Ford Motor Co Chief Executive Officer William Clay Ford Jr. said the automaker will cut 23,000 additional jobs, close five factories and eliminate four models after its first annual loss in nine years.
"We strayed from what got us to the top of the mountain and we paid dearly," said Ford, the 44-year-old chairman who took over as CEO of the second-largest automaker from Jacques Nasser in October. "Our success may have caused us to underestimate our competition."
The great-grandson of company founder Henry Ford said at a press conference he will forgo salary and bonuses, and the automaker cut its dividend for the second time since October. His challenges include stemming Ford's declining US market share, which fell 1 percentage point to 23.1 percent last year as rivals General Motors Corp and Toyota Motor Corp won away truck sales and consumers sought cars from Honda Motor Co and South Korean automakers.
Dearborn, Michigan-based Ford will take a fourth-quarter charge of US$4.1 billion to pay for the program that includes plant closings in New Jersey, Missouri, Michigan, Ohio and Ontario. Ford will drop the Escort small car, Mercury Cougar coupe and Villager minivan, and Lincoln Continental luxury sedan, all of which had sales declines of more than 10 percent last year.
The changes will be phased in over several years and will reduce costs by about US$1 billion this year, said Chief Operating Officer Nick Scheele, who is leading the cost-cutting drive in North America. He expects the company to save a total of US$9 billion by the middle of the decade.
Ford's shares rose US$0.21 to US$15.50 and have declined 42 percent in the past year.
"I think they did give the Street enough," said Dan Poole, analyst at National City Investment Advisors in Cleveland, which owned about 1.08 million shares as of June. "This is probably flat to more than what people expected."
Ford's job cuts will total about 35,000 worldwide, including some 12,000 jobs eliminated last year, said spokesman Todd Nissen.
That includes about 3,500 North American salaried workers who accepted buyout and early retirement offers, Nissen said. Scheele began work on the restructuring in July.
The total reduction represents about 10 percent of Ford's worldwide work force of 345,000 people.
The company is cutting about 15,000 hourly workers, 5,000 salaried employees and 1,500 contract workers in North America, and will eliminate 13,500 positions elsewhere in the world.
The automaker said it will close assembly plants in Edison, New Jersey; Oakville, Ontario; and St. Louis. An aluminum casting plant in Cleveland will close, as will a forging plant in Dearborn. The automaker also said it has not identified new products for factories in Avon Lake, Ohio, which assembles the Mercury Villager and Nissan Quest minivans, and Cuautitlan, Mexico, which builds the F-150 pickup truck.
The reductions will cut annual North American manufacturing capacity from 5.7 million vehicles to 4.8 million.
Ford must contend with restrictions in labor contracts on how quickly it can close factories. Under the current United Auto Workers contract covering workers in the US through September 2003, members continue to receive 95 percent of their base pay when they are laid off and automakers are barred from officially closing factories.
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