Ford will close three US plants over the next six months and a fourth plant by 2007 under its contract with the United Auto Workers union, company officials said on Thursday, according to Reuters.
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The news agency noted that Ford had announced in 2002 three plant closings, and the union had told its members last week about the fourth plant, but Ford had not previously set a timetable for the closings.
According to Reuters, Ford said the UAW contract it signed on Tuesday allows it to meet the goals of its turnaround plan to cut North American capacity by one million vehicles, likely shedding about 12,000 hourly jobs in the process.
Reuters said Ford had previously announced it was closing two parts plants, in Michigan and in Ohio, and an assembly plant in New Jersey. Under the contract, the UAW saved an assembly plant in Missouri, but had to allow another assembly plant in Ohio to close instead, the report added.
The two parts plants will close by the end of the year, Reuters said, while the New Jersey plant will close by March 2004 and Ford said it will close the Ohio assembly plant by 2007.
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By GlobalData
The company said some of the contract’s costs – such as a $US3,000 signing bonus for UAW members – would be accounted for as a one-time charge to third-quarter earnings, Reuters said, adding Ford is expected to post a loss of 13 cents a share in the third quarter, according to analysts surveyed by Reuters Research.
The news agency noted that, in the past few days, Ford has announced some 7,700 job cuts around the world, including 3,000 hourly workers in Belgium, 3,000 salaried and vacant jobs in North America and 1,700 jobs in Germany.
Reuters said the cuts are part of Ford’s drive to meet its profit forecasts despite higher-than-expected costs from Detroit’s ongoing price wars.
Mostly because of incentives now averaging roughly $3,700 per vehicle sold in the United States, Reuters said, Ford has already been forced to raise its cost-cutting target for this year to $2.5 billion just to hit its earnings estimate of 70 cents a share, or roughly $1.3 billion.
To the end of June, Reuters added, Ford had cut $1.9 billion, through reducing the cost of building current models and lowering its estimates for future warranty repairs. In July, it announced it would cut salaried worker costs 10% by the end of year, through every method possible, including job cuts, the report noted.
