In an attempt to slash costs and impress Wall Street, Ford Motor Co. targeted for elimination salaried workers with flawless performance records who had been promoted, rewarded and cited for excellence but were then deemed expendable because of their age and proximity to key retirement milestones, according to a federal age discrimination lawsuit filed by eight Ford employees.
At issue in the lawsuit is whether the methods used by then-CEO Jim Hackett in 2019 to massively downsize the company in a much-touted process called “Smart Redesign” were legal and whether the Ford Board of Directors signed off on a strategy to cut older workers with a plan to replace them with less qualified, cheaper, younger employees almost immediately.
Ford internal documents — unsealed in late July as part of the discovery process related to the lawsuit filed June 27, 2019, in U.S. District Court in the Eastern District of Michigan — appear to reveal the motivation behind the headlines.
Ford hired Boston Consulting Group to identify employees whose exit would provide the greatest cost savings, and the consultants utilized an algorithm that included employee birthdates and number of years employees had worked at the company, according to the lawsuit.
“It’s statistically impossible these cuts were made by chance,” said attorney Megan Bonanni of Royal Oak, Mich., who has fought Ford and settled previous age discrimination cases before this one. “Numbers don’t lie.”
Length of Ford employment is relevant because anyone hired before Jan. 1, 2004, qualified for pension payments, which have created a multibillion dollar burden.
Ford has denied in its legal filings any wrongdoing.
“The allegations in these cases are baseless,” Ford spokesman T.R. Reid said Thursday. “We’re vigorously challenging them.”
He said, “Age was not among the considerations.”
The company has released some 50,000 documents and internal emails and financial information and metrics formulas that former employees now suing say illustrate a strategy to betray the company’s most loyal people.
‘So difficult now’
“This was done for shareholders,” Suzanne Twomley, 56, a former Ford finance manager from Grosse Ile, Mich., told the Free Press. “I was always proud to be a Ford employee. That’s what makes it so difficult now.”
The Free Press obtained access to internal Ford emails in July, filed as exhibits, that revealed discussions between human resources officials about the situation at the time.
Initially, the emails were labeled confidential by Ford and sealed, but when challenged in court, they were made public by U.S. District Judge Bernard Friedman because the automaker agreed that the secret information was not properly designated.
‘Targeting the most senior leaders’
In an email dated Dec. 13, 2018, Graydon Reitz, then a Ford vehicle line director, wrote his ex-wife warning her of the job cuts. “As you probably have heard, Ford is in the process of a ‘Smart Organization Redesign’ that is targeted to eliminate 25% of the LL6 through LL2 population by 2nd quarter 2019. They are targeting the most senior leaders first (29+ years of service and 50+ years old).”
The LL designation at Ford refers to “leadership level” and the tiers run from LL1 for corporate officers to LL6.
Five months later, email discussions on May 8 among Ford human resources officials focused on the sensitivity of the situation, involvement of the company’s board of directors and how to proceed on Smart Re Design (SRD) under the subject line: “BoD (board of directors) discussion — SRD.”
Kiersten Robinson, whose title is chief people and employee experience officer, wrote, “Thank you again for your help with the BoD discussion on SRD. Overall it went well. There was sensitivity in the room to the employee sentiment, a desire to understand the communications plan, challenging whether we are being aggressive enough and a request to understand/ensure we are using this process to identify and elevate junior talent in the organization. Not sure how we realize this last request. Would love your thoughts.”
‘We want to do it carefully’
Marin Gjaja, a managing director at Boston Consulting Group, replied at 3:55 p.m.: “We can generate some metrics around promotions, tenure, and how the changes to layers created ‘pull up’ opportunities. We may need to wait until staffing is complete in Europe so as not to be seen as steering the outcome there. Alternatively, we can do the analysis on NA (North America) and use that as an input to FoE (Ford of Europe) but we want to do it carefully.”
This email exchange, coupled with the timing of hiring and firing and the use of an algorithm with a bias toward how age relates to future contributions, casts questions about the role of the directors, said Michael Pitt, co-counsel on the case.
“That document, when we received it, was marked confidential,” he told the Free Press. “This is top down discrimination. … I’ve never in my 48 years of being a lawyer seen a case of the board of directors telling the managers to discriminate.”
He pointed to the Robinson email and said: “She finished the dialogue with the board of directors, they approved smart redesign and they want to make room for junior people to move up. That, along with the statistics we have, shows Ford did indeed target older workers. You can’t show favoritism toward a younger crowd. It’s bias against older employees.”
This is the fourth age discrimination lawsuit Bonanni and Pitt have filed against Ford, and the three earlier cases settled. The first, which settled for $12 million, spotlighted tactics implemented by then-CEO Jacques Nasser that targeted LL4 and LL5 Ford workers.
