Ford may cut 30,000 jobs, close 10 plants

first_imgDearborn, Mich. – Ford Motor Co. executives plan to present a restructuring plan to the company’s board of directors today that calls for closing at least 10 assembly and component plants and eliminating 25,000 to 30,000 hourly jobs in North America within five years, according to people familiar with the plan. The planned cuts are deeper than many expected, signaling the urgency of Chairman and CEO Bill Ford Jr.’s push to restore the automaker’s ailing North American operations. Bill Ford has promised the impending cuts, expected to be announced Jan. 23, will affect all levels of the company. The automaker will announce the departure of as many as seven top executives by Jan 23, according to those familiar with the plan. The broad outlines of Ford’s plan – dubbed the “way forward” – were approved by directors during an off-site meeting in October with top executives in South Carolina. The new plan, which will guide the company through 2011, calls for 25,000 to 30,000 blue collar jobs to be eliminated in North America. Ford had 87,000 UAW-represented workers in North America at the end of 2004. Ford has about 11,600 union workers in Canada. On Tuesday, board member Kimberly Casiano told Dow Jones News Service that she and her colleagues will pore over the details of the proposal this week. “The plan is a super plan,” Casiano said after speaking at a luncheon in Detroit. She cautioned that the board may not approve every aspect of the “way forward” plan. “You can’t always make every detail of a plan possible.” Ford is eager to demonstrate that cuts to its hourly work force are being matched by similar cuts to its white collar work force and executive staff. The automaker already has announced plans to cut about 4,000 salaried workers in the first quarter of 2006 in addition to 2,750 workers this year. Over the past year, Ford’s pre-tax profits in North America have fallen from almost $1.8 billion in the first nine months of 2004 to a loss of nearly $2.2 billion for the same period in 2005. The Ford, Lincoln and Mercury share of the domestic market has dropped to 17.4 percent, compared with 25.6 percent in 1995. The plan calls for closing at least 10 assembly and component plants over the next five years. Sources familiar with the plan’s details said the decision about which plants to close has not been finalized, adding that Ford may only announce a few specific plant closures in January. Those are likely to include Ford’s assembly plants in St. Paul, Minn., and St. Louis, Mo. The St. Louis plant’s prospects have been hurt by a dramatic decline in demand for Ford’s once best-selling Ford Explorer SUV. The St. Paul factory produces the Ford Ranger pickup, which has not been redesigned in several years. The fate of Ford’s Wixom plant, which has been the subject of much speculation in recent months, is still up in the air, as is that of Ford’s Atlanta assembly facility. Ford is likely to hold off on naming all the plants slated for closure. The company is already negotiating with state and local authorities around the country, and the outcome of those talks could go a long way toward determining which plants stay open and which ones close. However, Ford also wants to keep its options open in order to adjust to changing market conditions. While Ford may not specify all of the plants it intends to close, it will estimate the amount of production capacity it plans to eliminate. Its goal is to boost capacity utilization to at least 95 percent. Global Insight Inc. estimates that Ford’s North American factories are currently running at 72 percent capacity. Anything less than 90 percent is generally considered to be operating at a loss. United Auto Workers Vice President Gerald Bantom said Tuesday that the details of Ford’s restructuring plan will be released Jan. 23, but said he did not know the extent of Ford’s planned cuts. “We’re hoping that nothing happens,” said Bantom, who heads the UAW’s Ford bargaining unit. “But we know that’s not going to happen.” Ford is already in negotiations with the UAW and hopes to receive concessions on health care costs similar to those the union recently negotiated with General Motors Corp. Ford hopes a deal will be ratified by union members by the end of the year or early next year. In a recent interview with the Detroit News, UAW President Ron Gettelfinger said he has had several meetings with Fields since he took over as head of Ford’s Americas division in October and feels comfortable working with him. Speaking at a press conference Tuesday, Gettelfinger said the UAW has hired an outside firm to review Ford’s finances. “We’re still in the process of analyzing the data,” the union leader said. The restructuring announcement will come on the heels of a series of new product and brand revelations at both the Los Angeles and Detroit auto shows. The timing is designed to demonstrate that Ford’s “way forward” plan is about not only closing plants and cutting jobs, but also expanding the company into new markets. On Jan. 4, Fields will outline Ford’s new brand strategy in his keynote address at the Greater Los Angeles Auto Show. While the details are still being worked out, Fields is expected to outline a comprehensive strategy to attract young buyers to the Ford brand. “Ford definitely needs a youth a strategy,” said Jim Sanfilippo, an analyst with AMCI Inc. in Detroit. “Ford can’t continue to operate without more volume at the low end of the market.”160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREBlues bury Kings early with four first-period goals In meetings today and Thursday, Mark Fields, Ford’s new president of the America’s division, will walk board members through the fine points, including budget projections for 2006 and 2007, capital expenditure requests and other details. He also will present his blueprint for revitalizing the Ford, Mercury and Lincoln brands, which includes a new strategy to attract young buyers for the Blue Oval brand. “That scale of action by Ford would be perceived as a very aggressive right-sizing move and would go a long way toward Ford getting its cost structure back in line with its much-diminished market share,” said Glenn Reynolds, an analyst with Credit Sights, a New York-based research firm. Ford would not comment on its plans. “Our work continues,” said spokesman Oscar Suris. “These plans will be final when they’re ready to be shared publicly.” Ford’s upcoming turnaround plan appears to be more far-reaching than the one Bill Ford launched after he became CEO four years ago. That plan called for 20,000 job cuts in North America, several plant closures and the elimination of unprofitable vehicles. At the time, Bill Ford set the goal of making $7 billion in pre-tax profit by the middle of the decade. Ford has since abandoned that goal. Ford is likely to make about $2.5 billion this year after taxes, but has struggled with falling sales and deep losses in North America. last_img read more