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Ford to cut thousands jobs 14 factories { January 23 2006 } Original Source Link: (May no longer be active)
http://www.washingtonpost.com/wp-dyn/content/article/2006/01/23/AR2006012300339.htmlhttp://www.washingtonpost.com/wp-dyn/content/article/2006/01/23/AR2006012300339.html
Ford to Cut Thousands of Jobs and Close 14 Factories
By Sholnn Freeman And Amy Joyce
Washington Post Staff Writers
Monday, January 23, 2006; 1:18 PM
Ford Motor Co. announced today that it will cut as many as 30,000 jobs and shut down 14 factories to help reverse losses in its troubled North American automotive division.
The restructuring announcement came shortly after Ford reported a higher than anticipated 19 percent increase in earnings for 2005. The results included a pre-tax loss of $1.6 billion in its North American automotive division in the fourth quarter, a decline of $3 billion from 2004.
Ford, which employs about 123,000 workers in North America, lost about $5.5 billion in those North America operations in 2005. The restructuring will eliminate about a quarter of those jobs between now and 2012.
With the job cuts announced today, salary-related costs are being reduced 10 percent in North America with the previously announced reduction of the equivalent of 4,000 salaried positions by the end of the first quarter. The company's officer ranks also will be trimmed 12 percent by the end of the first quarter.
The plan is to return the North American operations to profitability no later than 2008, although chairman William C. Ford Jr. said the company will no longer offer annual profit guidance.
Ford's restructuring announcement follows plans detailed by General Motors Corp. last year to close all or part of 12 plants and cut 30,000 jobs by 2008.
In the fourth quarter, Ford's worldwide automotive sector reported a pre-tax loss of $12 million, an improvement of $458 million from a pre-tax loss of $470 million a year earlier. In the fourth quarter, the automaker earned $124 million, up 19 percent from the quarter a year ago. Ford's special items included charges for restructuring-related costs at Land Rover and Jaguar and the sale of the Hertz car-rental company.
Both Ford and GM suffered from a slide in sales of sport-utility vehicles as gas prices rose.
Don Leclair, Ford's chief financial officer, blamed the collapse in SUV sales for Ford's troubles in the North American market. He said Ford anticipated large SUV sales would diminish, but the swift downturn last year was unexpected.
"What we didn't know is that change would occur as rapidly as it did," he said on a conference call this morning. "Clearly it was a significant event."
For the year, Ford earned $2 billion in net income, or $1.08 per share. That result was down 42 percent from $3.5 billion that the automaker earned in 2004. In its worldwide automotive business, Ford reported a $1 billion pre-tax loss for the year, compared to a $850 million pre-tax profit a year ago. Ford's annual revenue from automotive operations in 2005 was $155 billion, up 5.4 percent from $147 billion in 2004.
Today's announcement will mark the second time in four years that Ford's chairman has stepped forward to outline substantial cuts in the company that bears his family's name. Both Ford and GM are struggling to streamline operations as they respond to slowing sales and intensifying competition from global rivals. Ford's U.S. market share slipped to 17.4 percent in 2005 from 18.3 percent the year before, as the overall market grew slightly. Six years ago, Ford had 24 percent of the U.S. market.
Employees have spent the last two months worrying about their future. Many have known since November that the company would announce its restructuring in January, which would include job reductions. Since then, rumors, speculation and anxiety have been rampant.
Liz Boyd, press secretary for Michigan Gov. Jennifer Granholm (D), said Granholm has met personally with company officials and "has made a pitch to keep every Michigan job." Granholm also "laid out a very aggressive proposal" to keep jobs in Michigan, Ford's home. Boyd would not release details of that proposal.
"This is a time when the auto manufacturing sector is going through tremendous change," she said. "We want those companies to keep every job they have in Michigan."
© 2006 The Washington Post Company
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