Ford 2006 Annual Report Download - page 81

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Notes to the Financial Statements
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NOTE 17. EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES (Continued)
The plant idlings and shift reductions described above are expected to create a population of covered hourly
employees who will be permanently idled because we do not have the ability or intent to redeploy or absorb them in our
operations (the "affected employees"). The Jobs Bank Benefits reserve ("reserve") includes an amount for benefits
expected to be provided in their present form under the current UAW and CAW collective bargaining agreements, which
are scheduled to expire in September 2007 and September 2008, respectively, and an amount for similar benefits in an
expected modified form under new collective bargaining agreements after expiration of the current agreements. During
2006, we recorded an expense of $2.6 billion for the Jobs Bank Benefits reserve. The reserve balance is reduced for
Jobs Bank Benefits payments made to employees, and when employees accept relocation packages. In addition, the
reserve is adjusted for the estimated cost of voluntary separation packages to be offered in lieu of Jobs Bank Benefits.
As of December 31, 2006, approximately 14,100 of the estimated 25,800 affected employees had accepted voluntary
separation packages (including those affected employees who accepted enterprise-wide buyout offers described in the
"Other Actions" section below). About 1,000 of the estimated 25,800 affected employees had agreed to relocate to other
facilities as of December 31, 2006.
The Jobs Bank Benefits reserve balance at December 31, 2006 was $1 billion, and represents our best estimate of the
liability we will incur for the remaining 8,100 UAW-represented employees (including ACH) and 2,600 CAW-represented
employees at the facilities we plan to idle who have not accepted a voluntary separation package. This amount takes into
account several factors: the demographics of the population at each affected facility, redeployment alternatives, and
recent experience relative to voluntary redeployments. Due to the complexities inherent in estimating this reserve, our
actual costs could differ materially. We continue to expense costs associated with the small number of employees who
are temporarily idled on an as-incurred basis.
In addition to the announced plant idlings and shift reductions discussed above, the Way Forward plan includes
additional plant idlings for which the specific facilities have not yet been announced. We have not accrued any costs for
benefits that may be provided to employees working at these facilities. The execution of the plans for these facilities is
dependent on the resolution of many contingencies, including the negotiation of future labor agreements, the successful
implementation of our product cycle plan, the resolution of alternative capacity actions, and changes in our market share
between now and the planned idling of those facilities. Our current estimate for the cost of benefits that we anticipate
could be paid to employees at the remaining facilities is about $700 million (on a discounted basis). Although it is
probable that we will take the necessary actions to reduce our manufacturing employment, the amount of our estimated
benefit obligation is highly dependent on the resolution of the previously-mentioned contingencies. No estimated value is
more likely than another, and therefore, the benefit obligation is not reasonably estimable.
Other Actions
UAW Voluntary Separations: During 2006, we offered early retirement and voluntary separation programs to all Ford
and ACH hourly employees in the United States. These programs resulted in an additional 22,300 voluntary separation
acceptances, and we have recognized a pre-tax charge of $1.9 billion in 2006 related to these acceptances (separate from
our Jobs Bank Benefits reserve discussed above). Hourly employees in Ford North America who accepted an early
retirement or separation package are expected to leave the Company by September 2007, though employees have an
opportunity to rescind acceptance until the time of separation. In 2005, approximately $88 million of pre-tax charges were
incurred for hourly separations, of which approximately $62 million was related to ACH.