Ford - Elimination of 30,000 salaried jobs - Closing of 10 North American factories

[Marc]

From the Boston Gloge:

Ford reported to be looking at major cuts

By Royal Ford, December 8, 2005

Ford Motor Co. is reportedly considering the elimination of 30,000 salaried jobs and the closing of 10 North American factories. The news follows colossal job cuts and plant closings disclosed last month by General Motors Corp.

Both companies are hamstrung by costly health and pension benefits, excess production capability, increasing foreign competition, and reliance over the past decade on highly profitable SUV and pickup truck sales, which have been slumping because of rising gas prices.

Many analysts, who were surprised by the report, had likened Ford's woes to slow bleeding, rather than the hemorrhaging that appeared to be taking place at General Motors.

But at least one analyst, Joe Phillippi, president of AutoTrends Consulting, of Short Hills, N.J., said he still expects Ford to make massive cuts.

Auto sales have been static for several years, at around 16.5 to 17.5 million vehicles annually, he said. And foreign companies have steadily chipped away at what not long ago was a 70 percent domestic market share.

''That market share point's never coming back," Phillippi said, noting that foreign sales now account for nearly half the US market.

Any increase in sales will likely be because of gains made by Asia's big three automakers -- Toyota, Honda, and Nissan, said Jesse Topak, executive director of industry analysis for automotive watchdog Edmunds.com. Korean manufacturers Hyundai and Kia also are taking larger bites out of the US market.

Ford was already planning to eliminate nearly 7,000 white-collar jobs. At the end of last year, the company employed 122,877 workers in North America. The possible elimination of more jobs was first reported yesterday in the Detroit News. A Ford spokesman would not comment except to say that any discussions about cutbacks would not take place until January.

The company's board of directors is today scheduled to hold a second day of meetings to plan for next year.

Already, a host of executives have left the company, some forced out, others moving by choice to other firms. The Detroit News also reported yesterday that seven more top Ford executives will soon be departing.

General Motors said earlier this fall that it would cut 30,000 jobs and close a dozen factories that produce vehicles and parts. Coupled with any Ford plant closings, there would be a ripple effect on a key component of the US auto industry: independent suppliers who manufacture vehicle parts.

While American-owned auto factories are operating at as much as 15 percent below capacity, some foreign plants operating in the United States are struggling to keep up with demand.

This year, for the first time, more foreign-brand cars were built in foreign-owned factories in the United States than were imported. Some foreign companies also plan to soon open parts factories.

But Ford may have something to be optimistic about: It has just begun building an affordable, highly praised car, the Fusion, upon whose platform it will also build Lincoln and Mercury models.

''Ford has a pretty solid portfolio of passenger cars," Phillippi said.

Despite the difficulties, American companies are not likely to fold, said Edmunds' Topak.

''For the most part, they're going to be there, [but] they're going to need to learn to make money with much more limited production," he said.