The auto industry's putrid performance in May was an eye opener, and companies like Ford now have to readjust the adjustments they just made to their turnaround plans. Ford VP Jim Farley already braced his white-collar work force for a possible 12% reduction in their ranks, but a memo emailed today by Mark Fields, Ford's President of the Americas, reveals that the number of white-collar workers "reduced" will actually be 15%. Fields says in his memo (full transcript posted after the jump) that the company will "reduce salaried-related costs in North America by 15 percent by Aug. 1," which you, me and the guy who sits in the cubicle right under the AC vent know doesn't mean just cutting back on coffee filters.
The reductions will come from a series of steps that should ruin the day for lots of Ford employees wearing a tie or pants suit right now. They include "involuntary separations" (i.e. firings, letting go, RIFs, etc.), attrition (I'm leaving before you can fire me) and a consolidation of open positions (you now do his, his and her job plus what you were doing before). Other cost saving measures include further delaying merit-based raises from July 10th to Oct 1st (the Griswolds will not be going to Wally World this summer), suspending tuition assistance and dependent scholarship programs (education, not so much), and capping company-paid retiree basic life insurance for all existing and future retirees at $25,000 (that's still enough to buy a KISS Kasket for you and your spouse). As our esteemed colleague Mr. McElroy said a few posts ago, "It's a pretty grim picture. And it certainly is going to get worse." And so it has.
Over 2006 and 2007, Ford lost $15.3 billion. Over that same time and in light of those losses, the company also shed 33,600 union workers through buyouts and early retirement. Still working through the uphill part of the turnaround, Ford has announced it wants to eliminate another 8,000 to 9,000 factory jobs through buyouts. If 8,000 workers end up leaving, that's almost 12 percent of Ford's current workforce walking out the door. They'll leave with benefits and a buyout that ranges from $50,000 to $70,000 depending on whether the position is a skilled trade. While it might seem like a lot of money, the point is that with the new labor agreement, Ford can hire new workers -- when the time comes -- for $26 to $31, instead of the $60-per-hour it pays now. The UAW figures the salary change could save Ford $1,000 per car.
Although 8,000 buyouts is Ford's target, the company is willing to accept more workers leaving. The offer has been extended to workers at four shuttered factories, and will be expanded next week to others. Those who don't want buyouts can be transferred to another factory. And if they don't accept the buyout or relocation, then they "will be placed on a 'no-pay, no-benefit leave,'" which sounds a lot less appealing than a 5-figure check.
Alan Mulally succeeded as PRESIDENT de Ford one year ago this month, and it can wonder how he makes. The magazine of week of businesses indicates that it makes very good, really, in spite of a decline of 16% in the sales last month, a stock exchange of actions less than the cost of CD used and the fragmentary sale of the PAG.
BW indicates that Mulally obtains “A” in profits and losses to help Ford gain a benefit $750 million in the second quarter, though the company expects a loss during the this year and after as well.
Into the reorganization, Mulally slips with a “B,” most of the time because the author of BW calls into question the decision to sell Volvo, and speculates that the rather new PRESIDENT of Ford wants badly to stop the mercury division. The article indicates which would be a expensive movement which would not be much of a profit for Ford.
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