FORD is to cut production dramatically this year and is considering shedding thousands more jobs. The carmaker announced yesterday that vehicle production in North America would be cut by 21 per cent in the fourth quarter.
The company will reduce factory output by 20,000 units in the third quarter and 168,000 in the fourth quarter as part of its strategy to stem losses.
The reduction in capacity — equivalent to a 9 per cent cut over the year — will result in factories lying idle.
Ford is striving to regain profitability by closing factories and cutting jobs. It might also sell key assets such as Jaguar, Volvo and its credit financing division.
Ford announced at the start of this year that it would implement a plan called “Way Forward” after making losses of $1.6 billion (£850 million) in 2005. The plan was to close 14 factories in the US by 2012 and make 30,000 hourly workers redundant.
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Ford also hoped to cut salaried worker costs by 10 per cent, equivalent to 4,000 jobs, but this target is expected to rise as the firm continues to lose money.
It is now understood to be considering cutting salaried costs by 30 per cent, potentially 12,000 jobs. It will seek concessions in benefits and pension payments as well as a fall in headcount.
The new plan is expected to be put to Ford’s board on September 14. Another topic for discussion at this meeting will be the faster implementation of Way Forward, with factories likely to close sooner than had been expected.
The Detroit-based company lost $254 million in the first quarter of this year and sales have continued to decline for its most profitable vehicles.
Bill Ford, the chief executive, said: “We know this decision will have a dramatic impact on our employees as well as our suppliers. This is, however, the right call for our customers, our dealers and our long-term future.” Ford’s British operations experienced the company’s first wave of restructuring, which started in 2001. Analysts believe the British facilities should be safe.
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However, the appointment of Kenneth Leet, a former Goldman Sachs banker, to advise Bill Ford has prompted speculation that key marques may be sold.
Particular focus has been on the Premier Automotive Group, which contains Volvo, Jaguar, Aston Martin and Land Rover. It lost $162 million in the second quarter.
Ford is understood to be determined to hang on to Land Rover but Jaguar or Volvo might go.
Way forward