Ford readies white-collar layoffs as sales tumble

Ford Motor Co is preparing to fire U.S. salaried employees over the next two months due to the sudden downturn in auto sales, a drastic step it has so far avoided during its 2-1/2-year restructuring.

• Ford, which warned last week that it would not meet a long-standing goal of returning to profitability in 2009, has not yet decided how many jobs it will cut from its 24,300 U.S. white collar workers, a spokeswoman said on Thursday.
• The speed of the cuts, which are expected to be completed by August 1, made it untenable for Ford to offer voluntary buyout programs, said spokeswoman Marcey Evans, adding that the timing was still being studied.
• “We made a commitment to employees to communicate with them first when we have more information to share,” Evans said.
• The Detroit News reported on Wednesday that Ford expected to make cuts of up to 12 percent in its U.S. salaried job ranks. That would be up to roughly 3,000 jobs.
• Ford provides salaried workers dismissed from the company with a schedule of severance payments based on their years of service, but has not discloses details of those packages.
• The latest white collar layoffs show how critical the situation has become for Ford, which in the past has tried to ease the pain of cutbacks by offering buyouts and early retirements, Argus Research analyst Kevin Tynan said.
• “I think the gloves are coming off,” Tynan said.
• Others saw it as a positive that Ford was moving quickly to revise its restructuring plan in the face of weaker sales.
• “They have moved pretty rapidly and that should be noted,” said fund manager Bernie McGinn, who holds Ford shares. “I still believe they have got a plan and they have got a very good management team.”
• McGinn’s firm, McGinn Investment Management, bought Ford stock at about the time Alan Mulally was hired as chief executive and bought more shares recently. The Alexandria, Virginia-based fund is a large-cap contrarian investment fund that makes long-term bets, he said.
• Ford’s earnings warning on May 22 jolted analysts and workers alike, coming within weeks after it posted a surprise first-quarter profit and billionaire investor Kirk Kerkorian disclosed a nearly 5 percent stake in the automaker.
• U.S. auto sales have been broadly worse than automakers forecast at the start of the year, dropping about 12 percent through the first four months of the year, and weighing most on larger truck and SUV sales.
• Ford issued the warning after seeing an even more rapid deterioration in the large truck and SUV market through April and the first half of the month, executives said.
• Like most U.S. automakers, Ford has relied on sales of large trucks and SUVs for profits in recent years, but now sees a permanent shift in demand toward smaller cars and crossovers and has been restructuring its operations accordingly.
• Ford also plans targeted buyouts of U.S. hourly workers at plants it is closing, or cutting shifts because of reduced demand for specific products, such as large trucks or SUVs.
• The buyout offers among hourly workers are permitted under a contract reached with the UAW last year.