The plans, dubbed the Way Forward, were announced by William Clay Ford Jr., the company’s chairman and CEO and grandson of company founder — Henry Ford.
Ford hopes the plans will reverse losses in the North American auto operations and return the division to profitability by 2008.
“We will be making painful sacrifices to protect Ford’s heritage and secure our future,” Ford said in a statement.
The cuts represent nearly a quarter of Ford’s North American workforce of 122,000 people. Ford also said it was reducing the company’s salaried workers by 12 percent by the end of the first quarter. The company has 87,000 hourly workers and 35,000 salaried workers.
The company did not release a complete list of plant closings, but plants that are expected to be idled through 2008 include assembly plants in St. Louis, Atlanta and Wixom, Mich., as well as plants in Batavia, Ohio, and Windsor, Ontario Canada. Two more assembly plants are expected to be added to the list of plants to be idled by the end of the year, according to the Associated Press.
This is the second time in four years that Ford has restructured its North American auto division. Analysts criticized the first plan as too tepid. Under that plan, the company closed five plants and cut 35,000 jobs, but the cuts failed to turn the operations around.
Wall Street’s response to Monday’s announcement was more positive. Ford shares rose, 60 cents, or 7.6 percent, to $8.50 in midday trading on the New York Stock Exchange.
Response in communities where cuts are planned were not as upbeat. Alan Hallman, mayor of Hapeville, Ga., described the news as “a setback for the state.” He said the Atlanta assembly plant accounts for 9 percent of his city’s budget.
Although Ford Motor Co. has reported a profit for three straight years. Gains in Europe and Asia were offset by a loss of $1.6 billion in North American operations. Ford’s U.S. operations have been hurt by decreased sales of sport utility vehicles, increased health care and materials costs, increased competition and labor contracts that limit plant closures and job cuts.
Mark Fields, Ford’s executive vice president, described the Way Forward plan as an effort to retake the American marketplace by focusing on the consumer, changing the company’s conservative business culture and adopting a “change or die” mentality.