Author: Site Staff

Ford Motor Co. is cranking up production of the Ford Focus after strong Cash for Clunkers demand put the compact in short supply.

The automaker has added weekday and Saturday overtime at its Wayne, Michigan, plant, said Anderson Robinson Jr., president of UAW Local 900. The additional overtime will mean about 6,400 additional Focuses coming out of the plant between now and the end of September, he said.

On Monday, August 10, the Wayne plant began working 10-hour weekday shifts, up from regular eight-hour shifts. The plant also will work Saturdays on August 15 and 29 and September 12 and 26.

Two of those Saturdays already had been scheduled, Robinson said, but dwindling supplies of the Focus triggered the additional hours. Focus sales rose 44 percent in July, and the automaker ended the month with a 25-day supply of the compact.

Ford spokeswoman Angie Kozleski said she can’t share details but acknowledged that “we are taking some actions to add production at Wayne.”

Some dealers say they are sold out of the car.

“Cash for Clunkers, thank you,” Robinson said.

Ford also discussed postponing the plant’s summer shutdown, which is scheduled for next week, but opted for the additional overtime instead, he said. After 13 weeks of inventory-related shutdown earlier this year, the added overtime is “very exciting,” Robinson said.

Through August 5, the Focus was the second-most popular vehicle sold under the Cash for Clunkers program, according to data released by the Department of Transportation.

Updated figures are not yet available.

Filed by Amy Wilson and David Barkholz of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Kaiser Permanente is eliminating 1,850 jobs in California, or about 1.5 percent of its total workforce, citing enrollment losses, lower patient volume and slowing revenue.

Approximately 1,200 positions will be cut in Northern California, while 650 jobs are being eliminated in Southern California, according to Kaiser Permanente officials.

About one-third of the job cuts in Northern California will be temporary, on-call or short-hour positions, Kaiser Permanente said in a written statement. Southern California job cuts are mostly unionized support staff, and not direct patient care positions, a spokesman said.

Most medical centers in California will experience layoffs.

The Oakland, California-based not-for-profit managed care giant cited an uncertain industry environment as a reason for the cuts, including lower Medicare reimbursement rates and “changes related to healthcare reform,” according to a statement.

Affected employees will be placed in other positions where possible, and incentives will be offered for certain groups of employees to voluntarily leave the system.

“Our hope is that the number of people who choose voluntary separation will help reduce the number of employees affected by the position eliminations,” Gay Westfall, senior vice president of human resources at Kaiser Northern California, said in a statement.

Filed by Rebecca Vesely of Modern Healthcare, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Garment workers staged a protest against two clothing factories in Long Island City, Queens, on Tuesday, August 11.

They were rallying for the rights of six Chinese workers, who allegedly are owed hundreds of thousands of dollars in back wages and were fired unlawfully from Great Wall Corp., a garment manufacturer, and Silver Fashion, a subcontractor that produces for Great Wall.

More than 100 demonstrators were in attendance, along with representatives from local advocacy groups, including the Chinese Staff & Workers’ Association, National Mobilization Against SweatShops and New York City NOW.

“Long Island City is a sweatshop zone; these conditions are rampant and have only gotten worse through the years. Today we really want to make a stand,” said Jei Fong, an organizer with the Chinese Staff & Workers’ Association. “People need to demand better conditions. It’s the only way for the garment industry to improve.”

In December, the six workers filed a lawsuit with the National Labor Relations Board against Great Wall and Silver Fashion, each run by a husband and wife. The complaints alleged that the employers deducted 5 percent from the workers’ minimum-wage pay, did not pay them for overtime, and reduced their piece-rate payments, despite workweeks of more than 100 hours.

However, the workers were fired from both factories shortly after the filing, leading to a second lawsuit for wrongful termination.

Benjamin Holt, a staff attorney for the Urban Justice Center, is working on the case on behalf of the workers.

“The unpaid wages alone were over $500,000,” Holt said, adding that they are “seeking back pay for the time our clients were out of work and reinstatement to jobs at the factory.”

The case is currently being reviewed, but could go to trial in early 2010, Holt estimates.

