Re: E.U:Ford to cut 1,700 German jobs
Ford will cut costs and 3,200 more jobs
Positions in North America and Germany are on chopping block
September 30, 2003
BY SARAH A. WEBSTER
FREE PRESS BUSINESS WRITER
Ford Motor Co., under a mandate to cut white-collar expenses by 10 percent and keep its turnaround plan on track, is cutting 1,500 contract workers in North America and offering voluntary buyouts to 1,700 salaried and blue-collar employees in its German division.
In addition, 50 of Ford's salaried workers will be laid off by the end of the year and many jobs that have been sitting vacant are now being eliminated, according to a company official who did not want to be identified because all affected workers have not been notified.
Many of the contractors, who work at Ford but are employed by local suppliers such as MSX International Inc. in Southfield, will be told they are losing their jobs this week and a group of them will be let go today, according to people familiar with the staffing changes.
The contractors include engineers, technicians and professionals in the purchasing division, among others, and some suppliers are worried that managers at Ford will struggle to get their work done with a bare-bones staff that keeps getting thinner.
"The workload goes on," said an official at one company that supplies engineers to Ford. "They've already been living with jobs that couldn't be replaced -- now this."
In July, the Dearborn-based automaker said it would need to further trim salaried costs in order to meet its earnings target of $1.25 billion, or 70 cents a share, this year and to make $7 billion in profits, before taxes, by mid-decade. Ford, which boosted its cost-cutting goal to $2.5 billion for the year from its initial target of $500 million, cut costs by $1.3 billion in the second quarter.
The stepped-up effort follows the company's previously announced plan to close five plants and eliminate 21,500 jobs in North America as part of its 2002 revitalization effort.
Some experts who track the auto industry for investors had warned that the 2002 plan didn't go far enough to rescue Ford, which lost a combined $6.4 billion in 2001 and 2002. They have been similarly critical of Ford's recently ratified contract with the UAW. That deal may be viewed as concessionary, compared with prior agreements, but workers didn't take a vow of poverty.
Over four years, the new pact would yield $17,400 in financial gains for the rank and file, compared with $29,300 in the 1999 contract. Hourly workers will receive a $3,000 signing bonus as part of the latest deal, a 3-percent bonus next year and raises of 2 percent and 3 percent in the third and fourth years.
And while the deal allows the automaker to close five plants, it spared a suburban St. Louis assembly plant with 2,500 workers from the chopping block after receiving millions of dollars in government incentives. Thus, fewer than 3,000 union employees -- or 3 percent of Ford's hourly workforce -- are expected to be affected by plant closings.
Despite criticism from outsiders, though, Ford has emphasized that it remains on track for the year despite projections of a 15-cent loss per share in the July-September period.
Profits were down 27 percent in the second quarter, to $417 million, or 22 cents a share, but the world's second-largest automaker beat Wall Street estimates of 19 cents a share for the April-June period.
The voluntary retirement and compensation packages being offered at Ford's German division, Ford-Werke AG, are expected to shed 700 salaried and 1,000 blue-collar jobs. That represents about 6 percent of the division's workforce.
Despite intensified cost-cutting efforts, Ford of Europe reported a loss of $525 million in the second quarter, compared with a loss of $18 million in the same period a year ago.
Speaking only of the changes in Germany, Ford spokesman Ken Zino said, "It's part of the ongoing effort to reduce costs."
Ford isn't the only local automaker struggling with heavy operating costs and declining market share, which is now being won by foreign competitors such as Toyota, Honda and Nissan.
DaimlerChrysler AG's Chrysler Group, Ford's crosstown rival in Auburn Hills, reported a loss of $1.1 billion in the second quarter and recently announced that white-collar workers will get no merit raises this year. They will instead get a $2,000 tax-free bonus in their retirement accounts and a company match program will resume. The German-owned company is also studying whether additional changes to its operations are necessary.
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.
My next Ford.....