Ford’s ‘path to winning’

  • Associated Press
  • Monday, January 23, 2006 9:00pm
  • Business

DEARBORN, Mich. – Ford Motor Co., the nation’s second-largest automaker, said Monday that it will cut 25,000 to 30,000 jobs and close 14 facilities by 2012 as part of a restructuring designed to reverse a $1.6 billion loss last year in its North American operations.

The cuts represent 20 percent to 25 percent of Ford’s North American work force of 122,000 people. Ford has approximately 87,000 hourly workers and 35,000 salaried workers there.

Plants to be idled through 2008 include the St. Louis, Atlanta and Michigan’s Wixom assembly plants and Batavia Transmission in Ohio. Windsor Casting in Ontario also will be idled, as was previously announced after contract negotiations with the Canadian Auto Workers.

A total of 14 facilities, including seven assembly plants, will cease production by 2012. The names of the other facilities were not immediately disclosed.

“These cuts are a painful last resort, and I’m deeply mindful of their impact,” Chairman and Chief Executive Bill Ford said in announcing the cuts. “In the long run we will create far more stable and secure jobs. We all have to change and we all have to sacrifice, but I believe this is the path to winning.”

Under the company’s existing contract with the United Auto Workers, workers at the idled plants will continue to get most of their pay and benefits until a new contract is negotiated next year. However, they won’t be eligible for overtime.

UAW President Ron Gettelfinger and Vice President Gerald Bantom called the plan “extremely disappointing.”

“The impacted hourly and salaried workers find themselves facing uncertain futures because of senior management’s failure to halt Ford’s sliding market share,” they said in a statement. “The announcement has further left a cloud hanging over the entire work force because of pending future announcements of additional facilities to be closed at some point in the future.”

Ford shares rose 46 cents, or 5.8 percent, to $8.36 in Monday afternoon trading on the New York Stock Exchange.

Earlier Monday, Ford reported earnings of $2 billion in 2005, down 42 percent from last year’s profit of $3.5 billion. It was the third straight year the automaker has reported a profit, but gains in Europe, Asia and elsewhere were offset by a loss of $1.6 billion in North American operations.

In announcing the job cuts and plant moves, Ford said Monday it would no longer provide earnings guidance beginning in 2006.

“We must be guided by our long-term goals of building our brands, satisfying customers, developing strong products, accelerating innovation, and, most importantly, producing a sustainable profit from our automotive business,” the CEO said in a statement.

In addition to the cuts in hourly jobs, Ford said it was reducing the company’s officer ranks by 12 percent by the end of the first quarter. The company previously said it was cutting the equivalent of 4,000 salaried positions by the end of the quarter.

The No. 2 U.S. automaker after General Motors Corp. has been hurt by falling sales of its profitable sport utility vehicles, growing health care and materials costs and labor contracts that have limited its ability to close plants and cut jobs. The UAW will have to agree to some portions of the restructuring plan, dubbed the “Way Forward” by Ford officials.

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