Ford puts job cuts into overdrive

Janet Babin Sep 15, 2006


BRIAN WATT: Ford Motor Company shifted its restructuring plan — called the Way Forward &mdash into overdrive this morning. In an effort to become profitable, it announced jobs cuts, buyouts and plant closures that will happen faster and slice deeper. From North Carolina Public Radio, Marketplace’s Janet Babin reports.

JANET BABIN: Ford said this morning it will cut an additional 10,000 white collar jobs and offer buyouts to all of its 75,000 hourly workers in the US.

The company’s also shuttering two more factories, in addition to the 14 it already planned to close.

These moves will cut $5 billion from Ford’s operating costs, but Bob Schulties with says Ford won’t make money until it creates a car people want to buy.

BOB SCHULTIES: “People aren’t interested in the Ford products right now and until they produce vehicles that we’re all interested in buying, they can cut and cut and cut and it won’t make any difference.”

The company promises that 70 percent of its product lineup will be new or revamped by 2008.

But even after the changes, Ford doesn’t expect to become profitable until 2009, a year later than it had previously forecast.

In New York, I’m Janet Babin for Marketplace.

WATT: Let’s take look at Ford’s situation by the numbers: 82,000 is the number of hourly workers Ford had in North America at the start of the year. 75,000 is where that number stands today.

$140,000 is the maximum number of dollars one of those workers can now get for walking away. Now, that worker has to be 55, have at least 10 years on the job and give up health-benefits. But Ford is now offering options to any of the others who are willing to leave.

The struggling automaker’s trying to cut its payroll costs by a third and is basically following the lead of General Motors. It’s managed to trim out 34,000 workers with similar buyout offers.

Rebecca Lindland is an auto industry analyst with Global Insight. She says Ford’s gotta do more than just cut jobs.

REBECCA LINDLAND:“Ford really needs to look at designing vehicles that are distinctly American. We’ve seen it from GM in the resurgence of the Camero. We’ve seen it even more aggressively in Chrysler. That’s what we’re looking for with Ford. They have it in the current Mustang. The problem is we don’t see it any of their future products.”

That’s Rebecca Lindland of Global Insight.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.