30,000 Union Workers Accept Buyouts at Ford

Workers from the Ford Motor Company have recently decided to leave their jobs in exchange for a buyout of early retirement benefits, lump-sum payments, tuition reimbursement, scholarship money, and cash payouts. Workers will begin to leave the company in January and must be gone by September 2007. The Ford workers are represented by the United Automobile Workers union and were offered up to $140,000 to retire early. Of the 75,000 workers around 38,000 have agreed to the buyouts which were available to Ford Motors entire hourly work force. This will leave Ford with its smallest workforce in decades.

Ford needs to eliminate 25,000 to 30,000 jobs as they close plants in order for their Way Forward overhaul plan to work properly because of their decrease in market share. The take on the offer was surprisingly high for the 15,000 that was estimated. “While I know that, in many cases, decisions to leave the company were difficult for our employees, the acceptances received through this voluntary effort will help Ford to become more competitive,” said Alan Mulally, Ford’s new chief executive. After the buyouts Ford does not expect to begin making a profit again until at least 2009.

This proves people will do almost anything for money and I can see this decrease in employment hurting our economy in the long run because the buyouts have put 38,000 workers out of a job. These people although they received good benefits from Ford are most likely going to need some other source of income or will resort to welfare. Do you think this will result in the free rider problem? What are you thoughts on the situation?