‘It would haunt me’
During Free Press interviews, the Ford employees now suing said they understand and support the need for companies to cut costs and don’t take that part personally. But each also said they simply cannot fathom being targeted for release just weeks or months from a birthday or a calendar date that provided benefits owed for a lifetime of service.
“I’ve put myself in financial jeopardy to join this case,” Twomley said. “But I knew it would haunt me forever if I didn’t at least try to help right this wrong. At the very least, regardless of what happens to me personally, I hope our efforts prevent age-based targeting in the future.”
In her 26 years with the company, she has seen multiple programs designed to cut workers but cuts have always considered job performance, she said. “I don’t think this was executed in a way that is consistent with Ford’s values.”
‘Betrayal’
Susan Quick, 55, who moved to Lake View, Alabama, for a new job, said it’s hard to trust anything anymore after being abruptly let go from her role in human resources after nearly two decades at Ford.
“I was blindsided,” she said. “Pension plans are a retention tool. It’s a commitment the company makes to an employee to get you to stay. What Ford did is break that promise. My pension would have almost tripled when I hit 55. This is about Ford shedding its legacy costs. We were good employees replaced by younger people. I feel like it’s a story of betrayal.”
Ching Pei, 49, spent nearly 27 years with the company as a parts distribution manager with a record for turning around underperforming sites. In his last role, he bought a house in a rural area 4 miles from work to be on-site when needed for emergencies.
“Since I was released from Ford, it has been a nightmare,” he said. “I moved eight times for Ford. … You uproot your family so many times. It’s a harsh backstabbing to give up so much of your life to Ford and then for them to do this to me.”
He was called into the parts distribution facility in Menomonie, Wisconsin, without notice and let go immediately.
‘Anger, depression, sadness’
“I was finished that hour. I considered that building as my family, in charge of 50-60 people. I couldn’t even say goodbye,” Pei said, tearfully. “I had my company car, a Flex, and had to give up my only means of transportation. I couldn’t even get home. I couldn’t pick up my daughter from school. They told me to call Uber but it was such a small town. I was so poor growing up, being the son of immigrants. And this was the American dream.”
Another Ford employee secretly drove Pei home. “You go through denial, anger, depression, sadness. I would have retired at age 50, which is next year, making $60,000 a year in pension. Now I have to wait until age 62 to get $10,500 in pension a year.”
In the past, Ford had worked to bridge years to qualify for benefits. That didn’t happen this time, plaintiffs say.
Ford denies the charge, Reid said. “The presumption about additional benefits is wrong. Attorneys for the plaintiffs know this — they have not produced any examples of such benefits being provided to other employees who involuntarily left the company in comparable circumstances.”
Matt John, 56, of Canton, Mich., pleaded with Ford to bridge his time to keep from drastically cutting his planned retirement after nearly 25 years of service. He had been promoted just prior to getting let go from his job managing a $4 million information technology budget. He asked to be bridged for 2½ months of service in any role available, including a demotion — to avoid being shown the door eight months before his 55th birthday and his pension milestone.
“They let me go to steal almost $400,000 of my pension,” he said.
When John asked his boss whether he could return as a contractor, his boss said a strong performance record spoke for itself, but less than a week later a contract company told him that Ford HR told no one cut could be brought back in any capacity. At this point, he went to a lawyer.
Each plaintiff interviewed said this week they hoped Executive Chair Bill Ford didn’t have any part in the termination plan, and added that the outcome has destroyed their families, friendships and an ability to trust.
The company said in legal filings that Ford “did not engage in any kind of intentional discrimination, nor did it act with a discriminatory purpose” and Ford “acted in good faith” in its restructuring.
Spokesman Reid said Thursday: “Unfortunately, an outcome of the process was that several good performers were let go, including people who made valuable contributions to Ford.”
Meanwhile, the lawsuit claims:
—In order to reduce operating expenses and reduce debt and pension liabilities, Ford adopted a Salaried Involuntary Reduction Process (SIRP) which was carried out in four waves.
—Ford retained the services of Boston Consulting to develop a head count and pension reduction plan. This was promoted as a high-tech program designed to modernize Ford and was given the title of “Smart Re Design.” At the core of the program was a proprietary algorithm capable of quickly reviewing information from tens of thousands of personnel records. This automated system was deliberately programmed to target older and higher pension-cost salaried employees based on legally protected characteristics including the employee’s proximity to retirement benefit milestones or employee age.
—Long-term managers suing Ford, and other LL5/LL6 managers they seek to represent, were separated in Wave 4 beginning on May 31, 2019.
