Ford to cut 25,000 to 30,000 jobs

Monday, January 23rd 2006, 10:47 am
By: News On 6

DEARBORN, Mich. (AP) _ Ford Motor Co., the nation's second-largest automaker, said Monday that it will cut 25,000 to 30,000 jobs and idle 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 in the region.

Ford shares rose 68 cents, or 8.6 percent, to $8.58 in morning 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.

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 following contract negotiations with the Canadian Auto Workers. Another two assembly plants to be idled will be determined later this year, the company said.

The other seven facilities that will be idled were not immediately identified.

A total of 14 facilities, including seven assembly plants, will cease production by 2012, Ford said.

``We will be making painful sacrifices to protect Ford's heritage and secure our future,'' Chairman and Chief Executive Bill Ford said in a statement. ``Going forward, we will be able to deliver more innovative products, better returns for our shareholders and stability in the communities where we operate.''

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 United Auto Workers union will have to agree to some of the changes Ford wants to make.

Ford also has seen its U.S. market share slide as a result of increasing competition from foreign rivals. The company suffered its tenth straight year of market share losses in the United States in 2005, and for the first time in 19 years, Ford lost its crown as America's best-selling brand to GM's Chevrolet. Ford sold around 2.9 million vehicles for a market share of 17.4 percent in 2005, down from 18.3 percent the year before and 24 percent in 1990.

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.

The restructuring is Ford's second in four years. Under the first plan, Ford closed five plants and cut 35,000 jobs, but its North American operations failed to turn around.

Alan Hallman, mayor of Hapeville, Ga., where the Atlanta Assembly Plant is located, called the latest news ``a setback for the state.''

The plant, which makes the Taurus, has about 2,000 employees. Hallman said it accounts for 9 percent of the small city's budget.

``We've got hundreds of man-hours and thousands of dollars invested on various plans to keep them here. The fact that they've elected to idle the plant is very disappointing,'' he said.

Ford used just 79 percent of its North American plant capacity in 2005, down from 86 percent in 2004, according to preliminary numbers released last week by Harbour Consulting Inc., a firm that measures plant productivity. By contrast, rival Toyota Motor Corp. was operating at full capacity.

Ford said in its earnings announcement Monday that it reduced employment in 2005 by 10,000 people due to layoffs, buyouts and attrition. Ford has around 300,000 employees worldwide.