lost $12.6 billion.
The white-collar payments are”in line with Ford’s commitment to provide competitive base salaries and profitable growth for all,” said Mark Fields, Ford’s President of the America in the letter to salaried staff.
Indeed, Ford has been sharing the fruits of its turnaround with all its stakeholders lately. Last month, the maker announced plans to resume payment of its dividend on March 1st. That move, in turn, triggered an upgrade in Ford’s debt rating; it now stands one step short of CEO Alan Mulally’s goal of returning the rating to industrial grade.
U.S. hourly workers, meanwhile, received a $6,500 signing bonus for approving their new, 4-year contract last autumn. That was followed, in December, by profit sharing checks worth an average $3,252 based on Ford’s North American earnings during the first half of 2011.
They’re expected to get a second profit sharing check, in March, covering earnings for the last half of 2011.
Top management has also done well by Ford’s turnaround. Last March, the automaker announced it was issuing nearly $100 million in stock to Mulally and Ford Chairman William Clay Ford, Jr., on top of about $15 million in pay and bonuses.