Ford Wringing More Costs From Co By Controlling Absenteeism
06 Mai 2009 - 8:48PM
Dow Jones News
Ford Motor Co. (F) may wring a few more millions in costs from
its annual operations by controlling what has been a chronic money
waster for the U.S. auto makers - absenteeism.
The auto maker said Wednesday its next generation Ford Focus
small car will be profitable when they begin rolling out of a
converted Michigan truck plant next year.
Ford Chief Executive Alan Mulally credited much of the Focus's
future profitability to the new round of concessions it forged with
the United Auto Workers in February.
Those concessions are also allowing the auto maker to close some
of its attendance loopholes by changing the rules on overtime and
ending the practice of paying cash for unused vacation.
"We can save up to $60 million with every one percent
improvement in absenteeism," Ford manufacturing chief Joe Hinrichs
said adding Ford's absenteeism rate was 7.6% four years ago. "In
the past there were opportunities for abuse by those that wanted to
work the system. That has changed."
The Dearborn, Mich.-based auto maker needs all the financial
savings it can get if it hopes to weather one of the worst vehicle
sales downturn in 25 years and avoid taking financial aid from the
federal government. Ford posted a first-quarter loss of $1.4
billion.
Under the changes, hourly employees are now paid overtime after
40 hours of work instead of at the end of eight hour shifts. A
worker can no longer cash in his unused vacation time for pay at
the end of the year.
"Let's say you stayed up late watching a championship game one
night and decided the next day to call in sick," Hinrichs said.
"You always knew you could get paid for that day just by cashing in
one of your vacation days later. Not any more."
UAW Vice President Bob King said the membership had no problem
backing the changes. Ford had been introducing different plans to
fight absenteeism at different plants for the past couple of years.
Now it's one plan for everyone.
"Someone else has to pick up the load when a person isn't
there," King said. "There is a definite negative impact on the
product when people aren't there."
Controlling absenteeism will also play a crucial role as Ford
looks to shift to more team manufacturing in all of its plants
similar to Toyota Motor Co.'s (TM) U.S. plants. Teams work on
manufacturing problems together, thereby boosting efficiency.
"Absenteeism is a serious problem because of the costs
associated with keeping extra people to fill those slots and the
impact on efficiency," said Ron Harbour, who produces an annual
report on auto manufacturing for consultant Oliver Wyman. "If you
have a team leader and he is busy covering for the absent employee
then he spends all his time on the line rather than working to
improve the operations."
General Motors Corp. (GM) is working on similar cost-cutting
deals with the UAW. Chrysler LLC was able to secure an attendance
policy that results in firing if a worker misses or arrives late
for the start of a shift. Discharge occurs after seven
offenses.
-By Jeff Bennett, Dow Jones Newswires; 248-204-5542;
jeff.bennett@dowjones.com
(Wall Street Journal reporter Matthew Dolan contributed to this
story)