Ford to cut between 25,000 and 30,000 jobs in North America

[Marc]

From Forbes:

When to watch: Monday, Jan. 23. Some added notoriety for that Monday morning feeling may be at hand after William Clay Ford Jr. announces his "Way Forward" restructuring plan for Ford Motor at 9:30 A.M. EST. Setting a poignant precedent two hours prior will be the firm's financial announcement, which is expected to show further losses in North America after a $1.2 billion loss in the third quarter. The company's new head of the Americas, Mark Fields, recently said Detroit's carmakers had to "change or die." And change Ford will--analysts quoted in media reports have predicted plant closings, executive departures and massive job cuts. The Detroit News has reported that Ford is planning to close a minimum of ten plants and cut between 25,000 and 30,000 jobs in North America, representing around 20% of its U.S. workforce. Other reports have cited product revamps, with rumors that minivans could get the chop. It will be the second major restructuring plan by William Ford since he took the reigns of his great-grandfather's company in 2001. But even his first plan in January 2002, which saw 35,000 job cuts and five plant closures, couldn't fully stem the losses brought on by higher costs and increasing competition from the likes of Toyota. At least there's a glimmer of hope from similarly beleaguered GM's announcement that it expects to save $4 billion this year, thanks to its own revamp, which included 30,000 job cuts. No pain no gain, as they say--unless you're a Ford employee of course. --Parmy Olson

And from the New York Times:

Analysts Ask if Ford Overhaul Plan Will Be Spartan Enough

By JEREMY W. PETERS
Published: January 21, 2006

DETROIT, Jan. 20 - Even before Ford Motor announces a revamping plan on Monday that will cut jobs and close plants, Wall Street is asking whether it will be enough.

Many analysts say the overhaul plan, called The Way Forward, will be too little and at least a year too late.

"Ideally, they could have gotten this program started a year ago," said Brian Johnson, an analyst with Sanford C. Bernstein, who expected Ford's revamping plan to be "insufficiently aggressive."

"We see this as a test of their ability to face reality," Mr. Johnson said.

On Monday, Ford will announce its plan along with its 2005 financial results. According to a survey by Thomson Financial, analysts expect Ford to have earned a penny a share for the fourth quarter, down from 28 cents a year earlier, both excluding special items. Ford's stock price has been cut nearly in half in the last year: on Friday, shares closed down 32 cents, or almost 4 percent, at $7.90.

Speculation about what Ford would do has been fed by press reports, which have said the company could lay off up to 30,000 workers over a number of years and close at least 10 plants. The identity of those plants has also been a subject of much discussion.

Mr. Johnson said that for the revamping to be effective, Ford would need to cut about 15,000 jobs immediately - a step analysts say the company will not take.

Brett D. Hoselton, a former analyst at Ford who now works for KeyBanc Capital Markets, said that so far the company and its chief executive, William Clay Ford Jr., had not moved aggressively enough.

"They've watched Bill Ford do tepid things for too long," he said. "Now everyone's thinking, 'Here comes another big announcement, and it's going to be another tepid announcement.' "

A Ford spokesman, Oscar Suris, said: "Judgments about a plan that has yet to be unveiled are premature. We promised a comprehensive plan. We will unveil it on Monday."

Many analysts say Ford's problems go beyond having too many plants and workers.

"We think some of the trends from '05 will continue into '06, especially the trouble with S.U.V.'s," an analyst at Standard & Poor's, Bob Schulz, said. Sales of large S.U.V.'s have declined sharply at Ford, in part because of higher gasoline prices.

"Competitors aren't sitting still," Mr. Schulz said. " Toyota continues to gain a percentage point of market share a year. Ford is, roughly speaking, losing about a point of market share a year for the past few years."

This month, Standard & Poor's cut Ford's debt rating two notches further into junk status. The downgrade was significant because Ford shared parts of its overhaul plan with S. & P. before the agency made its decision. Explaining the downgrade, S. & P. said it was skeptical about Ford's ability to turn around North American operations.

