Massive Layoffs At Ford?

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Ford Motor Co.'s massive restructuring program to be announced this week could include thousands of job cuts, analysts who follow the nation's second biggest carmaker say.

Ford officials wouldn't comment on whether the plan will include job cuts, but said it is aimed at increasing manufacturing flexibility while reducing capacity and renewing focus on quality products.

"We can't cost-cut our way out of it," said chairman and CEO William Clay Ford Jr. during a media event Sunday at the North American International Auto Show. "The turnaround will be driven by great products."

Some analysts have predicted that up to 20,000 jobs will be eliminated to help the company become profitable again.

"It should be relatively dramatic, and I would say if I had to ballpark on the high end, I'd say 20,000. I think 15,000-20,000 is where it should be," Kevin Tynan, an auto analyst with Argus Research in New York, said Monday. "Where it winds up is another story altogether."

The automaker said last month that it expected to report a loss of 50 cents per share for the last three months of 2001. Analysts had been expecting a loss of 14 cents a share for the quarter, and some said the company's loan policies led to trouble. The final fourth-quarter financial report is due next week.

Last week, Ford reported its U.S. vehicles sales dropped 6 percent in 2001.

Ford - like the rest of the industry - has excess manufacturing capacity, said Jim Padilla, group vice president of North American operations.

But that doesn't mean the No. 2 automaker will cut product programs to save money in the short term, Nick Scheele, Ford chief operating officer, said in an interview.

Scheele said the restructuring would look at more flexibility in manufacturing to make better use of assembly plants. Plants could be made adaptable to build more than one type of product, or be retooled quickly to build more popular products.

"You have to `right-size' for capacity and build what you sell," Scheele said. "Right-sizing" is generally a code word for cutbacks.

Ford executives are expected to announce the company's restructuring plan to a gathering of analysts and reporters Friday, following the monthly meeting of the board of directors.

Scheele said whatever is announced then would be only phase one of the restructuring.

"I think 2002 is going to be a difficult year as well for profitability for Ford," analyst Tynan said. "The question is how much of the demand is going to be fueled by incentives. Is it going to be a continuation of what happened at the end of 2001?"

To revive flagging U.S. sales in the wake of the Sept. 11 attacks, automakers began offering zero-percent financing - a costly measure that could erode earnings.

In the past six months, Ford has already undertaken several cost- cutting measures, including cutting 4,000-5,000 white collar positions, mainly through voluntary buyouts and early retirements.

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