Ford cuts jobs, plants, cars
BY MARTON PETTENDY | 14th Jan 2002
Ford hopes to reap $US7billion in annual pretax operating profits by around 2005 and is expected to post a net loss of more than $US2 billion when it releases its 2001 financial results on January 17.
The company said the restructuring will cost it a one-time charge of $4.1 billion against fourth quarter earnings and that its annual shareholder's dividend will be reduced to 40 cents per share.
"Our revitalization plan is based on executing the fundamentals of our business to build great products," said Ford chairman and chief executive officer Bill Ford in a presentation to analysts at Ford's Dearborn, Michigan headquarters on Friday.
"We are confident we can achieve these goals through the efforts of our dedicated employee team. "We know we have immediate challenges to face. It will be difficult, and in some cases, painful to turn things around. But we will turn things around." Ford plans a "product-led revitalisation program" which will lead to the introduction of 20 new or freshened products in the US annually between now and mid-decade.
The job cuts total 21,500 in North America, of which 15,000 are hourly workers. They include 12,000 blue-collar positions in North America, in addition to 3000 positions already eliminated from a total hourly work force of about 115,000 last year. The cuts include reductions made since the beginning of the year.
Mr Scheele said the job cuts include 5000 salaried positions, mostly in the US, eliminated through a voluntary early retirement program announced last summer, and 1500 contract positions. Additionally, Ford will reduce its North American plant manufacturing capacity by about one million units by the middle of the decade.
The five Ford plants to be closed in the next several years include the Oakville truck plant in Ontario (by 2003), the Edison in New Jersey (2004), the St Louis in Missouri (around 2005) and the Cleveland aluminium casting and Vulcan forge plant in Dearborn, Michigan as early as 2003.
Ford said it will also sell its Woodhaven, Michigan, forging plant, which builds crankshafts, and that selling its non-core businesses would reap an estimated $1 billion this year.
Shift reductions will be made at 11 other plants. Line speed reductions will be made at nine plants.
Additionally, Ford said it has not identified any new products to build at its Avon Lake, Ohio, assembly plant, which produces the Mercury Villager and Nissan Quest. Production on both vehicles ends this summer. Ford said it would not violate any union contracts.
"Although the actions we're outlining today are difficult, they are necessary steps to lead Ford back to a strong financial and competitive position," said Nick Scheele, Ford president and chief operating officer. "In order to remain competitive and profitable, we must make some hard decisions to align capacity with our anticipated sales.
"At the same time, the company is continuing its commitment to North American manufacturing operations with investments of about $20 billion over the next five years in new product programs and spending to add flexibility and increase our ability to respond quickly to changes in market demand." The plant closures will cut Ford's total North American production capacity by about 16 percent to 4.8 million vehicles from 5.7 million, Mr Scheele said.
Ford, which will post its first annual loss since 1992 when it releases financial results next Thursday, cut its dividend for the first time in a decade in October and has suspended matching payments to employee retirement plans and suspended all bonuses for top managers.
In further cost-saving measures announced on Friday, Ford said it was setting its first-quarter dividend at 10 cents a share, a 33 percent cut from the fourth-quarter rate and a 67 percent cut from the third-quarter dividend.
Ford Australia brand communications manager Sinead McAlary said the Ford US cost cutting is unlikely to affect any part of Ford's local operations.