Ford To Cut Benefits And Jobs
Ford sent out a mass e-mail to all of their salaried workers on Thursday that stated they would be delaying the merit raises and will be forced to cut a few benefits as well as reducing costs by 15%. Because of this many employees will find themselves being laid off.
Ford also has sent letters to about 100 recent college graduates who had been offered jobs, telling them that their hiring would be deferred indefinitely. Ford is offering the would-be employees $5,000 to compensate them for their troubles. “The vast majority of the offers are being deferred,” Ford spokeswoman Marcey Evans confirmed Thursday, declining to say precisely how many. “It’s not across the board.”
Ford is making these cost-cutting actions in the face of a suffering U.S. economy, which has resulted in an industrywide sales decline and an unprecedented consumer shift out of pickups and SUVs — which are highly profitable to automakers — to fuel-efficient cars. In an e-mail obtained by the Free Press, Mark Fields, Ford’s president of the Americas, said the company aims to have its salaried-related costs reduced by Aug. 1.
“This unfortunately will result in involuntary separations of Ford employees and agency personnel, as well as cost savings through attrition and the consolidation of open positions,” he said. “We won’t know the exact number of job reductions until each function examines its business needs and determines how best to meet their specific cost-reduction target.”
News of the 15% salaried-cost cuts was first reported Wednesday morning on www.freep.com. Ford has 23,400 salaried employees, down 32% from 2005, when the company started restructuring. The percentage of jobs eliminated under this new cost-cutting round will likely vary by department, Ford spokesman Mark Truby said.
Fields also told employees in the e-mail that several other actions would also be taken. Pay raises would be delayed in the United States and Canada from July 1 to Oct. 1, he said. The company is also suspending tuition and scholarship programs for employees and capping life insurance at $25,000. The changes represent Ford’s latest revision of the company’s Way Forward turnaround plan, which was first announced in January 2006. It was revamped later that year, in September, as high gas prices began encouraging consumers to shift toward cars.
On May 22, Ford Chief Executive Officer Alan Mulally said the automaker would need to intensify the turnaround plan yet again because of increasing weakness in the U.S. economy and an ever-quickening consumer shift toward cars. Mulally also said the company would not meet its profitability goal in 2009 because of large cuts in the production of trucks, and he warned that more cost cutting, including involuntary layoffs of white-collar workers, would be necessary. The automaker has said that employees who are dismissed will be offered standard severance packages, which are based on years of service and other factors.