Tuesday’s protest follows a February federal court decision that found manufacturing company Liberty Apparel guilty of labor and wage violations. Liberty was ordered to pay $550,000 to workers. Many garment workers and advocacy groups expected the Liberty Apparel announcement to send a stern message to would-be labor violators in New York.

“Liberty Apparel changed the precedent for compensation, but despite that, a lot of these bosses are ignoring the law and still trying to use ridiculous schemes,” Fong said.

Filed by Adrianne Pasquarelli of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Despite recent reports that the economy may have bottomed out, it will be several more months before employers reinstate their defined-contribution plan matches, experts say.

Since November, 8 percent of the Fortune 500 companies have suspended or reduced their matches, according to Hewitt Associates.

However, a June Watson Wyatt Worldwide survey finds that 42 percent of employers plan to bring back their match in the next 12 months.

But most employers probably won’t reinstate their matches until late 2010 or early 2011, experts say.

“My prediction is January 1, 2011,” said Michael Weddell, a principal and senior defined-contribution consultant in Mercer’s retirement, risk and finance consulting business.

Weddell says he’s date-specific because many employers have 401(k) plans with a safe harbor plan design, meaning they run on a calendar year and have to announce in November any changes they are making to the plans.

“January 1, 2010, is too soon to make changes because the recession is still going on,” he said. “So I think January 1, 2011, is when you will see some announcements.”

There is no pressure on employers to rush to bring their 401(k) matches back, Weddell said.

“The price companies pay for reducing or suspending their matches is increased turnover,” he said. “But the job market is such right now that people aren’t leaving.”

Many employers have started talking about reinstating their 401(k) matches, but are looking closely at whether they will bring them back at the same levels, said Rob Reiskytl, leader of Hewitt’s defined-contribution consulting practice.

“We are working with some organizations that aren’t just looking at the timing of when to reinstate, but also of exactly what to reinstate,” he said.

Some companies that previously offered non-matching contributions to employees may no longer do so, he said.

Also, many employers are discussing changing their matches from a fixed portion of salary to discretionary matches based on company performance, experts say.

“This is a hot topic of discussion,” Reiskytl said.

Starbucks announced in December that it was moving from a fixed defined-contribution match to a profit-sharing feature. In late July, the company said it would match U.S. employees’ contributions to it 401(k) plan for 2009, which ends September 27.

“I think many companies may be looking at this,” said Lenny Sanicola, practice leader of benefits for Scottsdale, Arizona-based WorldatWork, a global human resources association focused on compensation and benefits. “They are looking at whether their matches were overly generous to begin with.”

Many employers may opt to bring back their defined-contribution plan matches incrementally, Weddell said. “I would guess that some companies will raise it to an intermediate level, then maybe in another year after that go to the previous level,” he said.

And then some employers, particularly in battered industries such as automotive suppliers, may not bring their defined-contribution matches back at all, said Jack Abraham, a principal in PricewaterhouseCoopers’ HR services group.

“There is no guarantee,” he said. “I don’t think in my 20 years in this industry that we have ever seen anything this bad.”

—Jessica Marquez

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Checks totaling $6.5 million have been mailed to hundreds of former members of Phoenix Fund Inc., a self-insured group workers’ compensation fund, who were victims of reinsurance fraud, the North Carolina Department of Insurance said.

Insurance Commissioner Wayne Goodwin said Monday, August 10, that the $6.5 million has been distributed to 661 former members of the San Antonio-based workers’ comp fund.

Phoenix Fund has been under rehabilitation since October 2006, the result of the North Carolina Insurance Department uncovering a $20 million scheme that left several insurance entities, including the Phoenix Fund, without reinsurance.

The state agency said it has recovered nearly $18 million for the Phoenix Fund from Thomas G. Reitz, whom the department described as the “purported insurance broker” for Phoenix Fund.

Reitz pleaded guilty in 2007 to charges of mail fraud and money laundering. In 2008, he was sentenced to 70 months in prison and ordered to pay more than $19 million in restitution to the Phoenix Fund.

Distribution checks were mailed to members participating in the Phoenix Fund as of October 17, 2006, according to the North Carolina agency.

