Ford to buy out 75,000 as losses head for $9bn

Click to follow
The Independent Online

Ford, faced by losses that could reach $9bn (£4.8bn) this year, will offer buyout packages of up to $140,000 to all of the more than 75,000 workers at its US plants, it was reported last night.

Meanwhile, two top Ford executives, including Americas chief operating officer Anne Stevens, stepped down just over a week after Alan Mulally took over as chief executive.

Ford said it would announce its long-awaited update to its restructuring plans today. The new measures were examined at a two-day Ford board meeting - the first to be attended by Mr Mulally, the former Boeing executive who replaced the family scion, William Ford Jr.

The turnaround plan is Ford's second attempt since January to come to grips with falling market share.

The latest chapter in the company's long history of woe was revealed by the Detroit News. The newspaper quoted an internal Ford document that put pre-tax losses by its worldwide car and truck operations at between $5.6bn and $5.9bn. Though most of its international manufacturing was loss-making, the bulk of the deficit came from operations in North America. Additional restructuring costs could push total 2006 losses to $9bn.

The latest measures could see a further acceleration of plant closures and job cuts - on top of the original "Way Forward" cost-cutting plan announced by Mr Ford in January, under which 30,000 jobs would be lost and 14 plants shut by 2012. The latest belt-tightening follows a fall in sales of pick-up trucks, Ford's best-selling models.

The "Big Three" US car manufacturers - GM, Ford and DaimlerChrysler - have all been hit by the two-edged crisis afflicting the industry: falling demand for the truck and SUV "gas guzzlers" on which they relied for profits, and sky-high labour costs caused by fixed pension and health care benefits.

But Ford has arguably suffered most. As well as warning of accelerated white-collar job cuts and plant closures, it has announced it is considering the sale of the specialist luxury brands Jaguar and Aston Martin - even a scheme to take the company private.

Requests for government aid have thus far fallen on deaf ears. President George Bush, who has publicly opposed a federal bailout for Detroit, has twice postponed a summit planned this spring with the CEOs of Ford, GM and Chrysler. Mr Bush reportedly called Mr Ford last week to tell him that any meeting would have to wait until after the 7 November mid-term elections.

Ford shares, which initially rose 9 per cent after the appointment of Mr Mulally, closed down more than 1 per cent on Wall Street yesterday.

End of the road for Lincoln

For any properly attired Wall Street tycoon or New York mobster, the Lincoln Town Car has long been the vehicle of choice. Smooth-riding, sophisticated and with plenty of metal to ensure one is noticed, the Lincoln has been a constant on the streets of New York and Washington.

But what of the future? Ford is expected to close the plant in Wixom, Michigan, where the Town Car is manufactured, as part of a round of cost- cutting measures and will not commit itself to producing the vehicle beyond next year. "They're really nice cars," Alex Weiss, an investment banking analyst at Lehman Brothers who uses a car service at least four times a month, told the New York Daily News. "It's spacious, the leather seats are nice and it's just a nice ride."

Selling for $43,000, the Town Car measures 18-and-a-half feet of plush leather and polished metalwork and is the largest US sedan on the market.

But despite the enthusiasm for the Town Car among its owners, it appears that sales have long been falling. Last year just 47,000 were sold across the entire US, compared with 149,000 in 1990. This year sales are said to be a further 17 per cent down.

The investor Warren Buffett has apparently already realised that the time is up for the Town Car. This week he offered his 2001 model in an auction that will benefit the New York based charity Girls Inc. Yesterday bids on eBay had reached as much as $32,850.

Andrew Buncombe in Washington

Comments