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This Sucks, announced today:
NEW YORK (CNN/Money) - Ford Motor Co. will cut 22,000
jobs and close five plants in North America and cut
13,000 positions elsewhere in coming years as the No. 2
automaker struggles to cut costs and boost profits,
President Nick Scheele said Friday.
The company also slashed its dividend for the second time
in a year and said it will take $4.1 billion in charges as part
of the plan, mostly for the write down of assets.
The Ford Escort and Mercury Cougar compact cars,
Mercury Villager minivan and the Lincoln Continental
full-size sedan will be phased out by the end of this year.
In addition, CEO William Clay Ford said at the news
conference that he would take no salary or bonus this year
other than stock options.
Company executives said the restructuring should produce
$9 billion in annual savings by the middle of the decade.
The plant closures and many of the job cuts are years
away. Ford did not give details on when the plants will be
closed other than to say it will occur by mid-decade. The current labor contract with the
United Autoworkers union, which runs through fall of 2003, does not allow plant closi
ngs and laid-off employees would have to be paid near full salary, reducing incentive to
cut the 12,000 hourly positions planned before then.
"The closures that are indicated are further out because of those commitments," said
Jim Padilla, president of Ford North America.
The company said its plan announced late last year to cut up to 5,000 salaried staff
through a voluntary separation and early retirement package had been accepted by only
3,500 employees. Scheele said the program will be extended and that terminations will
be used if the full 5,000 in cuts are not reached.
The company has been struggling with industry overcapacity, restrictive labor contracts
and an industry incentive war that has attracted buyers but contributed to rising losses.
The company's involvement in the Firestone tire recall has also raised questions about
quality.
William Ford admitted the company's problems also had come from pursuing strategies
that were either poorly conceived or poorly timed, and bad execution. He said the cuts
were very painful but necessary to keep the company competitive.
Check auto stocks here
"We strayed from what got us to the top of the mountain, and it cost us greatly," the
CEO said. "These problems didn't happen overnight and they're not going to go away
overnight."
Wall Street has been expecting a broad restructuring plan for weeks after Ford said it
would unveil one this month. Ford has cut jobs and idled or slowed production at several
plants in the interim as its profits continued to slide.
Ford already has ended matching contributions to its salaried staff's 401(k) retirement
plans as well as increasing health insurance premiums.
Ford's first-quarter dividend on its widely traded Class B stock will be 10 cents a share,
down from 15 cents in the fourth quarter and 30 cents a year ago. Ford also said it plans
to sell $1 billion in non-core assets this year.
NEW YORK (CNN/Money) - Ford Motor Co. will cut 22,000
jobs and close five plants in North America and cut
13,000 positions elsewhere in coming years as the No. 2
automaker struggles to cut costs and boost profits,
President Nick Scheele said Friday.
The company also slashed its dividend for the second time
in a year and said it will take $4.1 billion in charges as part
of the plan, mostly for the write down of assets.
The Ford Escort and Mercury Cougar compact cars,
Mercury Villager minivan and the Lincoln Continental
full-size sedan will be phased out by the end of this year.
In addition, CEO William Clay Ford said at the news
conference that he would take no salary or bonus this year
other than stock options.
Company executives said the restructuring should produce
$9 billion in annual savings by the middle of the decade.
The plant closures and many of the job cuts are years
away. Ford did not give details on when the plants will be
closed other than to say it will occur by mid-decade. The current labor contract with the
United Autoworkers union, which runs through fall of 2003, does not allow plant closi
ngs and laid-off employees would have to be paid near full salary, reducing incentive to
cut the 12,000 hourly positions planned before then.
"The closures that are indicated are further out because of those commitments," said
Jim Padilla, president of Ford North America.
The company said its plan announced late last year to cut up to 5,000 salaried staff
through a voluntary separation and early retirement package had been accepted by only
3,500 employees. Scheele said the program will be extended and that terminations will
be used if the full 5,000 in cuts are not reached.
The company has been struggling with industry overcapacity, restrictive labor contracts
and an industry incentive war that has attracted buyers but contributed to rising losses.
The company's involvement in the Firestone tire recall has also raised questions about
quality.
William Ford admitted the company's problems also had come from pursuing strategies
that were either poorly conceived or poorly timed, and bad execution. He said the cuts
were very painful but necessary to keep the company competitive.
Check auto stocks here
"We strayed from what got us to the top of the mountain, and it cost us greatly," the
CEO said. "These problems didn't happen overnight and they're not going to go away
overnight."
Wall Street has been expecting a broad restructuring plan for weeks after Ford said it
would unveil one this month. Ford has cut jobs and idled or slowed production at several
plants in the interim as its profits continued to slide.
Ford already has ended matching contributions to its salaried staff's 401(k) retirement
plans as well as increasing health insurance premiums.
Ford's first-quarter dividend on its widely traded Class B stock will be 10 cents a share,
down from 15 cents in the fourth quarter and 30 cents a year ago. Ford also said it plans
to sell $1 billion in non-core assets this year.
