Visteon Giveth An Taketh Away (Money That Is)

The Detroit Free Press reported that Visteon Corp. has joined other major players in the auto industry that are trying to save money by suspending contributions to employee retirement accounts. But the Dearborn auto supplier has also decided to grant substantial raises to hundreds of underpaid salaried workers.

Visteon told employees last week it would suspend its contributions to 401(k) retirement accounts for 9,900 U.S. salaried workers as of Jan. 1. Former parent Ford Motor Co. will do the same with 45,000 white-collar employees, among other cost-cutting moves it plans to announce this week.

Visteon, the world's third-largest auto-parts maker, sent an e-mail to employees Thursday outlining several steps that would be taken in anticipation of an industry slowdown.

But the supplier also disclosed the outcome of its study of worker salaries, which led to some sizable raises.

They reported that Visteon commissioned a study that compared salaries of its nearly 10,000 white-collar workers with their counterparts at companies in a variety of industries, including the auto sector.

About two-thirds of the salaried employees were paid within 10 percent of the average, spokesman Craig Miner said.

More than half of the remaining workers were determined to be paid too little, he said, which was remedied with an equity adjustment, effective Saturday. Those who were paid more will not receive merit increases until their salary is in line with the average.

The company did not give specific figures.

The story continued; Such salary adjustments were common in many industries a few years ago, in the frenzied competition for talented workers, said David Cole, executive director of the Center for Automotive Research in Ann Arbor.

It stands out now, because most automakers and suppliers are trying to trim their white-collar ranks, he said.

"This is not an unusual type of thing, but it is unusual at a time of economic stress," Cole said.

Except for the elimination of the 401(k) contribution, benefits for current employees will not change. However, the company will offer less-generous pension and retiree health care benefits for salaried employees hired after Dec. 31. The new benefits will be "generally competitive" with the industry, Miner said.

The 401(k) contributions will "resume as quickly as affordable," Chairman Peter Pestillo said in the e-mail. The move will save about $25 million a year. The company previously matched 60 percent of employees' investments in the tax-deferred accounts.

Visteon also said that employees would get the total benefit of the company's previous contributions immediately, rather than having to wait five years to be fully vested.

Other automakers and large suppliers have made similar reductions in 401(k) matches recently, affecting about 85,000 workers. DaimlerChrysler AG's Chrysler Group and Delphi Automotive Systems Corp. have suspended their matches; General Motors Corp. has trimmed its match program.

Ford is expected to announce its 401(k) changes this week. A Ford spokesperson said the automaker also would announce several other white-collar, cost-saving moves, including: increased health care premiums and co-payments for white-collar workers, no merit increases for top executives in 2002, and the requirement that retirees from salaried positions contribute to their own health insurance costs starting next June.

The company also plans to eliminate one shift and 600 jobs at its Edison, N.J., plant, where Ranger pickup trucks are assembled.

Analysts said Ford's expected cuts to white-collar benefits and New Jersey UAW jobs look like only a small part of the broad restructuring needed to return the automaker to profitability.

By the end of the year, Ford will have lost money in three straight quarters for the first time in nearly a decade.