Ford Motor Company on Friday confirmed that it is to close five US plants and halt production of four ageing models — the Mexican-built Ford Escort and the US-built Mercury Cougar coupe, Villager minivan and luxury Lincoln Continental — by the end of the year, reducing the company’s North American production capacity from 5.7 million vehicles a year to 4.8 million.


The latest round of job cuts will take the number of Ford employees laid off since January 2001 to 35,000 – with 21,500 of those in North America.


The company said that the restructuring will cost it a one-time charge of $US4.1 billion against fourth quarter earnings and that its annual shareholder’s dividend will be reduced to 40 cents per share.


“Our revitalisation plan is based on executing the fundamentals of our business to build great products,” said Ford chairman and chief executive officer Bill Ford in a presentation to analysts at Ford’s Dearborn, Michigan headquarters.


“We are confident we can achieve these goals through the efforts of our dedicated employee team. “We know we have immediate challenges to face. It will be difficult, and in some cases, painful to turn things around. But we will turn things around.”

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Ford plans a “product-led revitalisation programme” which will lead to the introduction of 20 new or freshened products in the U.S. annually between now and mid-decade.


Key points of the plan are:


— Reduction of North American plant manufacturing operating capacity by about one million units by mid-decade to realign capacity with market conditions. Five plants will be closed: Edison Assembly in New Jersey which builds Ranger pickups, Ontario Truck Plant, St. Louis Assembly, Cleveland Aluminum Casting and Vulcan Forge. Ford also says that “no new products have been identified” for two further plants: the Ohio Assembly Mercury Villager/Nissan Quest minivan facility and Cuautitlan Assembly. The company also plans to sell its Woodhaven Forging Plant and downsize or reduce shifts at 11 other plants while reducing line speeds and changing “operating patterns” at nine more. Ford officials said that F-series light-duty truck production for the US and Canada at Cuautitlan, Mexico, will also stop though the plant will continue to build vehicles for Mexico. The officials added, however, that the plant could build vehicles for markets outside North America. All plant closings will have to take account of Ford’s contract with the UAW, effective until September next year, banning plant closings, and there is a similar contract in place with the Canadian Auto Workers, effective until autumn 2002. The Ford officials stressed they would not breach the unions’ contracts.


— Reduced hourly workforce: About 12,000 hourly employees in North America are affected by job cuts completed in December or to be taken throughout 2002 and beyond. An additional 3,000 hourly employees were also affected in 2001. Ford says as many plant employees as possible will be “reassigned”.


— Reduced salaried workforce: Last year’s voluntary redundancies for salaried employees (which extended beyond North America) reduced Ford’s white collar head count in North America alone by 3,500. The programme will now be extended to axe a further 1,500 jobs to reach the NA target of 5,000. “If necessary to meet this goal, an involuntary separation programme will be used,” Ford said in a statement.


— Reduced global workforce: About 35,000 employees will be or already have been affected by job cuts around the world since January 2001. These include 21,500 in North America — 15,000 hourly, 5,000 salaried and 1,500 contract employees — and 13,500 in the rest of the world.


— Reduced material costs: A material cost-reduction programme has been initiated with North American suppliers which shares design savings, with Ford receiving 65 percent of implemented cost reductions and suppliers receiving 35 percent in the first year. Designs will be developed that will help improve Ford’s products and overall quality and the programme, along with other material cost reduction efforts, is expected to improve ongoing annual profits before taxes by $3 billion by mid-decade.


— Discontinued low-margin models: The Mercury Cougar coupe produced in conjunction with Mazda, at Flat Rock, Michigan, the Mercury Villager minivan which is built in Ohio alongside a ‘badge-engineered’ Quest version for Nissan, the luxury Lincoln Continental and the Mexican-built Ford Escort, largely supplanted in the US market by the newer Focus, will all be discontinued this year. Exports of Ford-badged Cougars to Europe were halted last year due to slow sales.


— Revitalisation plans beyond Ford’s North American automotive operations include the continued implementation of the European Transformation Strategy, the Premier Automotive Group strategy, the turnaround in South America and a revised direction for Ford Financial.


— Divestitures: Ford confirmed that it is pursuing the sale of non-core assets and businesses. Plans include the raising of $1 billion of cash from these sales in 2002.


— Dividend: The annual common stock and Class B stock dividend will be reduced from 60 cents a share to 40 cents.


These ‘actions’, as Ford calls them, and those already taken are expected to improve pre-tax operating results to $7 billion annually, an improvement of $9 billion by the middle of the decade. As part of the restructuring, the company will take an after-tax charge on fourth quarter earnings of $4.1 billion. The charge will cover several items, including asset impairments and personnel costs.


Friday’s announcement is the latest in a series of steps the troubled U.S. No. 2 car maker has taken over the past few months. Late last year Ford consolidated car and truck product development in North America, reduced dividends by 50 percent, reduced contract workers’ pay by seven percent, began a voluntary separation programme for North American salaried staff, eliminated bonuses and raises for senior managers, began sharing health care programme costs with U.S. salaried employees and retirees and eliminated company matches for U.S. salaried employees’ 401(k) retirement plans.


In the midst of the cutbacks, Ford’s high-profile former president and chief executive, Australian-born Jac Nasser, along with several key directors he appointed during his tenure, departed in October after Nasser lost the support of Ford chairman William Clay (Bill) Ford Jr. and the board.


“Although the actions we’re outlining today are difficult, they are necessary steps to lead Ford back to a strong financial and competitive position,” said Nick Scheele, Ford president and chief operating officer. “In order to remain competitive and profitable, we must make some hard decisions to align capacity with our anticipated sales.


“At the same time, the company is continuing its commitment to North American manufacturing operations with investments of about $20 billion over the next five years in new product programmes and spending to add flexibility and increase our ability to respond quickly to changes in market demand.”


Ford will releases fourth quarter and full-year 2001 financial results on January 17.