Ford will cut jobs, close plants under restructuring plan |
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Mon, 23 Jan 2006 11:05
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DETROIT: Ford Motor Co. is expected to cut thousands of jobs as part of its restructuring plan, according to reports. The company refused to give details of the plan, called Way Forward, but sources indicated the plan calls for plant closings, product changes and a substantial downsizing of its staff strength. The company has nearly 87,000 hourly workers and 35,000 salaried workers in North America.
The plan comes in the wake of dwindling sales of the No 2 U.S. carmaker's products, importantly its SUVs, increasing health care expenditure and higher raw material and labour costs. The United Auto Workers Union, which represents the company's workers, feels it has no other alternative but to go along with some of the proposals.
The year 2005 saw a major slide in the company's market share as foreign carmakers offered it stiff competition. It lost its No 1 position as the best selling brand in the U.S. to General Motor Corp. It sold 2.9 million vehicles during the year to have a 17.4 per cent market share, down from 18.3 per cent in 2004.
This will be the second restructuring plan in four years for the automobile major. Under the first plan, some 35,000 jobs were cut and five plants were closed down.
Meanwhile, unnamed sources indicated that there will be job cuts in the managerial levels and at least two directors will be going. The company has 53 executives with the rank of vice-president or above. That number is likely to be cut to about 45 over time, the sources said. Steve Lyons, head of North American sales, is expected to be the first to leave the company, while Darryl Hazel, vice-president, will be moved to another role.
The axe will fall on the company's large number of white collar workers too, whose number is said to be disproportionate to the level of operations.
The restructuring plan is likely to have a closer look at the Jaguar operations. Assembly plants in St. Louis; St. Paul; Atlanta; Wixom, Michigan, St. Thomas, Ontario, and Cuatitlan, Mexico are the ones that are facing closure. The decision is based on factors like the age of the plants, their product mix and their lack of flexibility.
The company had used just 79 per cent of its North American plant capacity in 2005, down from 86 percent in 2004, according to Harbour Consulting Inc. Rival Toyota Motor Corp. has been operating at full capacity.
The restructuring plan has been visualised and designed by Mark Fields, the company's new head of American operations.
Ford's chairman and chief executive Bill Ford had said that the restructuring is going to be painful for some people.
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