On Friday, Mr. Schulz repeated that assertion. "We're skeptical that it's going to be a simple matter to stabilize market share," he said.

Ford has already taken some steps to shrink its work force. In mid-2005, it began eliminating white-collar jobs through layoffs, buyouts and leaving vacancies unfilled. By the end of the first quarter of 2006, the company said, it will have shed nearly 7,000, or about 20 percent, of its white-collar jobs.

Analysts said the cuts were meant to be a signal to the United Automobile Workers that Ford management would shoulder part of the burden.

The U.A.W. president, Ron Gettelfinger, said this week: "When you talk to people, and see what it does to people's hopes and dreams and aspirations, they are literally in tears because they had hoped to send their son or daughter off to college and now that's all at risk. It doesn't matter who you are, whether you are a union member or a salaried worker."

The white-collar layoffs have thrown many people back into the job market, where some have not been for years. Recent studies say that when laid-off workers find work, they often accept jobs that pay less. The labor bureau's most recent data found that 57 percent of people who found work after being laid off are earning less than in their previous jobs. For about a third of them, wages drop 20 percent or more.

Nationwide, according to the Bureau of Labor Statistics, nearly two people are competing for every job opening.

Ford began layoffs in July after fewer people than expected accepted buyouts. On a day many former employees now call Bloody Thursday, more than a dozen employees in the public affairs division were laid off.

Glenn Ray, who worked at Ford in media relations for 16 years, said that on the day he lost his job, he had been joking with his wife about being laid off.

"I left the house that day, my wife said to me, 'I hope you don't come home early today.' Lo and behold, I came home at about 12:30 and her eyes were like saucers."

It took a few months, but Mr. Ray, 49, found a job doing public relations for a biotechnology firm. He said he makes about two-thirds of what he did at Ford and has added about 50 miles to his commute.

With additional job cuts looming, Mr. Ray said: "I really feel bad for a lot of my friends and co-workers still there. They're waiting to see what happens."

[Wes Bucey]

Part of the slash and burn will be the Windstar minivan which has steadily lost market share to Toyota and Honda - simply too few innovations and far too late in copying the innovations of others. Daimler Chrysler at least has some innovation in its minivans!

[Marc]

And the flow down to scrapping suppliers hits home: Ford to drop 1,700 suppliers

[Randy]

This is bad and can only get worse for everyone in the auto industry. The experts can only guess at the real economic impact to come. I imagine that a whole herd of our friends here are gonna get hammered real soon.

[Jim Wynne]

In Reply to Parent Post by Marc

And the flow down to scrapping suppliers hits home: Ford to drop 1,700 suppliers

I have to believe that a whole lot of those 1700 are going to wind up at Tier 2, and that the existing Tier 1's are going to get a he11uva lot busier, and probably overloaded. This is part of Ford's way of cutting its own supply management staff and shifting the burden (and the blame, when bad things happen) to the big (and soon to get bigger) Tier 1's.

[bmccabe - 2006]

Tich, tich. GM? Now Ford too? ...Oh wait,,, we did see this coming.

I have another solution nobody will listen to –
Make a consortium: GM + Ford = so long Toyota.
…Hey, it worked for the European Union, why not US corporations?
Oh, the communist thing again. I thought we were concerned about another 30k jobs lost. Never mind.

[Jim Wynne]

In Reply to Parent Post by bmccabe

Tich, tich. GM? Now Ford too? ...Oh wait,,, we did see this coming.

I have another solution nobody will listen to –
Make a consortium: GM + Ford = so long Toyota.

So incompetence + incompetence = highly competent? I think this is how we got in trouble in the first place. I think it's more of an exponential thing, and combining the two would result in incompetence^2.

[Marc]

The Daily Show on the Ford Layoffs

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The Daily Show on the Ford Layoffs

At Work Caution NOTE: Has sound.