Ford Cutting 35,000 Jobs, Closing Five US Plants

DEARBORN, Mich. (AP) -- Ford Motor Co. said Friday it would shed 35,000 jobs, close five plants and eliminate four vehicles in a restructuring that the CEO called "painful but necessary.''

"We strayed from what got us to the top of the mountain, and it cost us greatly,'' chief executive William Clay Ford Jr. said Friday from headquarters of the world's second largest automaker.

The job cuts, including 22,000 in North America, amount to about 10 percent of Ford's overall work force. The plants to be closed are in Edison, N.J. and Oakville, Ontario by 2004; Brook Park, Ohio, near Cleveland in either 2003 or 2004; Hazelwood, Mo., near St. Louis by an undetermined date; and Vulcan Forge in Dearborn, Mich., as soon as possible.

"We were really surprised,'' Hazelwood Mayor T.R. Carr said. "We were not anticipating this kind of move by Ford.''

He estimated the economic impact on the St. Louis area will be up to $400 million per year.

Vehicles to be dropped are the Ford Escort, Mercury Cougar, Mercury Villager and Lincoln Continental. Ford said it was taking a $4.1 billion one-time charge against earnings to pay for its plan.

The move also includes suspending bonuses for company managers and eliminating 401(k) matching contributions for employees.

In morning trading on the New York Stock Exchange, Ford shares were up 9 cents, at $15.38. The job cuts include 12,000 manufacturing jobs and 3,500 previously announced early retirements for white collar workers.

Ford employs about 345,000 people worldwide. It has 170,000 employees in North America and operates 47 plants there.

"This sort of loss, a $100 million payroll, the ancillary vendors and suppliers that provide services and materials to this plant,'' Edison Mayor George Spadoro said. "There's going to be a domino effect as a result.''

Tony McKinnie, 47, an assembly worker at a plant in Wayne, Mich., said he could understand the decision, given the current economy.

"I don't want to see anybody laid off,'' he said. "I don't want to see plants closed. I want to see plants open, but I have to look at it from the company's perspective as well.''

For Ford, the sweeping restructuring represents a complete change from its position a year ago, when it reported a $6.67 billion profit for 2000. In the third quarter of 2001, Ford lost $692 million and when it releases its fourth quarter financial statement Jan. 17, it is expected to report its third straight losing quarter.

"For most of the last decade the Ford Motor Company was on a roll,'' William Ford said. "The great success we enjoyed may have caused us to underestimate the strength of our competitors.''

"We realize that some of the things that must be done will be painful,'' said Ford, a great-grandson of company founder Henry Ford. "I can't begin to describe how sorry I am about that.''

Ford said he would accept no salary. The automaker was hit hard by a self-inflicted financial wound in 2001 when it launched a $3 billion program to replace 13 million Firestone tires that were not recalled in the original recall that began in August 2000. The move resulted in the severing of Firestone's almost century-old relationship with Ford.

In July, much of Ford's top management was shaken up, and Nick Scheele, the man known for turning around Ford's European operations, took over North American operations. The next month Ford announced it hoped to cut 4,000 to 5,000 salaried positions by offering early retirement and buyout packages.

By October, president and CEO Jacques Nasser was forced to resign and Ford replaced him as CEO. Scheele was elevated to chief operating officer.

Both Scheele and Ford have said the future for Ford is based on "getting back to basics,'' in product development and improvements in quality and productivity.

Ford officials also have blamed high marketing costs related to an incentive price war for its difficult financial position.