Ford to Cut 25,000 to 30,000 Jobs in N. America

DETROIT – Ford Motor Co. (F) on Monday said it will cut 25,000 to 30,000 jobs in North America by 2012 and plans to idle 14 manufacturing facilities, in what it hopes to be a long-term turnaround for the No. 2 automaker.

"We will be making painful sacrifices to protect Ford's heritage and secure our future," Chairman and Chief Executive Bill Ford said in a statement. "Going forward, we will be able to deliver more innovative products, better returns for our shareholders and stability in the communities where we operate."

Ford shares rose 42 cents, or 5.32 percent, to $8.32 on the New York Stock Exchange.

The cuts represent 20 percent to 25 percent of Ford's North American work force of 122,000 people. Ford has approximately 87,000 hourly workers and 35,000 salaried workers in the region.

Plants to be idled through 2008 include the St. Louis, Atlanta and Wixom assembly plants and Batavia Transmission in Ohio. Windsor Casting in Ontario also will be idled, as was previously announced following contract negotiations with the Canadian Auto Workers. Another two additional assembly plants to be idled will be determined later this year.

A total of 14 facilities, including seven assembly plants, will cease production by 2012.

The sweeping restructuring plan also called for reducing capacity by 1.2 million units, or 26 percent, by 2008, and targets a material cost reduction of at least $6 billion by 2010.

Ford said Monday it would no longer provide earnings guidance beginning in 2006.

"We must be guided by our long-term goals of building our brands, satisfying customers, developing strong products, accelerating innovation, and, most importantly, producing a sustainable profit from our automotive business," the CEO said.

The job cuts are the deepest since since Ford launched a multiyear restructuring program in 2002.

Before the restructuring announcement, Ford reported that it earned $124 million in the fourth quarter, up 19 percent from the previous year thanks to the sale of its Hertz car rental division and improved profits for its luxury brands. Its profit for the year fell 42 percent to $2 billion.

Excluding special items, the company earned 26 cents a share, soundly beating the average analyst expectation of 1 cent a share.

The No. 2 U.S. automaker after General Motors Corp. (GM) has been hurt by falling sales of its profitable sport utility vehicles, growing health care and materials costs and labor contracts that have limited its ability to close plants and cut jobs. The United Auto Workers union will have to agree to some of the changes Ford wants to make.

Ford also has seen its U.S. market share slide as a result of increasing competition from foreign rivals. The company suffered its tenth straight year of market share losses in the United States in 2005, and for the first time in 19 years, Ford lost its crown as America's best-selling brand to GM's Chevrolet. Ford sold around 2.9 million vehicles for a market share of 17.4 percent in 2005, down from 18.3 percent the year before and 24 percent in 1990.

The restructuring is Ford's second in four years. Under the first plan, Ford closed five plants and cut 35,000 jobs, but its North American operations failed to turn around.

Employees at Ford plants in North America slated for closure reacted with emotions ranging from anger to disappointment to surprise.

"Their hopes and dreams and aspirations and secure future are gone for now," said Ken Dearing, president of the local union that represents Ford workers at the Hazlewood, Mo., plant outside St. Louis, which also will be idled.

In Michigan, James Crawford said he is too young to retire and might not have enough seniority to get hired at another plant, even though he has worked at Ford for 18 years.

"This really hits me hard," said the 48-year-old car painter, who listened to the announcement on the radio in a white Ford Probe parked across the street from the Wixom plant. "It looks like I'm starting over."

Crawford's sentiment echoes the uncertainty that is just beginning for most of the workers.

Those old enough will retire, but are worried about the security of their pensions.

Younger workers are hoping to land jobs at other plants, but they're not optimistic. Ford said it will make efforts to place some workers at other facilities.

The news is especially tough in Georgia, which already was reeling from GM's announcement in November that it would close its plant in Doraville, which could cut more than 3,000 jobs. The Ford plant in Hapeville has about 2,000 employees. It makes the Ford Taurus, which is being phased out this year. It is Ford's only assembly plant in the South identified by the company for changes.

"We're devastated," said Danny Sparks, chairman of the local union representing Ford workers at the Hapeville plant. "This work force deserves some attention to this. They have done everything Ford has asked of them."

As workers left the Hapeville plant Monday in a light drizzle, they said they were upset but not surprised by the news.

Shipping clerk Wilburn Kelly, a 38-year veteran employee, said he expects to retire. But for his co-workers who haven't reached retirement age, he said, "It will be rough."

Police cruisers were posted at the plant gate and across the road at the union office in case of problems, but the scene was quiet at both places.

Hapeville Mayor Alan Hallman called the news "a setback for the state" and the community of 6,200 just south of Atlanta. Tax revenue from the plant accounts for 9 percent of the small city's budget.

"We've got hundreds of man-hours and thousands of dollars invested in various plans to keep them here. The fact that they've elected to idle the plant is very disappointing," Hallman said.

States have been scrambling to offer tax credits and other incentives to keep Ford from closing their facilities ever since the automaker said last fall that it was developing a restructuring plan.

Earlier this month, Missouri Gov. Matt Blunt and other state officials flew to Ford's headquarters for a one-hour meeting with Ford executives. Michigan Gov. Jennifer Granholm outlined a package of incentives to Ford last week but said she wasn't given any assurance that Michigan plants would be spared.

Ford used just 79 percent of its North American plant capacity in 2005, down from 86 percent in 2004, according to preliminary numbers released last week by Harbour Consulting Inc., a firm that measures plant productivity. By contrast, rival Toyota Motor Corp. (TM) was operating at full capacity.

Ford said in its earnings announcement Monday that it reduced employment in 2005 by 10,000 people due to layoffs, buyouts and attrition. Ford has around 300,000 employees worldwide.

Reuters and the Associated Press contributed to this report.