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Ford weighs more white-collar job cuts
The auto manufacturer says it is not ruling out deeper job cuts in its salaried work force.
July 22, 2005: 12:08 PM EDT

NEW YORK (CNN/Money) - Ford Motor Co., whose North American automotive operations lost $1.21 billion in the second quarter, said Friday it is not ruling out deeper job cuts in its salaried work force to help return to sustained profits.

The No. 2 automaker, which has already announced plans to cut its North American white-collar work force by 8 percent this year, has seen profit margins squeezed by intense competition in the U.S. vehicle market and soaring costs of everything from raw materials to health care.

Ford (up $0.02 to $10.66, Research) could cut as much as 30 percent of its white-collar staff, or about 10,000 jobs, in the next few years, according to The Wall Street Journal.

Spokesman Oscar Suris wouldn't confirm the 30 percent reduction target some Ford (Research) employees cited to the Journal, but he told the newspaper that job cuts announced earlier this year were short-term actions, and that the company is considering more aggressive measures to reduce costs, including further job cuts.

Ford has about 35,000 salaried employees in its North American operations, so a 30 percent drop would represent a cut of about 10,500 jobs. The company had already announced plans in April to cut 1,000 white-collar positions, and it announced another 1,700 planned cuts June 21, when it warned about second-quarter results.

Ford reported lower second-quarter earnings Tuesday, and executives told investors at that time it planned to accelerate cost-reduction efforts, including cuts in manufacturing capacity.

It is difficult for Ford, General Motors Corp. (Research) or DaimlerChrysler (Research)'s North American unit Chrysler Group to trim union work staff levels because their contracts with the United Auto Workers union require them to essentially continue to pay hourly employees who are laid off. But salaried staff have no such protections.

The Journal reported that the deeper management job cuts could be a precursor to Ford asking the UAW for cuts among hourly workers as it trims excess capacity. To show that salaried employees are sharing restructuring pains, Detroit auto manufacturers often cut salaried jobs before seeking help from the union, according to the report.

On Tuesday, Ford Chief Financial Officer Don Leclair told investors the company was ready to accelerate cost-reduction efforts, including cuts in manufacturing capacity.

"We realize we have excess capacity, and we will update you on our plans later this year," he said on the company conference call.

"Leclair has said nothing is off the table," Suris said. "The company has operating challenges and they include issues with cost performance," he said. "We are developing plans to address those issues."

In one sign of the cut of white-collar staff, the Detroit News reported Friday that Ford has laid off several senior public relations officials and recently closed PR offices in Chicago and Atlanta.

"We had to take the difficult step today of conducting involuntary separations because we weren't able to meet our cost-cutting objectives solely through voluntary separations," Suris told the News.


For a look at Ford's second-quarter results, click here.

For Your Job 2005, a special report on the U.S. labor market, click here.

For more news on autos and auto manufacturers, click here.

-- From staff and wire reports.  Top of page


Ford Motor Company
Layoffs and Downsizing
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