Ford Announces Huge Job Cuts
Ford Motor Co. said Friday that it plans to cut 10,000 more salaried jobs, offer buyouts to all hourly workers and shut down two more plants as part of a dramatic restructuring plan designed to rein in expenses and restore the struggling automaker to profitability.
The company said in a news release that it would shutter a stamping plant in Maumee, Ohio, in 2008 and an engine plant in Essex, Ontario, in 2007. In addition, an assembly plant in Norfolk, Va., will close in 2007, a year earlier than previously announced.
Ford said it would complete its cuts of 25,000 to 30,000 hourly jobs by the end of 2008, four years ahead of its previous target. Ford also said it already had cut 4,000 salaried positions in the first quarter of this year.
Ford lost $4 billion in the United States in the first half of the year as soaring gas prices sent sales of gas-guzzling trucks and SUVs into a nosedive. They account for a third of Ford's business — but are down 17 percent in 2006, reports CBS News correspondent Anthony Mason.
Ford's union contracts also are a big part of the problem. A Ford worker earns on average nearly $65 an hour. In contrast, Toyota pays its American workers just $45 an hour, Mason adds.
The bottom line is that nearly 45,000 salaried and manufacturing jobs will be gone, with two more plants added to Ford's closing list, reportsJeff Gilbert of CBS radio station WWJ-AM Detroit (audio). Most of the job cuts will be made through early retirements and buyouts, but Ford says there will need to be some "involuntary separations."
The company said the plan would cut about $5 billion in operating costs, mainly by offering early-retirement and buyout packages to all hourly workers and to white-collar employees. Ford plans to expand buyout and early-retirement offers to the company's U.S. hourly work force of more than 75,000 as part of the plan.
"This is an acknowledgement on the part of Ford they simply don't know what they are doing or what to do," Lou Dobbs, host of CNN's "Lou Dobbs Tonight," said on CBS News' The Early Show.
The plan was leaked Thursday when a Ford supervisor who was told of the plan by company officials gave details, and the greatly impacted United Auto Workers made an announcement.
Ford previously had announced plans to cut up to 30,000 hourly jobs by 2012. CBS News correspondent Anthony Mason reports that the 103-year-old automaker began the year with 82,000 employees, 6,500 of whom have already accepted buyouts.
When the dust settles, the change will be dramatic for the company that began as a daring adventure by Henry Ford and 11 business associates, with an investment of just $28,000.
By 2008, North American factory capacity will be reduced by 26 percent compared to 2005 levels, Ford said Friday.
"After this downsizing, Ford won't be the giant it once was," says auto industry analyst John Casesa. "It'll move from the second-largest manufacturer in North America to the third, fighting it out with the Hondas, Toyotas and Chryslers of this world instead of competing with General Motors."
It's also going to affect companies and communities far beyond the automaker.
"The state of Michigan is already hard-pressed. Workers there are simply reeling," Dobbs told Early Show co-anchor Hannah Storm. "The huge auto suppliers, Delphi and Visteon, which supply parts to Ford — we are talking about bankruptcy, rollbacks and the loss of jobs. No state in the union has been hit as hard as Michigan."
Under the buyout and early-retirement plan for hourly workers, detailed in a UAW statement, workers can choose among eight packages that offer from $35,000 to $140,000 depending on their years of service, age and how close they are to retirement age. Some packages require workers to give up health benefits.
Ford's board of directors, including new CEO Alan Mulally, on Thursday wrapped up a two-day meeting in which they considered and approved the latest phase of the company's effort to reduce its size and its costs.
Catherine Madden, an auto industry analyst at consulting firm Global Insight Inc., said although not all 75,000 workers will take the packages, the size of the offer illustrates the magnitude of Ford's troubles.
"No matter what, the number reflects the pressure the Ford Motor Co. is under right now," she said. "That's how significant the mounting pressures are on Ford."
The offers also show a realization of Ford's troubles by the UAW, which said in a statement that it agreed to the packages due to the "extraordinary circumstances in the domestic auto industry."
Ford had about 82,000 workers represented by the UAW at the end of last year, but about 6,500 have taken previous buyout and early retirement offers made mainly at plants already slated for closure, company spokeswoman Marcey Evans said Thursday.
UAW President Ron Gettelfinger said its members have made hard choices under difficult circumstances.
"Now, it's Ford Motor Co.'s responsibility to lead this company in a positive direction — which means using the skills, experience and dedication to quality that UAW members demonstrate every day in order to deliver quality vehicles to customers," Gettelfinger said in a statement.
Ford has been battered by the auto market's shift from trucks and sport utility vehicles to more fuel-efficient cars and crossovers. Its market share and sales have dropped while its Japanese competitors have gained.
The buyouts being offered are similar to those made earlier this year to hourly workers at the General Motors Corp., where 35,000 people have agreed to leave the company. Ford is the second-largest carmaker in the United States after GM.
The announcement also came as UAW local leaders at Ford plants gathered in Detroit to discuss Ford's financial situation and the buyouts.
