DETROIT – Ford Motor Co. said Monday that it will reduce retirement and health benefits for 45,000 white-collar workers and lay off 630 people to save about $300 million a year.
"These plant and benefit actions, while painful for our employees, are necessary as we confront a serious situation," chairman and chief executive officer William Clay Ford Jr. said in a news release.
He said the cuts probably are not the last as the No. 2 U.S. automaker seeks to return to financial health, he said.
"More tough decisions will follow in the months to come," Ford Jr. said. "However, we are confident that by building on our inherent product strengths, we will succeed as the best car and truck company in the world."
The company said it was:
— Indefinitely suspending matching contributions on 401(k) plans for its 45,000 U.S. salaried employees. Ford had added 60 cents in company stock for every dollar employees contributed to 401(k) funds, up to 10 percent of their annual salary.
— Increasing health care premiums and prescription drug co-payments for U.S. salaried workers. U.S. salaried retirees will begin making monthly contributions to their health care plans in June 2002. Ford retirees will start paying health insurance premiums on that date.
— Eliminating merit pay increases for Ford's top 2,200 executives worldwide in 2002.
— Ending one of two production shifts at its pickup truck plant in Edison, N.J., effective Feb. 4, and laying off about 600 hourly and about 30 salaried workers. The number of trucks built at the plant was expected to be reduced by 84,000 a year.
"Even with these changes, our total compensation for salaried employees and health care benefits for salaried employees and retirees remain among the best in the United States both inside and outside the auto industry," said chief operating officer Nick Scheele.
Ford has been plagued by eroding sales, questions about vehicle quality and the ongoing Firestone tire crisis.
Through October, sales of Ford vehicles were down 7 percent from the first 10 months of 2000, a record sales year for the industry.
By the third quarter of 2001, Ford's losses dipped to $692 million, a reversal from the same quarter a year earlier, when it earned $888 million.
In October, Jacques Nasser was ousted as chief executive and replaced by Ford, the company chairman. The management shake-up also included the elevation of Scheele to chief operating officer.
Ford announced in August it would cut 4,000 to 5,000 salaried positions by the end of 2001.
More cutbacks are expected when Ford details a broader restructuring plan next month.