The Pain Over There

News from overseas.... It seems that labor activism is a little more prevalent in Europe. Plants have been taken over by disgruntled workers in France and in Britain. This news comes from a former Ford plant in Belfast.

In the last 7 or 8 years Ford has deliberately rundown its Visteon plant,
encouraging workers to take full pensions, early retirement or a severance deal.
From almost 600 workers in 2000 there were 210 people employed in Belfast at the
time of the attempted plant closure on Financial Fools day (April 1st 2009). Now
that Visteon has been put into administration, neither Ford nor Visteon will
have to pay those pensions. According to legislation the government (tax-payer
money) is expected to fill the pensions gap. Even so some of the pensioners
(4000 total in uk) would have a pension reduction by 10%. Many of the workers
are asking each other, was this a deliberate Ford strategy from 2000, to offer
full pensions because they knew they would never pay, they knew pension costs
would be off-loaded to the public taxpayer!

This makes you wonder if anyone with a defined benefit plan (traditional pension) can really count on it. Actually, what I want to say is that any employee with a defined benefit pension is living on borrowed time. In order for a company to be able to survive long into the future to continue to pay these pensions they need to have a competitive advantage over their competition. The fact that the company is burdened with the defined benefit for growing ranks of nonproductive retirees makes it almost impossible to fend off new companies with young workforces or foreign companies with state supported retirement systems.