"I think it's a good package," said Chris Kimmons, president of UAW Local 919 at the Norfolk, Va., assembly plant. "I think they worked real hard on it. They've got to do something to help Ford out of this crisis."
Separately, Ford said Thursday that Anne Stevens, an architect of the company's restructuring effort and one of the auto industry's highest ranking women, is retiring. Stevens, 57, had been at the center of Ford's turnaround efforts since October 2005, when she was named executive vice president.
© 2009 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report. The company said in a news release that it would shutter a stamping plant in Maumee, Ohio, in 2008 and an engine plant in Essex, Ontario, in 2007. In addition, an assembly plant in Norfolk, Va., will close in 2007, a year earlier than previously announced.
Ford said it would complete its cuts of 25,000 to 30,000 hourly jobs by the end of 2008, four years ahead of its previous target. Ford also said it already had cut 4,000 salaried positions in the first quarter of this year.
Ford lost $4 billion in the United States in the first half of the year as soaring gas prices sent sales of gas-guzzling trucks and SUVs into a nosedive. They account for a third of Ford's business — but are down 17 percent in 2006, reports CBS News correspondent Anthony Mason.
Ford's union contracts also are a big part of the problem. A Ford worker earns on average nearly $65 an hour. In contrast, Toyota pays its American workers just $45 an hour, Mason adds.
The bottom line is that nearly 45,000 salaried and manufacturing jobs will be gone, with two more plants added to Ford's closing list, reports
The company said the plan would cut about $5 billion in operating costs, mainly by offering early-retirement and buyout packages to all hourly workers and to white-collar employees. Ford plans to expand buyout and early-retirement offers to the company's U.S. hourly work force of more than 75,000 as part of the plan.
"This is an acknowledgement on the part of Ford they simply don't know what they are doing or what to do," Lou Dobbs, host of CNN's "Lou Dobbs Tonight," said on CBS News' The Early Show.
The plan was leaked Thursday when a Ford supervisor who was told of the plan by company officials gave details, and the greatly impacted United Auto Workers made an announcement.
Ford previously had announced plans to cut up to 30,000 hourly jobs by 2012. CBS News correspondent Anthony Mason reports that the 103-year-old automaker began the year with 82,000 employees, 6,500 of whom have already accepted buyouts.
When the dust settles, the change will be dramatic for the company that began as a daring adventure by Henry Ford and 11 business associates, with an investment of just $28,000.
By 2008, North American factory capacity will be reduced by 26 percent compared to 2005 levels, Ford said Friday.
"After this downsizing, Ford won't be the giant it once was," says auto industry analyst John Casesa. "It'll move from the second-largest manufacturer in North America to the third, fighting it out with the Hondas, Toyotas and Chryslers of this world instead of competing with General Motors."
It's also going to affect companies and communities far beyond the automaker.
"The state of Michigan is already hard-pressed. Workers there are simply reeling," Dobbs told Early Show co-anchor Hannah Storm. "The huge auto suppliers, Delphi and Visteon, which supply parts to Ford — we are talking about bankruptcy, rollbacks and the loss of jobs. No state in the union has been hit as hard as Michigan."
Under the buyout and early-retirement plan for hourly workers, detailed in a UAW statement, workers can choose among eight packages that offer from $35,000 to $140,000 depending on their years of service, age and how close they are to retirement age. Some packages require workers to give up health benefits.
Ford's board of directors, including new CEO Alan Mulally, on Thursday wrapped up a two-day meeting in which they considered and approved the latest phase of the company's effort to reduce its size and its costs.
Catherine Madden, an auto industry analyst at consulting firm Global Insight Inc., said although not all 75,000 workers will take the packages, the size of the offer illustrates the magnitude of Ford's troubles.
"No matter what, the number reflects the pressure the Ford Motor Co. is under right now," she said. "That's how significant the mounting pressures are on Ford."
The offers also show a realization of Ford's troubles by the UAW, which said in a statement that it agreed to the packages due to the "extraordinary circumstances in the domestic auto industry."
Ford had about 82,000 workers represented by the UAW at the end of last year, but about 6,500 have taken previous buyout and early retirement offers made mainly at plants already slated for closure, company spokeswoman Marcey Evans said Thursday.
UAW President Ron Gettelfinger said its members have made hard choices under difficult circumstances.
"Now, it's Ford Motor Co.'s responsibility to lead this company in a positive direction — which means using the skills, experience and dedication to quality that UAW members demonstrate every day in order to deliver quality vehicles to customers," Gettelfinger said in a statement.
Ford has been battered by the auto market's shift from trucks and sport utility vehicles to more fuel-efficient cars and crossovers. Its market share and sales have dropped while its Japanese competitors have gained.
The buyouts being offered are similar to those made earlier this year to hourly workers at the General Motors Corp., where 35,000 people have agreed to leave the company. Ford is the second-largest carmaker in the United States after GM.
