Ford Prepares Cost-Cutting Moves
Ford Motor Co. is expected this week to announce several steps to stem losses, including laying off hundreds of hourly workers and cutting some benefits for white-collar employees.
The latest moves, which could save the company hundreds of millions of dollars, are detailed in a draft of a company news release--dated for issue on Wednesday--that was quoted by the Detroit News on Sunday.
In the document, Ford Chairman and Chief Executive William Clay Ford Jr. called the moves painful but necessary and said more actions are to come.
“We recognize that our fourth-quarter results forecast is unacceptable and we are working with a laser-like focus to improve our performance,” Ford was quoted as saying in the release.
Ford this week also is expected to warn investors of deeper-than-expected fourth-quarter losses. The auto maker plans to forecast a loss of about 35 cents a share or an estimated $630 million, according to Ford insiders and internal company documents.
Among the cost-cutting plans expected to be announced:
* Eliminating one of two production shifts at its pickup truck plant in Edison, N.J., effective Feb. 4, and laying off 600 hourly employees and an unspecified number of salaried workers. The number of trucks built at the plant is expected to be reduced to 84,000 a year.
* Eliminating matching contributions on 401(k) plans for its 45,000 U.S. salaried employees for an indefinite period. The company now adds 60 cents in Ford stock for every dollar employees contribute to 401(k) funds, up to 10% 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.
* No merit salary increases will be given to Ford’s top 2,200 executives worldwide in 2002. Ford plans to rely more on stock options to compensate top managers in an effort to link executive pay with company performance.
Ford spokesman Jim Vella did not immediately return a call seeking comment Sunday.
Ford stock closed at $18.94 Friday on the New York Stock Exchange. It’s down 16% this year.
Ford has been plagued by eroding sales, questions about vehicle quality and the ongoing Bridge-stone/Firestone tire crisis.
Through September, Ford’s sales were down 11% from the first nine months of 2000, a record sales year for the industry. By the third quarter of 2001, losses had reached $692 million, a reversal from the same quarter a year earlier, when Ford earned $888million.
In October, Jacques Nasser was ousted as chief executive and replaced by chairman Bill Ford.
The company announced in August it would cut 4,000 to 5,000 salaried positions by the end of 2001. More cutbacks are expected in January.
