Ford: one third of US workforce to go
15 September 2006

Ford’s cost-cutting in the US will be even more radical than expected, with over a third of its salaried US staff to go: that's 45,000 people.

The world’s third-biggest carmaker is trying to stem enormous losses from its core North American business: Ford hopes to cut costs by $5billion (£2.7billion) per year. The announcement of 14,000 white-collar redundancies adds to the total of 30,000 unionised worker job cuts revealed in January.

Ford will also close 16 of its North American factories by 2008, having previously said it would close 14 plants by 2012.

This is Ford’s third recovery plan in the past five years and follows news of its sale of Aston Martin and the announcement that Bill Ford is being replaced at the head of the firm by ex-Boeing honcho Alan Mullaly.

The manufacturer cites “rapid shifts in consumer demand” and “continued high prices for commodities” as its challenges, although Ford was in trouble long before oil prices hit their high current levels.

Ford says it does not expect its North American operations to be profitable before 2009. Having posted a £744million loss in the first half of this year, even that may be optimistic: Detroit News estimates that Ford’s loss for 2006 may be between £4.25billion and £4.8billion.

Although Ford’s chief operating officer for the Americas and its vice-president of manufacturing resigned yesterday, the manufacturer has reached agreement with the powerful United Auto Workers union over buy outs for 75,000 hourly workers. That is significant because Ford needs the union’s goodwill as it cuts and restructures its contracted workforce.

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