The supplier is undergoing a global salary study to compare its pay levels with those of other automotive suppliers and similar-sized companies in other industries.
Visteon, with worldwide parts sales to automakers of $18.56 billion in 2000, ranks No. 2 on the Automotive News list of top 100 global auto suppliers, trailing Delphi Automotive Systems Corp.
Visteon Chairman Peter Pestillo briefed employees about the plan in an e-mail memo sent Aug. 17. The study began in the spring with the help of an outside consultant.
“We’ll be looking at all our new roles and responsibilities and checking how these stack up externally,” Pestillo said in the memo.
The process will conclude in the fourth quarter for U.S. employees. He said salaries higher than the market rate will be reviewed for “proper fit or unique talents,” but nobody’s base pay will be reduced. Salaries lower than market rate would be raised at that time.
The study is not driven by cost pressures, Visteon officials said, but rather by the need for a compensation program that attracts and retains the best people in the industry.
The study may carry into 2002 for non-U.S. locations. Any effect on represented salaried employees first will involve discussions with work councils and unions, officials said.
Hourly production workers in the United States, represented by the UAW, aren’t included in the study.
The study may be another step in defining Visteon as an independent company, or it could be a bid to show employees they are competitively paid, despite the cost pressures that have hit the industry hard this year, one labor economist said. Visteon slashed 2,000 salaried positions this year to help reduce costs.
“This is not a great year for the industry to check salaries. But on the other hand, we’ve had some salary appreciation the last five, six, seven years, so it shouldn’t be too scary to Visteon people,” said Sean McAlinden, director of the economics and business group at the Center for Automotive Research in Ann Arbor, Mich.
But it could backfire if Visteon uses the study to make a case for lowering salaries in the future.
“They’d better be very, very careful, or their best engineers will trot off to places that want (to pay for) the best engineers,” McAlinden said.
In a separate compensation initiative, Visteon has tied 2001 bonuses for its top executives to meeting certain stretched financial targets this year.
As of June, though, the company was not performing well enough to trigger those bonus awards.