As the economy falters and the automobile industry teeters on lower sales figures, counteractive measures have usurped the once-lucrative benefits of a healthy economy: profit sharing, cost of living raises — even job security. Now the rough waters are about to claim another victim: company 401(k) programs.

As sales fall and profits shrink, three of the biggest names in the automotive market have eliminated or greatly reduced contributions to company 401(k) programs. Chrysler Group capped its matching contributions for higher-paid workers, General Motors cut its match program by 25%, and Delphi Automotive Systems Corp. suspended its matching plan indefinitely. Auto and financial experts say that Ford Motor Company may be the next to announce changes.

That news hits hard when you consider that workers are already losing thousands of dollars in their tax-deferred retirement savings programs because of the downward spiral in stock prices and the shaky mutual funds market. It is downright discouraging for people to work hard and invest in their futures, only to see their net worth decrease at year’s end rather than increase.

I know from personal experience that the market volatility can be very deflating. I am not alone. To a person, everyone I talk to regarding their shrinking 401(k) accounts says the same thing — they are all losing money. At least misery loves company.

I’m willing to bet that there is a lot of head scratching going on in other businesses and trades. I doubt that anyone is unaffected, unless they are the filthy rich — in which case I have very little sympathy. If Bill Gates can lose several billion in one day without blinking an eye, I’ll save my tears for someone else.

Impact On Hvacr

So how does this “401(k)crisis” affect hvacr contractors? I don’t know for sure, but I can only speculate while asking for feedback fromNews’readers.

This year, The News published results of its October 2000 Salary and Service Rates Editorial Study, which included data on what types of benefits contractors offer to employees. Fifty-two percent of the respondents said they offer some type of 401(k) plan. That means that hundreds, possibly thousands, of hvacr workers have been affected by the unstable financial markets.

The trickle-down effect of a slowing economy and the fluctuations in the weather, which by many accounts has been unseasonably mild this year, must have some affect on the earning power of hvacr workers, either by less overtime, for example, or, as I discussed earlier, less money in their 401(k) programs. This double whammy can be made worse if contractors decide it is time to cut back or eliminate 401(k) contributions.

Are you cutting back or eliminating? I’d be curious to find out how you contractors are dealing with this 401(k)risis — if you’re doing anything at all. And if you aren’t cutting back on your contributions, are you trimming anywhere else?

It’s a tough call. I can hear the words of my father ringing in my ears: “Ride out the storm. Things will settle down and get better. You are in it for the long term.” That’s easy for some, since they are young and can weather many changes, but what about those who are nearing retirement and whose nest eggs have taken a pounding?

For my money, I am considering contributing a little less to the 401(k) and a little more to the savings account.

Hall is business management editor. He can be reached at 734-542-6214; 734-542-6215 (fax); (e-mail).

Publication date: 09/24/2001