DEARBORN, Mich., Jan. 11 -- Ford Motor Co. Friday unveiled its long-awaited restructuring plan, which executives said involved some "hard decisions" to bring production in line with demand.
Ford said it will reduce its payroll by 35,000 people -- 21,500 in North America, including 15,000 hourly employees -- and eliminate five plants.
Chairman and Chief Executive Officer Bill Ford said the company will work on "improving our quality and rationalizing our capacity from 5.7 million to 4.8 million vehicles by closing five plants and the elimination of four low-market vehicles."
"What we are outlining today is a comprehensive plan that builds for the future," he added. "It's going to take everyone in the extended Ford family -- employees, suppliers and dealers -- working together, over time, to make it work."
Ford said the company would take a $4.1 billion restructuring charge in the fourth quarter. The company is expected to report a loss of $800 million for 2001 when it releases its results Jan. 17. Ford also lowered its dividend for the second straight quarter, this time from 60 cents to 40 cents, for Class B and common shares.
The goal of the restructuring, which includes the sale of $1 billion in non-core assets, is to boost profits by $9 billion by the middle of the decade. Failing that, "I won't get paid," Ford quipped.
The four models slated for elimination are the Ford Escort subcompact, Mercury Villager minivan, Mercury Cougar coupe and Lincoln Continental sedan. At the same time, Ford said it would introduce 20 new or freshened products in the United States by mid-decade.
Ford said the automaker also intends to raise $1 billion in additional capital as part of its overhaul. The company last month filed a shelf registration with the Securities and Exchange Commission to issue as much as $10 billion in stock or debt securities.
The latest turnaround moves come after a series of downsizing and restructuring decisions Ford announced over the past several months.
Those included elimination of as many as 5,000 white-collar jobs, about 10 percent of the company's salaried work force in North America, through early retirement by the end of last year. Ford also has cut some 330,000 vehicles out of its production capacity by eliminating shifts and slowing assembly lines.
While Ford called the cutbacks "difficult" and "painful," they may not be enough to allay investors' concerns.
Some analysts believe Ford cannot cut staff fast enough, in light of its union agreements, to rapidly lower its expenses. United Auto Workers union members have extensive job and income protections that mean they could draw a portion of their pay even if their jobs are eliminated.
The five plants targeted for closing include the Edison Assembly, Ontario Truck Plant, St. Louis Assembly, Cleveland Aluminum Casting and Vulcan Forge. No new products have been identified for the Ohio Assembly or Cuautitlan Assembly plants. The company also plans to pursue the sale of its Woodhaven Forging Plant and downsize 11 other plants. Line speed reductions and changes to operating patterns at nine plants also are in the offing.
"In order to remain competitive and profitable, we must make some hard decisions to align capacity with our anticipated sales," said Nick Scheele, president and chief operating officer. "At the same time, the company is continuing its commitment to North American manufacturing operations with investments of about $20 billion over the next five years in new product programs and spending to add flexibility and increase our ability to respond quickly to changes in market demand."
"We are confident we can achieve these goals through the efforts of our dedicated employee team," Ford said. "We know we have immediate challenges to face. It will be difficult, and in some cases, painful to turn things around. But we will turn things around."
Ford Motor Company is the world's second largest automaker, with approximately 345,000 employees on six continents. Its automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Financial, Hertz and Quality Care. Content: 04011000 04016000 09009000 09010000