DETROIT – Ford expanded its plans to remake itself into a more competetive automaker and end financial losses on Friday by cutting more than 10,000 additional salaried jobs, extending buyout offers to all 75,000 of its hourly workers and shuttering two more plants.
The announcement from Ford came as Chrysler's parent said it would cut U.S. production through end of 2006 and follows big cutbacks at General Motors (GM) earlier this year. The cuts are all due to consumers shifting from trucks and sport utility vehicles to smaller, more fuel efficient cars and crossovers, many made by Asian automakers.
The blue-collar cuts at Ford are another blow to organized labor which has been losing members as the auto industry reshapes itself amid fierce competition from lower-cost, non-union rivals.
But Wall Street didn't seem to be impressed with the long-awaited acceleration of the Ford restructuring plan. Ford shares tumbled nearly 10 percent by midmorning.
Ford Motor Co. (F) said Friday it would shutter a stamping plant in Maumee, Ohio, in 2008 and its Essex engine plant in Windsor, Ontario, in 2007. That is in addition to previous plans for 14 plant closures.
It will also close an assembly plant in Norfolk, Va., in 2007, a year earlier than previously announced and will cut a shift in January. An assembly plant in St. Paul, Minn., which is scheduled to close in 2008, also will have a shift reduction in 2007.
Ford said it would complete its cuts of about 30,000 hourly jobs by the end of the 2008, four years ahead of its previous target. Ford also said it already had cut 4,000 salaried positions in the first quarter of this year.
The new cuts would reduce Ford's total North American work force by 29 percent, from the current level of about 130,000 to about 92,000 by the end of 2008. The salaried job cuts represent about a third of that work force.
Ford's method of slashing its work force is similar to cuts made earlier this year by larger rival General Motors Corp. At GM, 34,410 hourly workers have accepted buyouts or early retirement offers this year. Figures on white-collar cuts were not available.
Ford, GM and DaimlerChrysler AG's (DCX) Chrysler unit are struggling with the need to reduce their so-called "legacy costs" of big pay and benefits packages for workers and retirees to compete more effectively with foreign automakers.
DaimlerChrysler said Friday its Chrysler division will make additional production cuts in the third and fourth quarters to reduce dealer inventories.
By 2008, Ford's North American factory capacity will be reduced by 26 percent compared to 2005 levels, the company said in the release.
It said the plan would cut about $5 billion in operating costs, mainly by offering early retirement and buyout packages to all hourly workers and to white-collar employees. Ford plans to expand buyout and early retirement offers worth up to $140,000 to the company's U.S. hourly work force of more than 75,000 as part of the plan.
"The simple fact is that the business model that served us in North America for decades no longer works," Mark Fields, Ford's president of the Americas, said during a morning teleconference.
Todd Wiech, a 46-year-old Ford worker in St. Paul, Minn., said he's wrestling with his options, which include the buyout, going back to school or trying to transfer to another Ford nplant.
He said it wouldn't be easy to walk away from 18 years with the company.
"Myself -- people that were hired in 1988 -- it hits us pretty hard because we've got a lot of time invested with Ford and we're getting a little older to go out looking," said Wiech, whose daughter will graduate from high school in two years.
Ford said that by the end of 2008 it would close or sell all facilities that it took back as part of a bailout of Visteon Corp., a supplier that was spun off from the automaker.
Ford said it expects to achieve full-year profitability in its North American automotive operations no earlier than 2009. The company had previously pledged to make money in North America in 2008.
It also plans to suspend the quarterly dividend on its common and Class B stock in the fourth quarter of this year.
One Wall Street analyst said the revised turnaround plan did not go far enough.
Ron Tadross, analyst for Bank of America, said the plan "omits any bold steps to fix the business."
"We had hoped Ford would close additional assembly plants and make remaining ones highly more flexible, announce the exit-sale of several brands," and take other measures, he said.
Ford shares fell 90 cents, or 9.9 percent to $8.19 in midmorning trading on the New York Stock Exchange. Its shares have traded in a 52-week range of $6.06 to $10.09.
Ford lost $1.4 billion during the first half of this year and is under pressure from Wall Street to make further cuts and roll out new cars and trucks more quickly.
In July, the company pledged to accelerate its "Way Forward" restructuring plan, which when introduced in January called for the up to 30,000 job cuts as well as closing 14 facilities by 2012. The new cuts bring the total number of plant closures to 16.
"These actions have painful consequences for communities and many of our loyal employees," Executive Chairman Bill Ford said in the restructuring release. "But rapid shifts in consumer demand that affect our product mix and continued high prices for commodities mean we must continue working quickly and decisively to fix our business."
The company indicated that it is ready to accept a smaller slice of the market, focusing on profitable sales instead of sheer volume. It said that, with investments in new products and quality improvements, it expects market share of about 14 to 15 percent going forward.
This year, the company is forecasting Ford, Lincoln and Mercury market share in the low-16 percent range. The country's second-largest automaker has seen its market share decline steadily in recent years from about 26 percent in the early 1990s.
Ford also announced that a new full-size crossover based on the Fairlane wagon concept shown at the Detroit auto show in January 2005 would go on sale in 2008. A crossover is a vehicle with the roominess of an SUV, but built on a car platform. Ford said the Fairlane will be "a seven-passenger vehicle for modern families" and will be produced in Oakville, Ontario.
"The most important thing we do is to size our company and our capacity to the current demand and, on top of that, to continue to invest in the products and services -- the cars and trucks -- that the customers really, really want," Chief Executive Alan Mulally said. Mulally, who was named to the post last week, led a turnaround at the commercial jetmaking division of Boeing Co.
In another executive move, Ford said Thursday that Anne Stevens, an architect of the restructuring effort and one of the auto industry's highest ranking women, was retiring. Stevens, 57, had been at the center of Ford's turnaround efforts since October 2005, when she was named executive vice president.
The company also said it would roll out new or significantly upgraded cars and trucks in 70 percent of its Ford, Lincoln and Mercury brands, expanding in growing areas such as car-based crossovers. At the same time, Ford said it will try to maintain its lead in the truck segment by introducing a new F-150 that will go on sale in 2008.
Ford has acknowledged a need for drastic changes in its product lineup. Like other U.S. automakers, its bottom line is heavily dependent on high-margin trucks and large SUVs, but recently consumer preferences have shifted toward more fuel-efficient vehicles. Ford says the speed of that shift caught it by surprise.