Ford to drop four car models, close factories, cut 35,000 jobs

DEARBORN, Mich. -- With an apology to the employees from Henry Ford's great-grandson, Ford Motor Co. announced Friday it is eliminating 35,000 jobs, closing five plants and dropping four models in an effort to start making money again as the world's second-biggest automaker.

The job cuts include 22,000 in North America, and amount to about 10 percent of Ford's worldwide work force.

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

Ford, the first family member to take day-to-day control of the automaker in 22 years, apologized to employees affected by the plan. "We strayed from what got us to the top of the mountain, and it cost us greatly," he said.

Plants will close in Edison, N.J., and Oakville, Ontario, by 2004; Brook Park, Ohio, near Cleveland, in 2003 or 2004; Hazelwood, Mo., near St. Louis, at an undetermined date; and Vulcan Forge in Dearborn as soon as possible.

The company will stop making Ford Escort, once its best seller, as well as the Mercury Cougar sports car, the Mercury Villager minivan and the Lincoln Continental luxury car.

Workers' views

"That's just 10 years of your life that's gone," said Scott Elmore, 32, an employee at the Hazelwood plant.

Tony McKinnie, 47, an assembly worker at a plant in Wayne, Mich., said he understood the company's decisions, 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."

The cutbacks were prompted by a reversal in Ford's fortunes from a year ago, when the automaker 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 results on Thursday, it is expected to report its third straight losing quarter.

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

The automaker said it is taking a $4.1 billion one-time charge to pay for its plan.

In late afternoon trading on the New York Stock Exchange, Ford was down 13 cents at $15.16.

Ford employs about 345,000 people worldwide, including 170,000 employees and 47 plants in North America.

William Clay Ford Jr. said he will not draw any salary for the next year but will hold onto his stock options. The plan also includes suspending bonuses for managers and eliminating matching 401(k) contributions for employees.

Job elimination

Several thousand of the 35,000 jobs have already been eliminated through voluntary buyouts, early retirements and other moves, said chief operating officer Nick Scheele.

The cuts also include 8,100 employees in Europe, 2,100 in South America, 400 in Asia, and 2,500 in the rest of the world, Scheele said.

The Canadian Auto Workers union threatened a strike to protect the 1,500-worker pickup truck factory in Ontario. "The only weapon workers have in bargaining is our right to withhold our labor," CAW President Buzz Hargrove said.

Auto industry analyst David Healy with Burnham Securities said the restructuring plan goes further than Wall Street anticipated. "I think the news from now will be much better," he said.

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.

Among the doomed models, the Escort was overshadowed by the subcompact Focus, the world's best-selling car. The Cougar, with its cat's-eye headlights and wedge-shaped body, was never a big seller.

The Continental had survived for more than 60 years. In recent years Ford had tried to market the vehicle, which had appeal among the 60-and-up set, to somewhat younger drivers.

The Villager was built under an arrangement with Nissan and at one time was Ford's luxury minivan. Its demise was previously announced.

Ford 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, with Scheele, the man known for turning around Ford's European operations, taking over North American operations. By October, president and chief executive Jacques Nasser was forced to resign.

Other automakers have gone through tough times as well.

General Motors Corp. vice chairman Robert Lutz said this week that GM wants to cut 10 percent of its North American white-collar work force, or about 4,700 people, through attrition and buyouts.

Last January, DaimlerChrysler AG announced it would cut 26,000 jobs, or about one-fifth of the work force of its financially troubled Chrysler Group, over three years. The automaker also said it would idle six plants.