Ford hits the brakes

Associated Press

DEARBORN, Mich. — Apologizing to employees losing their jobs, Ford Motor Co. Chairman William Clay Ford Jr. laid out a restructuring plan Friday that will cut 35,000 positions, or 10 percent of the company’s workforce, close five plants and eliminate four models.

"These steps build upon what we’ve already done. … It’s a comprehensive plan, but it’s not a magic wand," Ford said. "We strayed from what got us to the top of the mountain, and it cost us greatly."

Several thousand of the 35,000 jobs already have been cut through voluntary buyouts, early retirements, shift eliminations and procedural changes at plants, according to chief operating officer Nick Scheele.

The automaker said it was taking a $4.1 billion one-time charge to pay for its plan and hopes to reach $9 billion in profit improvement by mid-decade. For Ford, the need to restructure so severely represents a complete change from its position just a year ago, when it reported a $6.67 billion profit for 2000.

"For most of the last decade, the Ford Motor Company was on a roll," Ford said. "The great success we enjoyed may have caused us to underestimate the strength of our competitors."

"We realize that some of the things that must be done will be painful," Ford said. "I can’t begin to describe how sorry I am about that."

The automaker also will reduce manufacturing capacity from 5.7 million vehicles worldwide to 4.7 million. The automaker will stop making the Ford Escort, Mercury Cougar, Mercury Villager and Lincoln Continental this year.

Ford, the first family member to head the automaker in 22 years, also said he wouldn’t accept any salary for the next year, but would hold on to his stock options.

United Auto Workers Vice President Ron Gettelfinger said Ford’s restructuring will respect previously negotiated contract rights, including job placement rights and other protections.

"Ford has great strengths and resources to draw upon — most importantly, an experienced, highly skilled workforce that’s committed to improving product quality and customer satisfaction," Gettelfinger said.

Analyst David Healy with Burnham Securities said the restructuring plan goes further than Wall Street anticipated.

"My impression of the overall program is it goes a lot deeper than I had expected, and I think the long-term results will probably be greater," Healy said. "I think the news from now will be much better."

The plan also includes the suspension of bonuses for company managers and the elimination of 401(k) matches for employees.

"I don’t want to see plants closed. I want to see plants open, but I have to look at it from the company’s perspective as well," said Tony McKinnie, 47, an assembly worker at the Wayne, Ind., plant, where shifts have been cut back. "Nobody wants this to happen, but unfortunately with the economy the way it is, you don’t have much of a choice."

The automaker was hit hard in 2001 when it launched a $3 billion program to replace 13 million Firestone tires that were not recalled in the original recall that began in August 2000. The move resulted in the severing of Firestone’s almost century-old relationship with Ford.

In July, much of Ford’s top management was shaken up, with Scheele, the man known for turning around Ford’s European operations, taking over North American operations.

Both Scheele and Ford said Ford’s future is based on "getting back to basics" in product development and improvements in quality and productivity.

"Great products made us who we are, and great products are going to take us where we’re going," Ford said Friday.