Approves New Agreements with Ford
The Dearborn, Mich.-based
Visteon Corp. has approved new commercial agreements with Ford Motor Co.
which it says will improve the competitiveness of both companies.
"These cooperative agreements with Ford provide a framework that
allows both companies to improve operating performance, clarify our relationship
and re-energize our employees," said Peter J. Pestillo, Visteon chairman
and chief executive officer. "Combined with our diligent restructuring
actions over the last three years, the Ford agreements strengthen our
vitality as a global Tier I supplier with a promising future. We are well-positioned
to enhance our profitability beginning in 2004."
The commercial agreements culminate discussions that began in mid-2003
between Ford and Visteon, its former automotive components subsidiary
that was spun off from Ford in 2000. The agreements include changes to
a number of structural and commercial elements established between the
two companies as part of the spin.
Some of the key points of the agreements with Ford are as follows:
- Visteon is no longer obligated to fund about $1.7 billion of an estimated
$3 billion in post-retirement health care and life insurance benefit obligations
(OPEB) related to Visteon-assigned United Auto Workers (UAW) Ford hourly
- Funding of the remaining OPEB obligations for assigned employees will
be extended over an additional 29 years, reducing Visteon's cash funding
requirement substantially starting in 2006;
- Visteon and Ford will share equally the cost related to information
technology separation of up to a combined total of $200 million;
- Visteon's exposure to UAW profit sharing for Ford assigned employees
will continue to be capped;
- Visteon will make lump-sum payments totaling $150 million for 2003 North
American price reductions on sales to Ford and has agreed with Ford on
a schedule of North American price reductions annually for the next four
- Ford has agreed to revised payment terms over the next three years which
will result in accelerated payments to Visteon for components supplied
- Visteon has the opportunity to receive labor differential relief, defined
as the difference between UAW Master Agreement fully-fringed wages and
competitive Tier I wages, on new model programs won from Ford; and
- Visteon and Ford will establish a Governance Council to ensure the intent
of the agreements is achieved.