Nick Scheele Tells Fellow Employees That Ford Plans White Collar Job Cuts

DEARBORN, Mich. July 18, 2003; John Porretto writing for the AP reported that Ford Motor Co. said Friday it plans to cut 10 percent of costs related to its salaried automotive work force by the end of the year. A Ford source said up to 2,000 white-collar jobs could be eliminated.

The cost-cutting effort comes as the world's No. 2 automaker tries to keep its restructuring plan, launched a year and a half ago, on track. Ford said earlier this week it slashed expenses by $1.3 billion in the second quarter; its goal is to reduce costs by $2.5 billion by the end of 2003.

Ford officials declined to give a specific number of jobs targeted in the plan announced Friday, but a company source speaking on condition of anonymity said the number of jobs cut could reach 2,000.

Chief operating officer Nick Scheele alerted Ford workers worldwide of the new cost-cutting plan in an e-mail Friday morning.

"Despite this excellent work, we still face uncertain economies around the globe and a fiercely competitive marketplace," Scheele said in his e-mail. "As a result, it's imperative that we continue looking at all of our costs globally to achieve even higher levels of efficiency and cost competitiveness."

Scheele said some of the 10 percent savings will be achieved through attrition, hiring freezes, elimination of overtime and a reduction in agency and supplemental workers.

"However, where these actions cannot fully meet the targets, we will have to reduce our salaried personnel structure to address the balance," Scheele said.

Ford has about 79,000 salaried automotive workers worldwide.

Ford officials said in April they were intensifying efforts to slash the company's $30 billion budget for costs not directly related to vehicles by as much as 20 percent over the next two years. The company said the effort is part of a goal to improve profits by $9 billion by mid-decade.

Scheele said cost-reduction efforts to date have been driven by trimming costs for materials and non-production items and improving new vehicle launches, which reduces recalls.

Ford made the announcement the same day it opened contract talks with the United Auto Workers union at Ford's world headquarters in this Detroit suburb.

Ford became the third major automaker in as many days to kick off contract talks, which will continue for the next couple of months. General Motors Corp. began talks with the UAW on Thursday and DaimlerChrysler AG's Chrysler division began negotiations Wednesday.

Ford's contract also will cover UAW workers at auto supplier Visteon Corp., which was spun off from Ford in June 2000. Supplier Delphi Corp., a former division of GM, also will negotiate a contract with the union.

The pacts will cover wages and benefits for more than 300,000 workers as well as pension payments and benefits for 475,000 retirees and their spouses.

The current contracts, negotiated in 1999, expire Sept. 14.

In a brief session with reporters after the ceremonial handshake between Ford and UAW officials, Dennis Cirbes, Ford's vice president for labor relations, said the timing of the opening of labor talks and the cost-reduction announcement was a coincidence.

Cirbes said Ford had yet to determine how many salaried jobs would be eliminated.

"There are no numbers that I'm aware of," he said. "We haven't finalized our plan."

In 2001, Ford cut 3,500 white-collar positions by offering early retirements and voluntary separation packages. About 1,500 more salaried positions were cut early last year as the automaker continued its cost-cutting efforts.

When Ford announced its restructuring in January 2002, the company said it planned to cut 35,000 hourly and salaried positions - roughly 10 percent of its global work force. To date, about 5,000 salaried jobs have been eliminated.

Ford spokesman Oscar Suris said the new reductions will contribute minimally to Ford's bottom line this year. Most of the savings will occur in 2004.

Earlier this week, Ford said it earned $417 million in the second quarter, a 27 percent decline from a year ago. The automaker said it expects a loss of 15 cents in the July-September period, reflecting lower production because of high inventories.

Ford posted a profit of $896 million in the first quarter. It's trying to rebound from $6.4 billion in losses the past two years.