Ford tops target for workforce reduction
Ford Motor Co., trying to stem North American losses, said Wednesday that 38,000 factory workers had agreed to take buyout and early-retirement offers to leave the company, pushing the automaker past its job cut target.
The company said about 30,000 employees had accepted the latest round of offers, after 8,000 took earlier incentives made at individual factories. The total tops Ford’s goal of trimming 30,000 blue-collar jobs in North America by 2008. It is paying as much as $140,000 apiece to get United Auto Workers union members to quit or retire.
Dearborn, Mich.-based Ford announced the buyout results as it also estimated that it would use $17 billion in cash in the next three years, including $7 billion for the restructuring plan that includes the job cuts.
Ford and bigger rival General Motors Corp. are scaling back in North America as they lose market share to Asian automakers, led by Toyota Motor Corp.
“This is just a bitter pill they’re going to have to take,” said Mirko Mikelic, part of a team that manages $21 billion in fixed-income assets, including Ford bonds, at Fifth Third Asset Management in Grand Rapids, Mich. “The market knew this was coming down the pike. It’s not a complete surprise that they’re going to have to write a big check.”
Ford said half its cash drain would occur next year as it spends money to close plants and trim jobs. Ford Motor Credit Co., the company’s financial arm, also will suspend dividend payments to its parent next year. The announcements came two days after the automaker said it planned to borrow $18 billion and back its loans for the first time with assets such as U.S. plants.
The workers who have accepted offers this year represent 46% of Ford’s 83,000 UAW-represented employees at the start of 2006. Martin Mulloy, Ford’s labor relations vice president, said in a conference call that the automaker probably would have to hire temporary workers because of the reduction. He declined to estimate how many.
At the same time, executives would not rule out the possibility of layoffs at some plants if there were more workers than needed and Ford couldn’t get enough people to transfer.
Joe Laymon, group vice president of human resources, would not estimate the savings from the buyouts.
Ford shares rose 2 cents to $8.17.