The announcement also came as UAW local leaders at Ford plants gathered in Detroit to discuss Ford's financial situation and the buyouts.
"I think it's a good package," said Chris Kimmons, president of UAW Local 919 at the Norfolk, Va., assembly plant. "I think they worked real hard on it. They've got to do something to help Ford out of this crisis."
Separately, Ford said Thursday that Anne Stevens, an architect of the company's restructuring effort and one of the auto industry's highest ranking women, is retiring. Stevens, 57, had been at the center of Ford's turnaround efforts since October 2005, when she was named executive vice president.
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I'M A FORD TECHNICIAN WORKING PRIMARILY ON THE LINCOLN/MERCURY LINE. I KNEW THAT THEY WERE MAKING GOOD MONEY BUT COME ON.BUISNESS IS SLOW AT
THE DEALERSHIP. CARS ARE NOT SELLING. CARS ARE NOT COMING IN FOR REPAIRS. IF YOU THINK TECHNICIANS GET PAID GREAT. YOUR MISTAKEN. I MAKE
CLOSE TO $18 PER HOUR. SOUNDS GREAT!
NEWS FLASH!!!!! IF I DON'T TURN A WRENCH I MAKE NO MONEY!!
I CAN BE MAKING $100 AN HOUR IF I DON'T TURN A
WRENCH I STILL MAKE NO MONEY.
NO WONDER WE'RE IN TROUBLE.THE UNIONS, WORKERS,
MANAGEMENT AND FORD GOT US INTO THIS MESS.
HOW CAN YOU JUSTIFY TO ME $65 AN HOUR. I BET THE WORKERS STILL COMPLAIN HOW HARD THEY HAD IT.
I FEEL SORRY THAT PEOPLE ARE LOSING THEIR JOBS.
THEY HAVE FAMILIES. I KNOW WHAT IT IS.I'VE BEEN THERE. GET RID OF THE UNION, TAKE A PAY CUT AND LEARN TO LIVE FOR UNDER $20 PER HOUR.
I HOPE THE SALARY THAT THE NEW CEO IS MAKING HE CAN TURN THIS COMPANY AROUND IF NOT WE ARE ALL GOING TO BE LOOKING FOR A NEW JOB.
There are more complicated jobs but try putting on 1000 tires or 500 radiators in 8 hours, standing in the same 4 foot area having to ask to get drink or go to the bathroom. Mentally and physically taxing. Carpal tunnel from a keyboard?
The auto worker began losing ground with NAFTA. Buy your material in indosnesia assemble it in Mexico and sell your denims here. You may say "Its my choice" but what choice do you have when buying a TV, clothes ect. The unions may be old fashioned but some lost there lifes to give you the 40 hour work week and overtime ect.
Nobody will be able to afford anything when we are all Wall Mart greeters and burger flippers.
Example..Dont drive the Nissan, wear a cowboy hat and fly the stars and bars. What happened to the days when we were all PROUD TO BE AN AMERICAN?
They have the public hooked like a bunch of dumb sheeple replacing these $20,000 machines that devalue the minute you drive off the lot- every 5 years or so.
Be smart, but a good late model car in good shape instead of new, even if you had to install a rebuilt engine it's far cheaper. Ive never bought a new car and never will. My present 4 cyl 89 chevy corsica has 306,000 original miles on it, I bought it off a friend 6 years ago for $100 who used it to commute to work 50 miles one way a day but changed the oil every 2,000 miles.
I've put 25,000 on it, only repairs Ive done were minor- headlight switch, muffler twice, tires, tie rod ends, battery, starter and usual stuff like that- no engine or transmission work done to it.
It doesnt burn oil, it doesnt leak oil, it always starts right up, gets 38 mpg. Engine could go any time now with that many miles on it, but I could put a rebuilt engine in if I wanted to and it's good for many more miles.
That's insane, I had no idea, I figured MAYBE as much as $20 an hour, but no, these grease monkeys assembling cars are making way more than anyone else.
Yes, blame the unions and their demands, these jobs will go overseas eventually too like all the rest, it's why we dont MAKE anything any more in this country, not steel, not machinery, zippo- it all comes from China, Mexico etc
All I can say is when these dudes were raking in $65 an hour they'd better have stashed a lot of it away because their job is gone and no one is going to hir an "over qualified" worker whose last job paid $65 an hour and they are applying for one that pays $12.
Wonder how many are broke or with huge debts DESPITE $65 an hour...
No, you will cry the blues. Assembly workers in other countries live in dormitories with 8 workers in a room, work 12 hour shifts with no private lives allowed, and no dissent or comments allowed, for example a pretty girl must date the boss if asked, including your girlfriend and you don't say a word. So, anyone with any life better than that has priced themselves out of the job market too, haven't they, that's you too, smart guy. So don't sing the blues to me when you or your kids are reaping the economic staleness that comes as Americans are globally downsized in their paychecks. It will affect all the other businesses too, and the general standard of living in the whole country, or is that too complicated to understand.