DETROIT - Ford is cutting more than 10,000 additional salaried
jobs, offering buyouts to all of its 75,000 U.S. hourly workers
and shutting down two more plants in a plan to end financial
losses and remake itself into a smaller, more competitive car
company.
The announcement from Ford came as Chrysler's parent
said it would cut U.S. production through the end of 2006
and follows big cutbacks at General Motors earlier this
year. The cuts are all due to consumers shifting from
trucks and sport utility vehicles to smaller, more fuel
efficient cars and crossovers, many made by Asian
automakers.
The blue-collar cuts at Ford are another blow to
organized labor, which has been losing members as the
domestic auto industry reshapes itself amid fierce
competition from lower-cost, non-union rivals.
Wall Street seemed unimpressed with Ford's accelerated
restructuring plan. Ford Motor Co. shares tumbled more
than 12 percent by early afternoon erasing more than $2
billion of the stock's value.
The nation's second biggest automaker said Friday it
would shutter a stamping plant in Maumee, Ohio, in 2008
and its Essex engine plant in Windsor, Ontario, in 2007.
It will also close an assembly plant in Norfolk, Va.,
in 2007, a year earlier than previously announced and will
cut a shift in January. An assembly plant in St. Paul,
Minn., which is scheduled to close in 2008, also will have
a shift reduction in 2007.
The new cuts bring the total number of plant closures
to 16, adding to the 14 plants announced previously. The
company has identified nine of the plants to be closed
through 2008, but Ford officials would not talk about
which facilities would be shut down after that.
Ford said it would complete its cuts of about 30,000
hourly jobs by the end of the 2008, four years ahead of
its previous target. The company said it already had cut
4,000 salaried positions in the first quarter of this
year.
The new cuts would reduce Ford's total North American
work force by 29 percent, from the current level of about
130,000 to about 92,000 by the end of 2008. The salaried
job cuts represent about a third of that work force.
Ford's method of slashing its work force is similar to
cuts made earlier this year by larger rival General Motors
Corp. At GM, 34,410 hourly workers have accepted buyouts
or early retirement offers this year. The company has cut
its white-collar work force by 2,000 in 2006.
Ford, GM and DaimlerChrysler AG's Chrysler unit are
struggling with the need to reduce their so-called "legacy
costs" of big pay and benefits packages for workers and
retirees to compete more effectively with foreign
automakers.
DaimlerChrysler said Friday its Chrysler division will
make additional production cuts in the third and fourth
quarters to reduce dealer inventories.
By 2008, Ford's North American factory capacity will be
reduced by 26 percent compared to 2005 levels, the company
said in the release.
It said the plan would cut about $5 billion in
operating costs, mainly by offering early retirement and
buyout packages to all hourly workers and to white-collar
employees. Ford plans to expand buyout and early
retirement offers worth up to $140,000 to the company's
U.S. hourly work force of more than 75,000 as part of the
plan.
"The simple fact is that the business model that served
us in North America for decades no longer works," Mark
Fields, Ford's president of the Americas, said during a
morning teleconference.
Also during the teleconference, Chairman Bill Ford said
there were no plans for the Ford family to take the
company private. The Ford family owns about 40 percent of
the voting power at Ford.
Todd Wiech, a 46-year-old Ford worker in St. Paul,
Minn., said he's wrestling with his options, which include
taking the buyout, going back to school or trying to
transfer to another Ford plant.
He said it wouldn't be easy to walk away from 18 years
with the company.
"Myself — people that were hired in 1988 — it hits us
pretty hard because we've got a lot of time invested with
Ford and we're getting a little older to go out looking,"
said Wiech, whose daughter is in high school.
Ford Motor said that by the end of 2008 it would close
or sell all facilities that it took back as part of a
bailout of Visteon Corp., a supplier that was spun off
from the automaker.
Ford said it expects to achieve full-year profitability
in its North American automotive operations no earlier
than 2009. The company had previously pledged to make
money in North America in 2008, but said it could not
accomplish that while continuing to invest in new
products.
It also plans to suspend the quarterly dividend on its
common and Class B stock in the fourth quarter of this
year.
One Wall Street analyst said the revised turnaround
plan did not go far enough.
Ron Tadross, analyst for Bank of America, said the plan
"omits any bold steps to fix the business."
"We had hoped Ford would close additional assembly
plants and make remaining ones highly more flexible,
announce the exit-sale of several brands" and take other
measures, he said.
Ford shares fell $1.13, or 12.4 percent, to $7.96 in
afternoon trading on the
New York Stock Exchange. Its shares have traded
in a 52-week range of $6.06 to $10.09.
Ford lost $1.4 billion during the first half of this
year and is under pressure from Wall Street to make
further cuts and roll out new cars and trucks more
quickly.
In July, the company said it would accelerate its "Way
Forward" restructuring plan, which when introduced in
January called for the up to 30,000 job cuts as well as
closing 14 facilities by 2012.
The company indicated that it is ready to accept a
smaller slice of the market, focusing on profitable sales
instead of sheer volume. It said that, with investments in
new products and quality improvements, it expects market
share of about 14 to 15 percent going forward.
This year, the company is forecasting Ford, Lincoln and
Mercury market share in the low-16 percent range. Ford's
market share once had about 26 percent of the market in
the early 1990s.
Ford also announced that a new full-size crossover
based on the Fairlane wagon concept shown at the Detroit
auto show in January 2005 would go on sale in 2008. A
crossover is a vehicle with the roominess of an SUV, but
built on a car platform. Ford said the Fairlane will be "a
seven-passenger vehicle for modern families" and will be
produced in Oakville, Ontario.
"The most important thing we do is to size our company
and our capacity to the current demand and, on top of
that, to continue to invest in the products and services —
the cars and trucks — that the customers really, really
want," Chief Executive Alan Mulally said. Mulally, who was
named to the post last week, led a turnaround at the
commercial jetmaking division of Boeing Co.
On Thursday, Ford said that Anne Stevens, an architect
of the restructuring effort and one of the auto industry's
highest ranking women, was retiring. Stevens, 57, had been
at the center of Ford's turnaround efforts since October
2005.
The company also said it would roll out new or
significantly upgraded cars and trucks in 70 percent of
its Ford, Lincoln and Mercury brands, expanding in growing
areas such as car-based crossovers. At the same time, Ford
said it will try to maintain its lead in the truck segment
by introducing a completely reworked F-150 that will go on
sale in 2008.
Ford has acknowledged a need for drastic changes in its
product lineup. Like other U.S. automakers, its bottom
line is heavily dependent on high-margin trucks and large
SUVs, but recently consumer preferences have shifted
toward more fuel-efficient vehicles. Ford says the speed
of that shift caught it by surprise.
___
Associated Press Writers Sarah Karush in Detroit and
Martiga Lohn in St. Paul, Minn., contributed to this
report.
___
On the Net:
Ford Motor Co.:
http://www.ford.com
