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Ford Readies White-Collar Buyouts


Ford is expected to launch a new wave of cost-cutting this week in the form of a new round of buyouts to salaried employees. The buyouts are the next step in its "Way Forward" turnaround plan, and part of its previously announced goal of cutting 14,000 salaried jobs this year.

 

Ford employees will have until the week of Jan. 5 to decide whether to take the offers, which will parallel buyout and retirement packages offered earlier this fall to the company's hourly employees. Ford has already eliminated 4000 salaried positions but in September announced it would cut 10,000 more white-collar jobs to expedite its turnaround plans. The cuts will mean Ford will have eliminated up to one-third of the 38,000 salaried employees the company had at the beginning of the 2006.

 

Observers have said the big cuts, while helping reduce the company's costs, have also cut workers with critical skills needed to keep the company competitive now and in the future. Ford employees have complained for years that the cuts instituted by Jac Nasser led to an institutional brain drain that has cost the company dearly in recent years.

 

Last month, Ford confirmed 38,000 hourly blue-collar employees had signed up for the buyout and retirement packages. The blue-collar buyouts, which won't be completed until late spring, are taking about half the company's hourly workforce.

 

Ford has successfully lined up $18 billion in secured financing to pay for the restructuring but the added debt also puts a huge new burden on the company's management.

 

Ford also said it has finally begun the shipment of its newest vehicles, the highly touted Ford Edge and Lincoln MKX, from the company's assembly plant in Oakville , Ont. Both the Edge and MKX are considered critical to the comeback at Ford, which lost $7 billion during the first nine months of this year.

 

Ford's total losses for 2006 could easily surpass the $10.6 billion loss posted by General Motors for 2005. Both the Edge and the MKX are expected to help offset the steep decline of Ford's sales of sport-utility vehicles. The decline in SUV sales has been instrumental in a ten-point decline in Ford's market share since the beginning of the decade.

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