Ford Motor Company plans to email employees on Tuesday details for severance packages with a goal of shedding at least 1,400 U.S. jobs by the end of 2020, and the Detroit Free Press, part of the USA TODAY Network, has obtained details of the offer.

The so-called “Voluntary Incentive Program” (VIP) provides a lump-sum cash severance payment for eligible employees who elect to, and are approved to, retire from the company, according to information obtained by the Free Press and confirmed by a source close to the situation who was not authorized to release the information.  

The severance benefits:

  • Up to seven full years of service: three months severance
  • 8-15 full years of service: six months severance
  • 16-plus full years of service: nine months

The incentive package does not provide post-employment continuation of medical or dental or vision coverage or life insurance. The company declined to discuss this element, saying that Ford employees may direct questions or concerns to their human resources representatives.

Ford’s F-150 (Photo: Ford Motor Company)

The Free Press first reported that salaried workers may apply for the VIP program if they: 

  • Have 30 years of service
  • Are 55 and older with 10 years of service
  • Are 65 with five years of service

Key dates

  • The application period for the incentive package opens Sept. 8. 
  • The offer period closes at 5 p.m. ET on Oct. 23.
  • Employees will be notified of acceptance in mid-November.
  • The last day of employment will be Dec. 31.

To accept the VIP offer, Ford will require employees to electronically sign a waiver and release agreement.

The company plans to provide information about career transition services, financial planning, retirement estimates and application, and post-retirement benefits. 

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Acceptance of the VIP offer is not the same as applying for retirement. People who want to begin retirement benefits must apply separately to the National Employee Services Center.


Workers are eligible for the incentive program if they meet all the following requirements:

  • Active full-time U.S. salaried employee at work on or after Sept. 1, 2020, and if inactive as of Sept. 1, 2020, returned to active status at work on or before Sept. 30, 2020;
  • In a Leadership Level 3 – 6 (middle management) or general salary roll position as of Sept.1, 2020, and through the date of separation; and
  • If hired or rehired prior to Jan.1, 2004, as of Dec.31, 2020, had:
  • Reached age 55 and had 10 years of credited service under the Ford Motor Company General Retirement Plan (GRP); or
  • Reached age 65 and had 1 one year of credited service under the GRP; or
  • Had 30 years of credited service under GRP; or
  • If hired or rehired on or after Jan.1, 2004, as of Dec.31, 2020, had:
  • Reached age 55 and had 10 years of service with the company; or
  • Reached age 65 with 5five years of service with the company; and
  • Fall within an area that management has selected for participation in “this voluntary separation program” and no critical skill or talent excludes participation.

“The program is part of Ford’s multiyear process to increase global fitness and effectiveness, including re-prioritizing products and services so we are more streamlined and successful,” spokesman Ian Thibodeau said Tuesday morning. 

“This is consistent with fixing parts of the business that aren’t working, accelerating in other areas and growing through investments in new technologies and businesses,” he said.

If too few employees respond to the incentive program, “involuntary separations may be required,” Kumar Galhotra told workers in an email last week. Galhotra is president, Americas & International Markets Group, who oversees the profit and loss of the business units at Ford.

Ford announced its plan on Sept. 2 to offer retirement packages to select salaried employees in an attempt to shrink the U.S. workforce. It is part of a restructuring strategy that has been ongoing for years under CEO Jim Hackett, who is scheduled to leave his role Oct. 1. Financial challenges facing the company have increased over the past year, separate and apart from COVID-19.

“This is not an early retirement. This is an incentive for people today who are already retirement eligible,” Thibodeau told the Free Press Sept. 2.

As of the end of 2019, Ford employed approximately 85,000 U.S. workers, including approximately 56,000 hourly workers. The company employs approximately 188,000 people worldwide. 

Steep challenges

Ford reported a dramatic loss in the first quarter, additional losses in the second quarter and forecast a loss for the fourth quarter.

For the past two years, Hackett has led an $11 billion global restructuring. Industry analysts have pressed him for details during earnings calls and he has assured them outcomes would be positive.

Ford reported disappointing earnings in 2019, before the pandemic.

Follow Phoebe Wall Howard on Twitter: @phoebesaid.

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