Ford extends cost cutting measures, may prune 12 per cent of salaried workforce

29 May 2008

Cost cutting at Ford Motors continues. After announcing plans to shed 1,300 jobs at two assembly plants at Chicago and Louisville, and then scaling down production of pickup trucks and sports utility vehicles amid soaring oil prices and falling sales, the automaker now proposes to cut up to 12 per cent of its salaried workforce in an effort to put its derailed overhaul back on track toward profitability, according to Wednesday report from a local Detroit newspaper(See: Ford to step up small car production; stalls pickup and SUV production and  Ford to shed 1,300 jobs in two US assembly plants )

Struggling to make up for the brutal selling climate in the US, Ford could be handing out pink slips to more than 2,000 white-collar workers, the Detroit News reported, adding that the Dearborn-based automaker is also taking a hard look at merit pay increases.

Unlike previous buyout and early retirement offers, this round will be involuntary. "Given the speed at which we are moving, we're not expecting to offer voluntary separation programmes," Ford spokeswoman Marcey Evans said. She declined to comment on specifics but said that any moves to pare the workforce will be completed by August.

The involuntary cuts would be completed by 1 August, according to sources. The company employs more than 24,300 salaried workers in the US, Canada and Mexico.

This proposal comes after Ford and its CEO Alan Mulally's grand plans for profits in 2009 came to an end on 22 May, sending the stock down more than 8per cent as plunging demand for trucks and SUVs have combined with rising fuel and steel costs to weigh on the bottom line. Instead of landing in the black in 2009, Ford now seems to be satisfied just breaking even.

The company also cut its outlook for full-year car and truck sales to a range of 15 million to 15.4 million units, down from 15.3 million to 15.6 million previously. And in an effort to align production with the sliding demand, the company now plans to build fewer vehicles.