US:Ford to cut 4,000 white collar jobs in North America by early next year
Ford to cut 4,000 white collar jobs in North America by early next year
Move is part of painful restructuring to be announced in January
By Bryce Hoffman / The Detroit News
Ford Motor Co. will cut another 4,000 white-collar jobs in North American by early next year as part of a painful restructuring that will be announced in January.
Mark Fields, president of Ford's Americas division, outlined the planned job cuts in an e-mail to employees Friday and at the same time gave a blunt assessment of Ford's operating weaknesses.
"Our leadership team has put into motion the difficult but necessary decision to further reduce our salaried-related personnel costs in North America by an average of about 10 percent," Fields wrote. "This will affect every function, including our corporate staffs, and will involve the reduction of salaried, agency and purchased services costs equivalent to about 4,000 positions."
Ford, which started the year with about 32,000 salaried workers in the United States, said the "involuntary" terminations will begin soon and be completed by the end of March.
"Separating members of the Ford team is not easy, nor is it something we take lightly," Fields said.
The automaker has already eliminated nearly 3,000 white-collar jobs since the spring through layoffs and voluntary departures.
Fields was tapped by Ford Chairman and CEO Bill Ford Jr. in October to revive the automaker's crucial North American operations. Ford has suffered an alarming drop in U.S. sales and market share, mounting automotive losses and persistent quality problems. The company posted a third-quarter loss of $284 million. In North America, it lost $1.2 billion before taxes.
Ford's global automotive operations have lost almost $1.7 billion through the first nine months of the year, compared to profits of more than $1.1 billion through the third quarter of 2004.
While U.S. light vehicle sales have increased 1.2 percent this year through October, Ford's sales have dropped 3.4 percent.
Ford, like crosstown rival General Motors Corp. is saddled with high labor costs, excess factory capacity and huge pension and health care obligations. Ford has also been forced to match GM's generous discounts this year, which have eroded the automaker's profits.
Rising gas prices have also sharply curtailed consumer demand for Ford's sport utility vehicle lineup, which helped the automaker become one of the industry's most profitable companies during the 1990s.
Fields, who previously headed Ford-controlled Mazda Motor Corp. and its Premier Automotive Group collection of European luxury brands, is examining nearly every major aspect of the automaker's North American operations.
In the memo to employees Friday, Fields said his "Way Forward" plan will focus on three key areas: strengthening Ford's product lineup, clarifying the company's brands "for stronger emotional appeal" and "achieving improved quality, costs, growth and profitability - all at the same time."
"The reality is that the best of the competition is more competitive than we are on quality and costs, more efficient than us in their operations, and they're achieving market share growth and sizable profitability all at the same time," Fields said. "We can and must do the same."
Fields called on those who remain to do more to improve quality and compete against companies like Toyota Motor Corp. and Honda Motor Co.
In addition to the job cuts, Ford is expected to close additional North American plants to align car and truck production with demand. It is also negotiating with the United Auto Workers union to lower health care costs.
Ford has been in a constant mode of restructuring and downsizing for several years now.
In January 2002, the company announced plans to cut 21,000 jobs, shutter some assembly and parts plants, and eliminate unprofitable car and truck models to stem losses that totaled $6 billion in 2001 and 2002.
The automaker became profitable again and earned a combined $4 billion in 2003 and 2004. But severe competition that has eroded Ford's pricing power, rising gas prices and steel costs, and uncompetitive operating costs have undermined the company for most of 2005.
As part of the turnaround, Ford this year has suspended matching 401(k) contributions, frozen management bonuses, and combined the back office and regional sales operations of its Lincoln, Mercury and Ford divisions.
Ford's share of the U.S. market has dropped to 17.6 percent this year from 18.4 percent a year ago. A decade ago, Ford controlled more than 26 percent of U.S. light vehicles sales. During that same period, both Toyota and Honda have seen their market share rise dramatically.
Read the Memo below
As our plans for the Way Forward come together, I've made a commitment to honest, open and immediate communications with employees. This includes telling the Ford team first about the steps we will take in the weeks and months ahead to return our North America business to profitability.
Our leadership team has put into motion the difficult but necessary decision to further reduce our salaried-related personnel costs in North America by an average of about 10 percent. This will affect every function, including our corporate staffs, and will involve the reduction of salaried, agency and purchased services costs equivalent to about 4,000 positions. We will announce full details of our Way Forward plan in January 2006 and anticipate that these salaried-related cost reductions will be primarily completed by the end of the first quarter.
Separating members of the Ford team is not easy, nor is it something we take lightly. As our leadership and Human Resources teams begin to implement the involuntary separations that are part of this plan, their priority at every step of the way will be to provide support for those affected directly by these actions as well as for everyone else on the team.
A leaner, flatter organization will be part of the Way Forward plan we announce in January. The Way Forward plan will be built around three pillars:
- Clarifying our brands for stronger emotional appeal
- Strengthening our line-up with more great products
- Achieving improved quality, costs, growth and profitability - all at the same time
The salaried-related cost reductions, obviously, are part of the third element of our plan. The reality is that the best of the competition is more competitive than we are on quality and costs, more efficient than us in their operations, and they're achieving market-share growth and sizeable profitability all at the same time. We can and must do the same.
We know this is a period of anxiety and uncertainty. That is why it is more important than ever that we accelerate the communications and provide our employees with the candid facts about our business and the actions we are taking.
We will discuss our plans in more detail in January. But we wanted you to receive the first word about our salaried-related cost-cutting efforts from your leadership as quickly as possible - rather than through the local media.
- Mark Fields
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.....