US:Ford cuts white collar jobs
Ford cuts white collar jobs
Up to 1,000 salaried workers will be forced out
By Eric Mayne / The Detroit News
Ford Motor Co. is launching a new cost-cutting drive and will eliminate an estimated 1,000 white-collar workers in the United States.
In memos to employees Monday, Ford said it planned to offer early retirement packages or buyouts to select salaried employees this month.
If it can't entice enough employees to accept the offers, "we may have to resort to involuntary separations," Greg Smith, executive vice president and president of Ford's Americas operations, said in an e-mail obtained by The Detroit News.
Serious challenges such as higher commodity prices, a weak U.S. dollar, increasing health care costs, and lower North American production are prompting Ford to reevaluate operations, Smith said.
"Although we've made significant progress ... competitive forces remain intense," Smith said.
The cuts to U.S. salaried payroll will come from Ford's North America consumer business group, its corporate staff and Ford Motor Credit Co.
Ford has 32,000 salaried employees in the United States.
The automaker will examine operations to identify groups of employees it would consider eligible for the "voluntary plans," and eligible employees can expect to be informed of their options by the end of this month, company spokeswoman Marcey Evans said.
Ford expects the job cuts to be completed before June 30, Evans said.
"Ford is facing some of the same pressures that GM is facing," said Steve Girsky, chief auto analyst with Morgan Stanley in New York. "So it doesn't surprise me they are taking aggressive actions."
The downsizing move follows Ford's decision to award merit pay increases to salaried employees beginning April 1, after delaying pay raises for three or more months in recent years.
Ford restored bonuses for some salaried workers last year. Ford also has lifted a four-year freeze on merit pay increases for 53 top executives, including Chairman and CEO Bill Ford Jr., who has received stock options instead of a cash salary since taking charge of the company in 2001.
The planned job cuts and recent cash bonus payouts can send a mixed message, said Mike Flynn, research scientist with the University of Michigan's Office for the Study of Automotive Transportation.
"But it need not be," Flynn said. "If they present it properly, nobody should be shaking their heads. What the thinking probably is, is that there are some things that we need to get back to normal."
Smith said in the e-mail that the decision to award merit increases and bonuses "was made to ensure that performance was recognized and rewarded, to retain talented employees and to continue to pay our people competitively."
Ford is rebounding from losses of $5.4 billion in 2000 and 2001, which prompted the automaker to cut 5,000 white-collar jobs. Last year, riding high on strong sales of its F-150 pickup, earnings reached $3.5 billion -- a sevenfold jump from 2003. But its 2005 U.S. sales have dropped 5.1 percent.
Evans said the latest white-collar cuts are aimed at helping Ford meet financial goals. The automaker has promised investors it will earn $7 billion in pre-tax profits by 2006 under a turnaround plan implemented by Bill Ford in January 2002.
"Because our task is cost-focused, we can't determine at this time the final number of employees that will ultimately be involved in these programs," Smith wrote. "We estimate they possibly could affect about 1,000 salaried U.S. employees."
Other expenditures under scrutiny include travel, administration and the cost of hiring contract personnel for specialized functions such as engineering.
Flynn said the moves are appropriate.
"They have done reasonably well on the revenue side," he said. "They still need to do some cost-cutting. They're continuing to lose share."
In 2003, Ford slashed overtime for salaried workers in a bid to cut costs. That move led to a pair of organizing drives by the UAW -- one of which was successful.
In a separate memo, Ford Credit CEO Mike Bannister told employees the automaker's finance arm has a target to cut corporate expenses by 5 to 10 percent by 2005.
Ford Credit plans to cut an additional $200 million in overhead costs next year, Bannister told employees.
Smith and Bannister asked employees for understanding.
"Given the culture of our company, it is never easy to announce separation packages, nor are these decisions made lightly," Bannister said.
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.....