Flailing Ford to Slash $6bn in Costs, Axe 30,000 Jobs

25 January 2006

Shock aplenty - but few surprises - in the Ford Motor Company's long-awaited restructuring plan.

Relegated to global number three position by Toyota, which overtook GM as the world's largest carmaker at the end of 2005, Ford is to shutter seven north American production units over the next six years. Along the way, it will also shed 30,000 jobs - nearly a quarter of its regional workforce.

The massive retrenchment plan is euphemistically titled The Way Forward by its begetter Mark Fields, Ford's president of the Americas, and former executive vp of the company's European and Premier Automotive Group units.

The plan's objective is to revitalize Ford's culture, streamlining the bureaucracy that chairman/ceo Bill Ford blames for producing too many vehicles appealing to too few customers.

Admits Fields: "We've grown too conservative, too hierarchical and too resistant to change." Ford, he warned, must adopt "a change-or-die mentality [emulating] a smaller, more agile company".

Despite this self-chastisement, Ford reported better than expected Q4 net income of $124 million (€101.0m; £69.5m), up year-on-year from $104m a year before.

Even so, the north American division haemorrhaged $1.2bn before tax and special items in 2005, down from a pre-tax profit of $1.6bn in 2004.

Data sourced from Financial Times Online; additional content by WARC staff