Ford Plans to Cut 10,000 Salaried Jobs, Person Says (Update1)

[Source]

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

Sept. 15 (Bloomberg) -- Ford Motor Co., responding to a $1.44 billion first-half loss, plans to cut an additional 10,000 salaried jobs in North America, a person familiar with the company's plans said. Along with 4,000 salaried jobs the second-largest U.S. automaker eliminated as part of its ``Way Forward'' strategy in January, the additional cuts mean Ford will have slashed almost 40 percent of its salaried workforce in North America by 2008. Ford will include its expanded plan for salaried job cuts when it discloses its third restructuring in five years today at 7 a.m. New York time, the person said. Instead of shedding at least 40,000 jobs in North America and closing 14 plants by 2012, the company intends to eliminate the jobs by 2008, the person said. ``It's their Way Forward on steroids; it's more and faster with more yet to come,'' said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan. Ford has to make major changes, Cole said, because ``all the escape routes are sealed off.'' Ford's job-cutting plans include an agreement with the United Auto Workers union yesterday to offer buyouts of as much as $140,000 to all of its U.S. hourly workers. ``I don't have any comment,'' said Oscar Suris, a spokesman at the automaker's headquarters in Dearborn. ``We'll have more to say when we make our announcement.'' A Profit in 2009 Ford's internal forecasts project global automotive losses may double to more than $8 billion in 2006, four people familiar with the figures have said. Ford has lost market share in the U.S., its home base, every year since 1995. As part of today's announcement, Ford will drop a pledge made in January to earn a profit on its North American automotive operations in 2008, the person said. Instead, in recognition of the impact of its first-half losses, the company projects a profit on its North American auto operations in 2009, the person said. Ford will delay other steps such as selling brands or other assets until Alan Mulally, 61, who succeeded Chairman William Clay Ford Jr. as chief executive officer this month, has a chance to study such proposals, the people said. Today, the company will re-affirm that it considers its Ford Motor Credit Co. finance unit to be a strategic asset that won't be sold, the person said. Ford is battling falling sales of F-Series pickup trucks and sport-utility vehicles, the main sources of its auto profits. After losses in seven of the past eight quarters at the North American automotive unit, Ford is cutting second-half production by 16 percent. Rival General Motors Corp. stepped up its own efforts to eliminate 30,000 North American jobs, saying in June it will finish the cuts by the start of 2007, two years ahead of schedule. Norfolk Closure As part of today's announcements, Ford will specify all 14 North American plants which it intends to close, said the person, who declined to say which plants. The company named five of the plants in January and two more in April. A Norfolk, Virginia, plant originally scheduled to close in 2008 will shut in 2007, the person said. That factory makes F-150 pickup trucks. Ford also has plants in Dearborn, Michigan, and Kansas City, Missouri that produce the vehicle. Ford plans to keep a factory in St. Thomas, Ontario, open on one shift to make the Lincoln Town Car, the person said. To help convince investors that its lineup of future products is sufficient to boost market share, the company will say today that it will introduce a redesigned version of the Super Duty commercial pickup in the first quarter of 2007, plus a redesigned F-150 pickup and new compact cars and sub-compacts in coming years, the person said. A First Step Yesterday, Ford and the UAW said more than 75,000 of the union's members will receive buyout or early retirement offers. ``It's a positive first step,'' said John Novak, a Chicago- based analyst with Morningstar Inc. ``It's hard to say that it's going be enough because we don't know where the bottom is for Ford. This should provide a way to downsize the workforce.'' One of the new buyout offers is for as much as $140,000 for employees aged 55 and over with at least 10 years of experience who agree to forgo health-care benefits, according to the union. Another of the eight options is a $35,000 payout to leave the company and maintain health benefits. Ford has had ``targeted'' buyouts for union workers at specific U.S. plants. Detroit-based GM, also trimming jobs and closing plants in North America, had offered buyouts to all its union workers earlier this year. About 34,000, or one in three, accepted. UAW Agreement The UAW agreed to the buyouts and early retirements to avoid involuntary layoffs as Ford reduces the size of its workforce, said Bob King, director of the UAW's Ford department, in a statement distributed to union officials in Detroit. Workers can apply for buyouts between Oct. 16 and Nov. 27, the UAW said. Workers at an Atlanta plant that closes later this year can apply from Sept. 19 through Oct. 2. Most employees who accept buyouts will depart between Jan. 1 and Sept. 1 of 2007. Executive Vice President Anne Stevens, 57, and Group Vice President David Szczupak, 51, are retiring, the company said in a statement. Stevens, No. 2 in North America at Ford, had been the highest-ranking woman in the company's 103-year history. Szczupak, the head of manufacturing, held the post for less than a year. Executive Exits During the past five years, two North American product development chiefs, two chief financial officers, three North American sales heads and three presidents have left Ford Motor. One of those presidents, Jacques Nasser, was deposed as chief executive by Bill Ford in October 2001. The automaker's shares fell 10 cents to $9.09 at 4:18 p.m. yesterday in New York Stock Exchange composite trading. They have gained 18 percent this year, after a 48 percent decline in 2005. Ford's 7.45 percent note due in 2031 fell 1 cent to 78.75 cents on the dollar, yielding 9.73 percent, according to Trace, the NASD's bond-price reporting service. The debt closed at 80.5 cents, its highest level in 2006, on Sept. 12. The perceived risk of owning Ford bonds rose 4.8 percent yesterday, according to traders who bet on the creditworthiness of companies in the credit-default swap market. Ford's five-year credit-default swap rose to $640,000, up from $610,000 Sept. 13, according to data compiled by Credit Suisse Group. The price is up 8.8 percent the past week.