From Detroit Free Press

VAN BUREN TOWNSHIP, MI -- The effort to rescue troubled auto parts maker Visteon Corp. took a pivotal step Tuesday.

UAW leaders embraced a plan that centers on former owner Ford Motor Co. taking back Visteon's plants and workers, then selling most of the plants.

About 17,000 UAW members at 15 plants must approve by a simple majority the plan agreed to by the leadership of the UAW, Visteon and Ford.

A few thousand UAW members would likely return to Ford. The rest would eventually see lower wages, but at least their jobs would be preserved, the union said.

The cost to Ford or Visteon is unclear -- neither is sharing details just yet. But the hope is that the auto supplier that lost $3.2 billion in its first five years can finally be strong enough to supply Ford, provide jobs and carry on without any future help.

"Visteon really never got to the point where they could survive as an independent company," said David Healy, who studies the auto industry for investors at brokerage Burnham Securities.

In the meantime, Ford has spent billions of dollars propping up Visteon, its shareholders have lost more than $1 billion in stock value and the union was at risk of losing much more if the company were forced into bankruptcy.

Over the next two weeks, union members are expected to vote in favor of the plan, which was outlined in a memo that was circulated in plants.

Under the plan, 11 of the 15 plants will be sold and workers will have to negotiate new contracts with "competitive operating agreements" -- likely including significantly lower wages.

Ford plans to keep two plants, the Sterling Heights axle plant and Rawsonville Road plant in Ypsilanti. Another plant in Ypsilanti will see most of its work transferred to Rawsonville Road; beyond that, its fate is unclear.

The foam plant in Chesterfield Township will be closed.

Early retirement buyouts

Many of Visteon's UAW workers are still technically under contract with Ford, which spun off the supplier in mid-2000. The automaker pays the workers, and Visteon reimburses the automaker.

Under this bailout plan, Ford also plans to offer early retirement packages to 5,000 union members at both companies. When workers leave Ford, it creates vacancies that can be filled by the workers who had been leased to Visteon.

The size of the buyout is not in the documents shared with workers, but lower-level union officials said they were told to expect $35,000 offers.

"I like the idea of going back to Ford. I love that," said Ricky Schehr, a 52-year-old electrician at the axle plant in Sterling Heights who has been there nearly 33 years.

"It's too soon to say what I think about the rest of the deal. As long as they offer plenty of buyouts to allow flowbacks to Ford, then it hopefully won't hurt too many of us too much."

UAW President Ron Gettelfinger told reporters Tuesday morning that reopening the contract is needed to save jobs.

"We think it's a good agreement in that regard. When you weigh the alternatives, you have very few options left available to you," he said.

After losing money in every year of its existence, Visteon is looking to shed businesses that lose money, namely parts plants that pay the same wages and benefits as workers get at an automobile assembly plant. Workers at parts plants typically make 25 percent to 50 percent less than workers at assembly plants.

Visteon makes a range of auto parts, including electronics, heating and cooling systems and axles.

Along with its high operating costs, Visteon has suffered from Ford's falling share of the U.S. vehicle market and its subsequent production cuts. The automaker still accounts for 70 percent of Visteon's sales.

As of last week, Visteon shares had fallen more than 80 percent from the peak price of more than $20 a share in 2001, bottoming out at nearly $3 a share. They have since rebounded to $6.27 a share.

Visteon shares closed unchanged Tuesday, a day when most automotive stocks fell on the news that General Motors Corp.'s credit rating was cut to high-risk junk-bond status by a second major rating agency.

With Ford and GM shares beaten down and both companies saddled with junk-bond ratings for the first time in their histories, some analysts and observers have called on the union to reopen its contracts and give the automakers concessions on health care and plant closings.

But the UAW has only done that for an automaker once: when Chrysler Corp. needed a federal bailout to stay in business a quarter-century ago, said former union President Doug Fraser.

"We don't reopen with Ford, GM and Chrysler -- just that one time with Chrysler," he said. "But we do it with suppliers when we have to. At least 20, 25 times I can think of, and probably more than that. Again, you do it to save jobs."

Copyright 2005 Detroit Free Press. All Rights Reserved.

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