Ford Motor Company’s board, meeting yesterday in Detroit, have agreed to a wide-ranging restructuring including the axing of 17,000 jobs and a further reduction of 6,000 contract and agency workers, The Financial Times said.
The FT said that Ford’s new chairman and chief executive, Bill Ford, told the 14 board directors that the cutbacks were necessary to reverse losses estimated at about $US2 billion for 2001.
Earlier analysts’ estimates had put Ford ‘s losses at $US900 million for the fourth quarter of 2001 alone.
The FT said the massive job cuts will be announced publicly on Friday and are the largest at Ford in more than a decade. Several plants will be closed while shifts and overtime working will be eliminated at others, the newspaper said.
Ford hopes to save $3-5 billion from the programme, although the board was told it would involve significant one-off restructuring charges, the FT said.
The newspaper added that the job cuts were expected to include about 12,000 hourly-paid staff and up to 5,000 salaried ‘white collar’ workers. Officials told the FT that Ford would aggressively reduce the use of contract workers in areas such as computer services.
Earlier, The Detroit News had claimed that the first three plants to close would be the Ranger pickup truck facility in Edison, New Jersey (also reported by The New York Times), Oakville in Ontario and the Mercury Villager/Nissan Quest minivan factory at Avon Lake in Ohio. The FT said that Ford officials declined to comment on the reports.
Two of the three plants have been at risk for some time, however. Ranger pickup sales in the US have slowed in the last year or so due to a dearth of new models and new competitive model roll-outs by rival manufacturers. Meanwhile, Nissan recently confirmed it will end its involvement in the Avon Lake joint minivan project (its current Quest is a re-badged Mercury Villager) with the run-out of 2002 model year models, and will build the in-house-designed 2003 model year replacement in one of its own US assembly plants.
The FT said that Ford will reduce vehicle production at its Atlanta plant and phase out Escort assembly in Mexico. Taurus production in Chicago will also stop (after a 25-year run), leaving Atlanta as the only factory building Ford’s staple midsized fleet and family car for the US market.
The FT added that Ford’s newly appointed chief operating officer, Sir Nick Scheele, has pledged that the group will not break its contract with the powerful United Auto Workers union, which prevents plant closures and forced redundancies before 2003.
However, Ford officials told the newspaper that most of the cuts would be achieved through voluntary separation and early retirement schemes.