Ford Plans Big Cut in White-Collar Workers

Ford said Thursday that it plans to reduce the ranks of white-collar employees in its core U.S. automotive operations by roughly 20%--more than 9,000 jobs--by 1990 in order to become more cost-competitive with the Japanese.

Ford spokesman David Scott said the cuts--which will be handled gradually over the coming years and mostly through attrition--should not affect Ford Aerospace or the company’s other high-technology or financial divisions.

Ford has not set a specific target for how many positions to eliminate in its auto-related operations, but Scott said the number will be “in the ballpark” of a 20% reduction from the current 47,700 level, or about 9,400 jobs.

Scott stressed, however, that the action was part of a long-term, cost-cutting drive at Ford, rather than the result of any recent problems inside the corporation.

Continuing Efforts

“The fact is that Ford is continuing the efforts it began five years ago to become leaner,” he said. “You continually try to look at what you do and what you don’t need to do. It’s an ongoing thing.”

The planned reduction is the latest in a series of cutbacks among Ford’s salaried ranks. Ford’s white-collar employment in the United States peaked in 1978 at nearly 85,000, with almost 69,000 just in the company’s automotive operations. Today, total white collar employment has dropped to just over 69,000, with 47,700 in its automotive- and diversified-products operations.

But Scott said more cuts are needed because “we’re facing this great import competition and we’ve got to get cost-competitive.”

Says Its Not Massive

Still, he said the move shouldn’t be described as a massive layoff because “the vast majority” of the cuts will be handled through retirements and other forms of attrition over the next few years.

He added that Ford is testing a new “voluntary termination” plan that will offer lump-sum severance payments and other benefits to some mid-level managers who lose their jobs under the cost-cutting drive.

Chrysler also has severely reduced its salaried ranks over the last few years. U.S. white-collar employment at the No. 3 auto maker has fallen from nearly 35,000 in 1978 to just over 26,000 today.

At General Motors, by contrast, U.S. salaried employment has actually increased to 149,000 this year from 145,500 in 1978 because of the company’s recent non-automotive acquisitions. (Excluding salaried employment at its newly acquired Electronic Data Systems subsidiary, however, GM’s white-collar levels have fallen slightly, a spokesman said.)

Analysts said Ford’s action was needed to bring its salaried costs more in line with those of the Japanese auto makers, which tend to operate with fewer layers of management.

“If you are competing against guys with leaner management ranks than yours, then you better get lean,” said David Cole, director of the Center for the Study of Automotive Transportation at the University of Michigan. “And there is no question that the Japanese are leaner.”

Analysts also said the auto industry’s drive to develop the “paperless factory,” in which virtually all paperwork in a manufacturing plant is replaced by electronic communication through computer networks, will also make a number of white collar functions redundant.

Martin Anderson, an auto industry consultant, added that Ford’s action was part of a broader realignment in the industry’s management ranks.

“After Chrysler fired thousands of people during its crisis, it proved you could still run a big company without so many layers of managers, and the other companies have tried to use that example,” he said.