DETROIT - Ford Motor Co.'s massive restructuring program to be announced Friday could include thousands of job cuts, analysts who follow the nation's second biggest carmaker say.
Ford officials said Monday there would be some reductions in the work force but wouldn't say how many cuts there would be. They said the plan is aimed at increasing manufacturing flexibility while reducing capacity and renewing focus on developing high quality products.
Ford chief operating officer Nick Scheele called analyst estimates of job cuts ``guesses.''
``We're not going to respond to what external people say you must do or not do,'' he said Monday at the North American International Auto Show.
On Sunday, chairman and CEO William Clay Ford Jr. told reporters at the show that Ford ``can't cost-cut our way out'' its slump. ``The turnaround will be driven by great products,'' he said.
Some analysts have predicted that up to 20,000 jobs will be eliminated to help the company become profitable again.
``It should be relatively dramatic, and I would say if I had to ballpark on the high end, I'd say 20,000. I think 15,000-20,000 is where it should be,'' Kevin Tynan, an auto analyst with Argus Research in New York, said Monday. ``Where it winds up is another story all together.''
Scheele said Monday the restructuring plan would be global and include operations in Japan.
However, both Scheele and North American operations chief Jim Padilla said there would be some head count reductions that could be accomplished largely through attrition.
``We have the capabilities to move people, there's the possibility of buyouts,'' said Padilla.
In afternoon trading on the New York Stock Exchange, Ford shares were down 2 percent, or 35 cents, to $16.59.
Ford plans to release its fourth-quarter financial report next week.
The automaker said last month that it expected to report a loss of 50 cents per share for the last three months of 2001. Analysts had been expecting a loss of 14 cents a share for the quarter and some said the company's loan policies led to trouble.
Last week Ford reported its U.S. vehicles sales dropped 6 percent in 2001 from 2000.
Ford - like the rest of the industry - has excess manufacturing capacity, Padilla said.
But that doesn't mean the No. 2 automaker will cut product programs to save money in the short-term, Scheele said in an interview Sunday.
Scheele said the company's contract with the United Auto Workers union forbids wholesale plant closings, but said the company would be working with the UAW on the local level as it attempts to reduce manufacturing capacity.
Just how much capacity will be reduced will be decided at this week's board meeting, Scheele said.
Scheele said the restructuring would look at more flexibility in the manufacturing process to make better use of assembly plants.
Automated processes might be programmed to do several jobs instead of just one and plants could be made adaptable to build more than one type of product, or be retooled quickly to build more popular products.
``You have to right-size for capacity and build what you sell,'' Scheele said.
Right-sizing is generally a code word for cutbacks.
David Littmann, chief economist for Comerica Bank, estimates Ford will have to cut between 7 percent and 12 percent of the work force.
``In Ford's case... in terms of actual, hard-nosed job cuts, I'm talking 12,700 to 14,000,'' Littmann said.
DeutscheBank Alex. Brown estimates Ford will have to cut 12,405 jobs by 2003, including 7,000 blue collar jobs and 350 additional white collar jobs.
In a report released Monday, the financial organization said Ford would have to eliminate two plants to reduce its manufacturing capacity by 550,000 units out of its annual production of 4.3 million units by next year.
Ford executives are expected to announce the company's restructuring plan to a gathering of financial analysts and reporters on Friday, following the monthly meeting of the company's board of directors.
Scheele said whatever is announced then would be only phase one of the company's restructuring.
``I think 2002 is going to be a difficult year as well for profitability for Ford,'' the analyst Tynan said. ``The question is how much of the demand is going to be fueled by incentives. Is it going to be a continuation of what happened at the end of 2001?''
To revive flagging U.S. sales in the wake of the Sept. 11 terrorist attacks, automakers including Ford, General Motors Co. and DaimlerChrysler AG began offering zero-percent financing - a costly measure which could erode earnings.
In the past six months Ford has already undertaken several cost- cutting measures:
-Cutting 4,000-5,000 white collar positions, mainly through voluntary buyouts and early retirements.
-Laying off 630 people at its Edison, N.J., assembly plant to save about $300 million a year.
-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.
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March 10th, 2025
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