Major news outlets are reporting that Ford will announce massive job cuts and plant closures on Monday, January 23. The Detroit News is reporting that 25,000 factory workers will lose their jobs with Ford over the next four years, and as many as 4,000 administrative and clerical workers will be laid-off by this April. It also said 10 plants could be closed under the plan, which follows a similar huge cost-cutting by General Motors, the world’s biggest car maker.
The job cuts were expected, however the magnitude certainly was not. Ford, which once held a 26% market share in the US, has seen it’s sales decline consistantly over the last ten years. It now holds just 17.4% of the US market and is in jeopardy of being surpassed by Toyota, the first time ever a foreign automaker would hold a top-three position in the American automotive market. Every percentage point of market share represents 170,000 vehicles.
Ford’s President, and great-grandson of Henry Ford, Bill Ford Jr. appears on the cover of this weeks Time magazine. He tells Time, “My goal is to fight Toyota and everyone else and come out on top. ”
Ford posted a net profit of $1.88 billion for the first nine months of 2005, but its North American unit has lost more than $1.4 billion before taxes. The numbers are expected to look even grimmer Monday when final 2005 financial results are reported.
Ford’s North American manufacturing operations still look a lot like they did when the company built one out of every four cars and trucks on the road. Ford has the factory capacity to build 4.5 million vehicles in North America, but produced just 3.3 million last year. As a result, Ford’s factory utilization rate is the lowest in the industry — just 79 percent, Harbour Consulting said last week. Analysts have identified several factories that could get the ax Monday. Ford assembly plants in St. Louis, Atlanta and St. Paul are in jeopardy, along with one in Cuatitlan, Mexico. Ford’s vastly underused plant in Wixom is also expected to be closed.
The Detroit News also reports that top executives will not be spared. Bill Ford also is expected to announce a significant reduction in the number of corporate officers at Ford by March 1, according to people familiar with the plan. One of those expected to leave is Steve Lyons, group vice president over sales and marketing for Ford, Lincoln and Mercury. He is negotiating to become a Ford dealer in Phoenix.
“This is the most serious crisis at Ford in modern times,” said David Cole, head of the Center for Automotive Research in Ann Arbor. “I think they view this as a last shot.”
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