Ford Motor Company to Eliminate 45,000 jobs by 2007

By Mark Hoerrner

Alan Mulally is not going through a "listening" period or a PR-based "talking" tour of Ford Motor Company. Now that he’s at behind the wheel, he’s making immediate – and some say dire – changes at the company as profits have been stalling. The first step: cut as many as 45,000 jobs by 2008.

The move is designed to cut $5 billion in costs at the automaker. All employees of the Ford and Automotive Components Holdings groups will be offered full buyouts. The cuts will also mean the "idling" of 16 different manufacturing operations in North America including seven assembly plants.

"These actions have painful consequences for communities and many of our loyal employees," said Ford Chairman Bill Ford in a statement. "But rapid shifts in consumer demand that affect our product mix and continued high prices for commodities mean we must continue working quickly and decisively to fix our business.

"Alan Mulally’s experience in turning around a major industrial company will help guide the implementation of these measures as he assumes leadership of the company," Ford added. "The actions we announce today – coupled with the North American production cuts we announced last month, the strategic alternatives we are considering for Aston Martin and a push for greater progress from our operating units and brands around the world – are part of a series of actions that Alan and our entire global team will be taking to put the company on a path to sustained profitability and success."

The company also plans a modernization of at least 70 percent of its product line by 2008. The massive cuts and revamping of the Ford lines are necessary to the company’s survival, Mulally told Ford’s Board of Directors last week.

"The steps we are announcing today are clearly needed to ensure the ultimate turnaround of the business in Ford’s biggest and most important market," Mulally said. "Although the process has been under way for months, I have had a chance to review these actions and am convinced that they provide the sound, product-led underpinnings and cost reductions we will need to achieve our goals. I look forward to helping with the implementation.

"Turnarounds of this magnitude succeed when capacity and costs are aligned with a realistic expectation of demand," Mulally said. "These actions are certainly consistent with that goal."

Ford will lower production goals to just 3.6 million units by 2008, a 26 percent decrease over 2005. The shift means that nine different facilities including Canada’s Essex Engine and Ohio’s Maumee Stamping Plants will be shut down. Other facilities scheduled for idling by the end of 2008 include: Atlanta Assembly (GA); Norfolk Assembly (VA); Batavia Transmission (OH); St. Louis Assembly (already shut down); Twin Cities Assembly (MN); Windsor Casting (Canada); Wixom Assembly (MI); and all Automotive Components Holdings operations.