Ford Juggles Job Cuts and Manager Bonuses

As Ford Motor Co. reports big losses and slashes thousands of jobs, executives consider paying bonuses to managers who control costs. The move could be another public-relations headache.

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We all heard the news about Ford last week: huge, historic losses in the billions of dollars. So this week's news might come as some surprise: potential bonuses for some company executives. Ford CEO Alan Mulally says he's willing to pay key managers to stay at the battered auto giant. But he's got to sell that idea to the unions and the stockholders.

NPR's Frank Langfitt reports.

FRANK LANGFITT: Alan Mulally is trying to turn around Ford after the worst year in its history. To do so, he says he may have to pay performance bonuses to keep critical people from leaving. He explained his thinking to reporters in a recent conference call.

Mr. ALAN MULALLY (CEO, Ford Motor Company): You know, we're in a tough situation right now, and we need the absolute best skilled and motivated team in all of the positions.

Mr. BRIAN QUANTZ (Vice President, United Auto Workers Local 900): There's probably some truth to that.

LANGFITT: That's Brian Quantz, vice president of the United Auto Workers Local 900 in Wayne, Michigan. He appreciates that Mulally's in a tight spot.

Mr. QUANTZ: But looking from a, you know, UAW standpoint and really the average person working in the plant is going to say, you know, that's crap. The average guy, you say, hey, give concessions and I'm going to give the boss bonuses. Most people aren't buying it.

LANGFITT: The public might not either. Ford is getting rid of more than 50,000 employees, most of them blue collar, and it lost nearly $13 billion last year.

Sam Singer runs a corporate communications firm in California. He says when a company pays bonuses after such dreadful results, it can undermine a brand.

Mr. SAM SINGER (Singer Associates, Inc.): I think Ford Motor Company winds up paying a big price if they reward executives, even though it may be the right thing to do. Because to many people rewarding the current Ford executives may seem like they're awarding the designer of the Edsel.

LANGFITT: Mulally emphasized that any bonuses would be based on performance. And since Ford actually lost money, bonuses would have to be tied to things like cost control. Analysts say a brain drain at Ford is a real problem. Managers have been leaving for auto parts suppliers and rivals like Toyota.

Steven Szakaly follows the industry at the Center for Automotive Research, an Ann Arbor think tank.

Mr. STEVEN SZAKALY (Center for Automotive Research): Ford has to do something to stop the current departure of key management, definitely.

LANGFITT: Still, there's no way to pretty-up the image of workers losing jobs while some managers make more money. That's why Chris Gadiz says firms should do all they can to soften the blow of layoffs. Gadiz works for the P.R. firm Hill & Knowlton.

Mr. CHRIS GADIZ (Hill & Knowlton): Companies typically don't get criticized because they have to lay off people, but they get criticized - if not crucified, and justly - if the manner in which they do it is seen as cold and disrespectful and uncaring.

LANGFITT: Ford did offer good financial packages for departing workers, up to $140,000 per person. Ultimately, though, P.R. consultants say a company's image hinges on whether leaders can turn the business around. And if they can, consumers tend to be forgiving.

Frank Langfitt, NPR News.

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