The American side of Honda Motor Co. is being forced into belt-tightening mode as profit margins for its Japanese parent have fallen onto the wrong side of acceptability. Automotive News reports that the U.S. branch of the Honda Motor Co. is in the process of offering voluntary severance packages to senior members of its sales force across the United States.
Join the Voluntary Retirement party
An internal memo dated March 9 from Honda Motor Co.’s U.S. operations office that was obtained by Automotive News indicates that those employees of the company who are at least 59 years old and have worked at least 15 years for the company will have the option of accepting Honda’s Voluntary Retirement Program. Officially, Honda workers have until April 23, 2012, to apply for the program, although Honda Motor Co. reserves the right to terminate the program at its discretion.
Those senior Honda sales employees who choose to accept voluntary retirement will reportedly receive one year’s base salary, a premium amount for each year they served Honda Motor Co., retiree medical and COBRA dental and vision and other benefits.
Honda’s employee memo stressed that the Voluntary Retirement Program is “entirely voluntary” and that the automaker has “no plans to offer this program or any other similar program in the foreseeable future.”
Small number of employees are eligible
American Honda Motor Co. spokesman Jeffrey Smith spoke with Automotive News and confirmed the details surrounding Honda’s Voluntary Retirement Program. He characterized the number of American Honda Motor Co. employees who are eligible to take advantage of the Voluntary Retirement Program as being “relatively small.” Among Honda’s sales force employees, only 5,600 are qualified under program parameters.
“Occasionally, we provide special acknowledgment of our tenured and dedicated associates by giving them the opportunity to retire early with some enhancements to their retirement plan,” Smith remarked in an email sent to the Wall Street Journal.
Rebuilding the chain and making it stronger
Supply chain disruptions that occurred as a result of earthquakes, tsunamis and floods in Japan and Thailand hit Honda harder than it did many automakers. As a result, Honda Motor Co.’s sales and production forces on the North American continent are still scrambling to catch up to where they would have been if the natural disasters had not occurred. Fiscal third-quarter profits by Honda’s Japanese parent company dropped 41 percent in 2011 to $624 million, a direct result of the disruptions and the ebb in the global automotive market. A strong valuation of the yen has cut into Honda’s overseas profits severely, too.