Filed by Jeff Casale of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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In a closely watched case, the Supreme Court of Canada has ruled that an employer had the right to use a surplus in a defined benefit pension plan to fund a new defined contribution plan.

Canada’s Supreme Court ruled 5-2 on Friday, August 7, in favor of Kerry (Canada) Inc.’s move in 2000, upholding a July 2007 ruling by the Ontario Court of Appeal that the Woodstock, Ontario-based food products company was allowed to pay defined-contribution plan expenses from its defined-benefit pension fund after taking into account the fund’s surplus.

According to court documents, Kerry closed its defined-benefit plan in 2000 and shifted to a defined-contribution plan. The defined-benefit plan had an actuarial surplus, or the pension fund was overfunded.

Kerry then took an allowable “pension contribution holiday,” according to the court decision, and stopped paying into the defined-benefit plan while using the surplus funds to pay $850,000 in plan expenses and starting a defined-contribution plan.

Defined-benefit plan and DCA Employees Pension Committee members sued and sought to prevent the funds from being converted. However, the Ontario Court of Appeal ruled that an employer could stop paying pension plan expenses and take money from the plan, providing the plan allows that.

“In this case, [Kerry] was successful [and] it does not have to pay into the defined-benefit fund to cover expenses at issue and may take contribution holidays,” Justice Marshall Rothstein wrote in the court’s majority opinion. “There is no reason to penalize it by reducing the defined-benefit fund surplus and thereby reducing its opportunity for contribution holidays.”

In a dissent, Justice Louis LeBel argued that allowing the surplus to fund the defined-contribution plan “disrupts this careful” balance between providing employers incentives to create pension plans and furthering the need to protect pensioners’ rights.

“The use of fund surplus to provide contribution holidays with respect to the defined-contribution plan violates the exclusive benefit provisions in the plan documentation as it benefits all but the defined-benefit members,” Justice LeBel wrote in his dissent.

Filed by Jeff Casale of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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The Congressional Budget Office said that federal investment in prevention and wellness programs could actually drive up costs rather than reduce them, and potentially overstep programs already in place in Medicare and private health plans.

“Although different types of preventive care have different effects on spending, the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall,” CBO Director Douglas Elmendorf wrote in a blog entry posted Sunday, August 9.

Preventive services include medical procedures to test for certain types of cancer, cholesterol management and vaccines, while wellness programs include weight management programs, dietary advice and smoking cessation directions.

In each case, the CBO said that even though it plans to study the topic further, it’s hard-pressed to show what’s known as “scorable” long-term savings. The issue has long frustrated lawmakers, who have banked on parlaying such programs into future health care savings.

Legislation in the House and Senate meant to reshape the health care system include measures to nudge Americans into healthier lifestyles, and members of Congress have tried to count those programs toward an overall lowering of health care costs.

But researchers who have studied preventive care “generally find that the added costs of widespread use of preventive services tend to exceed the savings from averted illness,” the CBO states.

Nevertheless, the CBO said that just because spending on prevention adds to the nation’s total health care tab, it’s not necessarily a bad investment.

“Experts have concluded that a large fraction of preventive care adds to spending but should be deemed ‘cost-effective,’ meaning that it provides clinical benefits that justify those added costs,” Elmendorf writes.

The CBO letter was sent to senior members of the Energy and Commerce Committee.

Filed by Matthew DoBias of Modern Healthcare, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Some 55 percent of executives at large companies and financial institutions worldwide believe the global recession will last for at least another year, while 41 percent say it will end in the next 12 months, according to a Greenwich Associates survey.

The “Greenwich Market Pulse” survey also showed 12 percent seeing an end of the global recession within the next six months, and 10 percent thinking the recession will last at least another three years.

Canadian executives were the most optimistic, with nearly half saying they believe the recession will end within a year. U.K. respondents were the most skeptical, with only 20 percent expecting a global economic recovery within the next year.

Thirty-one percent of U.S. executives said the global recession would end in seven to 12 months, while 42 percent said it would take one to two years.

Filed by Timothy Inklebarger of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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