Ford is planning involuntary layoffs

Company targets salaried workers

May 29, 2008|By Detroit Free Press

DETROIT - Ford Motor Co. Chief Executive Officer Alan R. Mulally and his top managers will take the next steps today toward deciding how many salaried workers the company must involuntarily lay off as it continues downsizing in the face of a brutal U.S. economy.

A final decision - which could slash more than 10 percent of the company's 24,300 white-collar jobs in North America - is expected in the next few weeks, as the automaker aims to swiftly wrap up all the personnel reductions by Aug. 1 and preserve cash it might need for the tough months ahead.

Workers will be offered Ford's standard severance packages, which are based on years of service and other factors, Ford spokeswoman Marcey Evans said.

Ford salaried employees expressed frustration yesterday.

"People thought we were headed in the right direction," said one engineer with more than 30 years of service at Ford. He and other salaried workers did not want their identities revealed for fear of repercussions. "Everybody is frustrated."

A month ago, Ford's management was leading salaried employees to feel energized about the company's future. Ford gave the workers bonuses in March and announced a surprise $100 million first-quarter profit last month. But since then, the auto industry has turned even harsher, the company said, forcing it to act swiftly.

After surviving two gloomy years, in which Ford lost a combined $15.3 billion, many workers told the Detroit Free Press that they believed the bonuses meant the company was on the cusp of a bona fide revival with Mulally's "One Ford" focus.

But last week, Mulally revealed that production cuts and other cost-cutting actions would be necessary to deal with the economy, which has been beset by higher prices for gas and food, by housing and credit crises, by surging prices for steel and other commodities and by low consumer confidence.

In a question-and-answer session posted on Ford's internal Web site late last week - a portion of which the Detroit Free Press reviewed - Mulally also said: "What we know today is that we do not plan to offer voluntary separation packages as we have done in the past."

Though Mulally never ruled out the possibility of further cuts, some workers said they felt misled. "It didn't dawn on anyone this was coming," the engineer said.

Ford spokesman Mark Truby said the "bonuses that were paid out were based on last year's performance, and any actions that we're taking now in North America, as we said, are a reaction to what we've seen in the rapid deterioration in business conditions in recent weeks."

Ford has cut more than 11,000 salaried jobs, or 32 percent of the work force, since 2005.

Despite workers' emotions, Van Conway, managing director of Conway MacKenzie & Dunleavy, a global firm that specializes in helping troubled companies, said Ford is taking the correct actions to preserve cash through the rough period ahead, as any company would. (General Motors Corp. and Chrysler LLC have not announced new job cuts or restructuring plans this year.)

Ford, which obtained $25.45 billion in loans and credits in late 2006, said recently that it expects to burn through $16 billion through next year, up $2 billion from a March estimate.

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