—Managers hired before Jan. 1, 2004, were eligible to participate in Ford’s General Retirement Plan. Milestones for full retirement benefits included a supplemental benefit upon attaining 30 years of Ford service, regardless of age, or attaining the age of 55 and at least 10 years of Ford service.
—Ford, with the aid of the Boston Consulting algorithm, terminated workers based on their age for the purpose of preventing them from attaining “30 and Out” supplemental benefit and “55 and 10” early retirement benefit, or both.
Pension shrinks
In the case of Monica Dowhan, a 52-year-old LL5 manager at the time with 29.2 years of service, her lump sum pension will be $552,595 instead of the $1,144,019 she would have received if allowed to work until March 31, 2020.
“Ford saved approximately $591,424 by unlawfully terminating this manager a few months short of her service milestone,” the lawsuit said.
Dowhan also suffered lost wages, lost bonuses, lost group health plan coverage as she is not classified as a retiree and lost vehicle plan benefits. She and other plaintiffs labeled as dispensable had been categorized as high-end achievers by the company itself, according to the lawsuit.
Dowhan was a process improvement expert who ran teams to address crisis issues that could impact Ford financially or cause reputational damage. Her final act was writing a letter and loading it into the official governance, risk and compliance system — which she designed — alerting brass to what she perceived to be a violation of employment law.
“I never expected that my last internal investigation to be of the CEO of the company and the board,” she said. “But that is what happened. I did this in my capacity on my very last day. My letter went to Bill Ford and (then-CFO) Tim Stone. The comment … went to the Office of General Counsel, top of HR and to the top of Finance.”
Dowhan was notified on her 29th work anniversary that she would be terminated in 10 days. She had received an extra 10% bonus during her last review. She offered to be demoted to remain employed. Her HR director said nothing was available in finance for her and, later that day, she learned three younger people were promoted in the subject area, Dowhan said.
Also, Ford immediately started posting job openings on job sites on June 3.
“Every time I see a Ford vehicle, I’m sad,” Dowhan said. “I’m sad for all the people this impacted. I had two co-workers die, one on the Monday after being terminated. Another shortly after. This was very stressful. People had medical issues afterward.”
Loyalty, promises
The ripple effect was shocking, she said. “These were strong performers who had dedicated their whole adult career lives to Ford Motor Company and corporate greed drove these decisions.”
Highly skilled workers had the opportunity to leave Ford during their careers but chose to stay out of loyalty, workers said. Ford promised pensions for those who committed their lives to the company, workers said. And that means nothing now, they said.
“It’s not like we were slacker employees,” said Quick, formerly of Dearborn, Mich. “We were just replaced by younger people. I had a co-worker just shy of 30 years who was replaced that day and told to leave by someone he was training who they promoted into his exact job. I thought, ‘How can you do that to someone?’ “
Many workers took their severance and chose not to sue. But the impact of this dismissal has been traumatic, workers said, some crying.
‘I started to panic’
“People look at you, you have a good resume, and they go, ‘Dang. What don’t I know?’ Why would they let someone like this go?” said Quick, who noted her pension payout was cut in half by releasing her a few years before her 55th birthday.
“I’d never had a discussion about my performance that was negative in all my years,” she said.
When Robinson told the human resources team that they would be “saying goodbye to “some long-term colleagues,” Quick realized she was the only long-term colleague in her peer group. “I started to panic. But I thought it can’t be. I’m one of the strongest performers. Customers love me. I just got a recognition award.”
Meanwhile, terms of the Ford retirement program should have permitted workers to bridge or extend termination dates as has been done in the past. Ford allowed this for a handful only and concealed information that would have allowed the process to proceed, the lawsuit said.
The Ford retirement plan allowed workers to add three years of age to LL5 managers who were age 52 or older and three years of service credits for LL5 managers with 10 or more years of service, allowing them to qualify for “55 and 10” or “30 and out” early retirement, the lawsuit said. This is known as “3+3 Bridge” at Ford.
Who decided?
Also, Ford refused to allow managers to transfer to open positions or even take lower status positions, the lawsuit says. The algorithm assessed future contribution of workers in a performance evaluation process that was inherently biased against older workers — how can you contribute in five years if you might be retired? plaintiffs asked.
“Ford continues to advertise for new employees to be hired into slots that could easily be handled by the targeted managers,” the lawsuit said. “Ford refuses to accept the applications of the terminated Wave 1 through Wave 4 managers.”
The employees are suing for retirement benefits they feel they’re owed.
“I’m angry. I’m disappointed. I’m sad,” said Andy Kress, 56, who was manager of cybersecurity policy and strategy when he was let go. “Ford had a pension liability challenge. They decided to package it up with a bow and put it on the backs of older employees and sent us out the door. I’d be angry enough if I just lost a couple of years pay because I was fired early. But there is no way I can make up the pension I earned over 26 years anywhere else. I can’t make that up.”
