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Ford to close 5 plants in restructuring; worldwide job losses to total 35,000, or 10 percent

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DEARBORN, Mich. (AP) _ Ford Motor Co. said Friday it is shedding 35,000 jobs, closing five plants and eliminating four vehicles including the once-best-selling Escort in a restructuring that the CEO called painful but necessary.

Ford said it was taking a $4.1 billion one-time charge against earnings to pay for its plan.

``We strayed from what got us to the top of the mountain, and it cost us greatly,'' chief executive William Clay Ford Jr. said from headquarters of the world's second largest automaker.

The job cuts, including 22,000 in North America, amount to about 10 percent of Ford's overall work force.

The plants to be closed are in Edison, N.J., and Oakville, Ontario, by 2004; Brook Park, Ohio, near Cleveland in either 2003 or 2004; Hazelwood, Mo., near St. Louis by an undetermined date; and Vulcan Forge in Dearborn as soon as possible.

``We were really surprised,'' Hazelwood Mayor T.R. Carr said. ``We were not anticipating this kind of move by Ford.'' He estimated the economic impact on the St. Louis area will be up to $400 million per year.

In addition the Escort, vehicles being dropped are the Mercury Cougar sports coupe, the Mercury Villager minivan and the Lincoln Continental luxury sedan.

The Escort at one time was Ford's best-selling car, but had been overshadowed by the subcompact Focus, now the world's best-selling car. In its recent incarnation, the Cougar, also targeted at young drivers, never reached any significant sales volume.

The Continental, with its history of trendsetting and design, had survived for more than 60 years. In recent years Ford had tried to market the vehicle, which had appeal in among the 60-and-up driver, to a somewhat younger driver.

The Lincoln LS sedan, which has been out about a year, has replaced the Continental as the automaker's top luxury model.

The Villager was built under a joint manufacturing arrangement with Nissan and at one time was Ford's luxury minivan. Its demise was previously announced.

The move also includes suspending bonuses for company managers and eliminating 401(k) matching contributions for employees.

In midafternoon trading on the New York Stock Exchange, Ford shares were up 17 cents, at $15.46.

The cuts include 12,000 manufacturing jobs and 3,500 previously announced early retirements for white collar workers. Also included in the total were 6,800 jobs already eliminated in North America during the past year, said Nick Scheele, Ford's chief operating officer.

In addition, 8,100 jobs were being cut in Europe, 2,100 in South America, 400 in Asia and 2,500 elsewhere.

Ford employs about 345,000 people worldwide. It has 170,000 employees in North America and operates 47 plants there.

Anaylst 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.''

Ron Gettelfinger, vice president of the United Auto Workers, said Ford's restructuring will respect previously negotiated contract rights, including job placement protections.

``Ford has great strengths and resources to draw upon _ most importantly, an experienced, highly skilled work force that's committed to improving product quality and customer satisfaction,'' Gettelfinger said in a statement.

Canadian Auto Workers president Buzz Hargrove was less conciliatory, saying the union would ``go to the bargaining table with Ford Motor Co. with a strike deadline'' with the continuation of the Oakville plant as a key demand.

The mayor of Edison, George Spadoro, flew to Michigan on Thursday in a last-ditch attempt to keep open his city's assembly plant, which employs about 1,500 hourly workers.

``This sort of loss _ a $100 million payroll, the ancillary vendors and suppliers that provide services and materials to this plant,'' Spadoro said. ``There's going to be a domino effect as a result.''

Tony McKinnie, 47, an assembly worker at a plant in Wayne, Mich., said he could understand the decision, given the current economy.

``I don't want to see anybody laid off,'' he said. ``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.''

For Ford, the sweeping restructuring represents a complete change from its position a year ago, when it reported a $6.67 billion profit for 2000.

In the third quarter of 2001, Ford lost $692 million and when it releases its fourth quarter financial statement Jan. 17, it is expected to report its third straight losing quarter.

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

Ford, a great-grandson of founder Henry Ford, said some steps would be painful and ``I can't begin to describe how sorry I am about that.'' He said he would accept no salary.

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

Ford officials also have grappled with high marketing costs related to an incentive price war.

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

By October, president and CEO Jacques Nasser was forced to resign and Ford replaced him as CEO. Scheele was elevated to COO.
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