Ford

["Ian Murray" <seamus2001@xxxxxxxxx>]

Ford plans to cut up to 20,000 jobs

David Teather in New York
Friday January 11, 2002
The Guardian

Ford Motor Company will today announce plans for mass job cuts as part
of an overhaul designed to drag the struggling car manufacturer back
to profitability.

Estimates on the number of employees who will lose their jobs range
from 10,000 to 20,000, including executives and factory floor workers.

The cost of the restructuring is said to be in the region of $4bn
(£2.8bn).

According to reports from Detroit, at least three assembly plants in
North America, including one at Edison in New Jersey, have been
identified as candidates for closure with production hours likely to
be scaled back at others. The company recently said it had the
capacity to build 1.9m more vehicles than it can sell.

The cutbacks in production will have a deep knock-on effect among the
company's suppliers and outside contractors. It is not yet clear if
the impact will be felt directly in Britain and other parts of Europe.

Shares in the world's second largest car manufacturer were around 6%
lower in early trade, at close to five-year lows.

Ford is on course to report a loss of some $2bn for 2001, its first
deficit in almost a decade as competition from European and Asian
manufacturers intensifies.

Investors are concerned that any corrective action at Ford to get the
company back on its feet will be hampered by the powerful United Auto
Workers union. Existing contracts mean there can be no plant closures
or enforced redundancies until September 2003.

Investment bank UBS Warburg yesterday cut its recommendation on Ford
from "hold" to "reduce". Analyst Saul Rubin said he expects the cuts
to be the first in a long process which will ultimately account for
25,000 to 30,000 staff - around 25% of the workforce. But he added:
"We fail to see how such a move can be made in one go, given the power
of the UAW. The whole restructuring will have to be phased in stages
over a lengthy period of time."

The restructuring is being led by chief executive William Clay Ford
Jr, a member of the founding family who was brought in to restore the
company's fortunes. He replaced Jacques Nasser in October last year.

Non-core parts of the business are expected to be put up for sale to
raise cash, possibly including the Kwik Fit retail business in
Britain.

Sales of cars and trucks reached record levels in the final three
months of the year, but at a steep cost. Fears that the September 11
terrorist attacks would have a detrimental effect on sales prompted 0%
finance deals that damaged margins. There is also concern that the
post- September bubble will eat into sales during 2002.

DaimlerChrysler said on Tuesday that it, too, was suffering in the
tough economic conditions, and admitted that it would be difficult for
the car manufacturer to meet its operating profit targets this year.

But there were more positive noises yesterday coming from General
Motors, the largest car maker in the world. The company said that it
will report fourth-quarter results next week that will exceed Wall
Street expectations.

As part of a continuing programme, GM is cutting 4,700 jobs this year.

A spokeswoman for Ford declined to comment.