Consultants telling Ford to eliminate older workers isn’t a surprise, but even current employees and bosses were demoralized by what they saw and tried to intervene, he said.
“They know what happened. My management fought this,” said Kress of Ferndale, Mich., his voice cracking. “I was very proud to work at Ford. But this took away my relationships with co-workers and friends. We were a Ford family. We made sacrifices. I could have left. We talked about it, but we stuck it through. It just all makes me so sad.”
Matt John, 56, of Canton, said he never, ever could have imagined suing Ford after 24 stellar performance reviews. He waited four days to tell his family, trying to figure out how to deliver news that left him reeling.
“It’s mind-boggling,” he said. “I would never have thought of suing except when I asked a manager if I was allowed to come back as a contract worker, he said, ‘Yes, your record doesn’t have anything on it that would stop you.’ ” Then, later, he was told he was prohibited from returning in any capacity.”
Even now, John said he can’t believe he has a photo of a day hosted by Bill Ford recognizing individuals including John for going above and beyond during an economic downturn. Ironically, John and his wife declined an offer to stay at a Dearborn hotel because they wanted to save Ford money.
“Bill Ford let Jim Hackett do this to me,” John said. “Where, six or seven years ago, he was telling me how great an employee I was to help save Ford Motor Company from going to the government for a bailout. To think that type of person doesn’t have a future at Ford is really sad.”
David Macpherson, a statistical expert for the Ford employees, analyzed data provided by Ford and found there is a “statistically significant” disparity between the number of older employees one would expect to be terminated and the number actually terminated, the lawsuit said.
Ford denies allowing the algorithm to drive decisions rather than manager feedback.
“We didn’t. This is fiction,” said Reid, the Ford spokesman. “Individual Ford managers were solely responsible for making separation decisions based on legitimate business-related considerations.”
When Bill Ford, the great-grandson of company founder Henry Ford, took the helm as CEO in 2002, he immediately settled several class action suits filed by employees who said an evaluation system discriminated against older, white male managers. Former workers said they trust Bill Ford to do right by wronged employees again.
10 days to vacate
After 28 years, Remo Morrone was given 10 days to vacate his office as a preproduction management supervisor who worked in material planning and logistics in Allen Park, Mich.
This is the grandson of a millwright at the Ford Rouge site, the son of a designer illustrator on vehicles, including the Taurus and Escort, the brother of an industrial engineering manager at Flat Rock Assembly plant.
“We’ve got pure Ford blood in our family,” Morrone said. “This hurt deep. My father was 83 and he wrote a letter to Bill Ford, hand wrote it.”
A family member typed it up and emailed it into the company. Morrone told them it was pointless.
“When they told me, my first words were, ‘Are you serious?’ It was very cold,” Morrone said, noting that he had been in line for a promotion. “How do you sue a company that’s really like suing your family? … It’s a weird feeling. But they didn’t want me to get to that 30-year mark. You realize you’re just a number, when no way in heck that’s what you thought you were.”
Ford challenged the premise that workers aren’t valued.
“Colleagues affected by the changes were offered generous severance packages, including up to nine months of pay, continued health and welfare benefits, and reemployment assistance,” Reid said. “All but the eight plaintiffs named in this case and a small handful of others chose to accept what we believe were attractive severance packages.”
Push to cut costs
Hackett, who struggled to gain favor with Wall Street, vowed to make Ford a lean operation.
He emailed employees on May 20, 2019, regarding Smart Redesign: “We must reduce bureaucracy, empower managers, speed decision making, focus on the most valuable work, and cut costs. This required intensive work across multiple layers of our company.”
The final phase, Hackett said, would be Wave 4. This is the group that’s suing now.
Erik Eliason, 55, of Northville, Mich., worked as a global material cost manager.
“Organizations are always adjusting due to competitive forces,” he said. “This requires management to … make sure the business structure is optimized. … But after 27 years, to be told my contributions that had been recognized again and again and documented in performance reviews were insufficient, this is clear to me that the selection criteria communicated to severed employees was just a pretext for being able to take actions on the company’s balance sheet to please investors.”
‘Highly improbable’
It all became clear while watching the waves of layoffs, Eliason said. “My blood runs Ford blue. I came out of Columbia Business School and didn’t go to Wall Street. I came to Ford because I love the auto industry. But with the data provided by Ford, it is highly improbable that the results of who was separated was a coincidence and based on neutral criteria. I don’t think Ford has credibility on this issue.”
At the time of the job reductions in May 2019, Ford employees affected and not affected reached out to the Free Press alleging age discrimination as job cuts made headlines. The Free Press declined to probe the issue without evidence.
Now, new information is emerging through documents compelled by the court.
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