Ford Sets Cost-Cut Target – Big Job Cuts Likely

June 5, 2008

Confirming recent rumors of a shake-up in its white-collar ranks, Ford Motor Co. is notifying workers it expects a 15 percent cut in salary costs by August 1.

How many jobs will be lost is uncertain, as department heads are being told to find ways of their own to meet the 15 percent target. Initial reports, following news of a high-level corporate meeting, suggested Ford could eventually trim as much as 12 percent of its white-collar jobs.

"This unfortunately will result in involuntary separations of Ford employees and agency personnel as well as cost savings through attrition and the consolidation of open positions," President of the Americas Mark Fields said in an e-mail to company employees. It was previously reported that the new cuts will be mandatory, unlike prior, voluntary reduction programs.

The cuts at Ford follow a series of setbacks that have forced the automaker to rethink what was already a draconian turnaround plan. For the month of May, Ford suffered a 15.6 percent decline in sales, largely the result of plunging demand for trucks like its F-Series pickup. The truck had been the nation's best-selling nameplate since 1981, but last month, sales fell behind four Japanese passenger cars, including the new king of the hill, the Honda Civic.

Little more than a week ago, Ford CEO Alan Mulally revealed that the automaker expects to miss its original plan of pushing back into the black in 2009. The former Boeing executive declined to say when he foresees the company being able to turn a profit.

But in an interview with a Detroit radio station, Mulally tried to remain upbeat, insisting, "We'll come out the other side of this with a company that is competitive, with the products that people want, and we'll start to grow again."

Having already trimmed 10,800 salaried jobs in North America, Ford's white-collar workforce stood at 23,700 at the end of 2007.

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