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The Great PC Giveaway

Will computers and Internet access join health plans and 401(k)s as standard benefits?

In 1914, Henry Ford reduced employee turnover at his young company by doubling wages to an unprecedented $5 a day, a move other manufacturers were forced to follow. In February, Ford Motor Co. raised the stakes for employers again. The Dearborn, Mich.-based auto giant announced it would offer a powerful personal computer, a color printer, and unlimited Internet access for just $5 a month to each of its 350,000 employees worldwide. The next day, Delta Air Lines Inc. made a similar offer, for $12 a month, to its 72,000 employees.

Why the largess? “It is critical for the success of businesses in the future for employees to be Internet savvy,” explains Ford chief information officer James Yost, noting that basic Web skills already are essential for salaried workers. “I won’t say it’s a job requirement [for hourly workers], but pretty soon it probably will be.”

Ford wants its employees along for the ride as the Internet changes the way cars are made, bought, and sold, says Yost. The company has unveiled various cyberspace initiatives in recent months, including Web sites for buyers, owners, and dealers; and marketing alliances with Web heavyweights such as Yahoo and Microsoft CarPoint. AutoXchange–a site that links 30,000 suppliers to the car maker and to one another– conducted its first online auction the same week Ford announced the employee PC program. Ultimately, Ford, General Motors Corp., and DaimlerChrysler will share a version of this site for all parts purchasing.

Tangible Benefits

Ford executives emphasize the value of making employees comfortable in these types of Internet environments, and they encourage personal use of the PCs, whether for E-mail or schoolwork. But Yost is quick to identify more-tangible benefits of the program. The company hopes the computers will help improve communications with employees–particularly with plant workers who don’t have office desktops–and lower the cost of providing human resources and other corporate services, he says.

Atlanta-based Delta views its $12 PCs as “simply an employee benefit,” says spokesman John Kennedy, but is still keen to link up with its huge “absentee workforce” of 29,000 pilots and flight attendants who go home between duty rotations, he adds. Even on the job, “they don’t go anywhere to work except to a moving piece of equipment,” Kennedy points out.

The PCs will allow those Delta employees to arrange their flight schedules from anywhere and take care of HR issues that traditionally have been handled by phone or mail. Not surprisingly, Delta was the first of the two companies to specify that employees could upgrade to a laptop for a larger co-payment.

San Francisco­based PeoplePC, which offers similar packages to the public for $24.95 a month, will provide the PCs and Internet service for both Ford and Delta. CEO Nick Grouf won’t say what sort of discount the vendor gave the companies. “I would characterize it as a great deal for PeoplePC and a great deal for Ford,” he says. Based on the price of the basic model that PeoplePC offers to the public, Ford could spend anywhere from about $50 million a year to cover the 200,000 employees in North America, to $90 million for personnel worldwide. Delta, whose employees pick up a larger share of the cost, could pay up to $12 million a year.

Trendsetter?

Meta Group analyst Maria Schafer says the Ford and Delta programs mirror an informal trend at many high-tech firms. “Companies are giving away all types of gadgets,” she says, and are paying for ISDN lines or cable modems in employees’ homes. “The real news is that a bricks-and-mortar company–Ford–with a lot of unionized employees has taken [such] a dramatic step. In the long run, I expect to see a whole bunch of companies rushing in to offer this same type of perk.”

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