DEARBORN, Michigan, 24 January 2006 — Ford Motor Co. said yesterday it will eliminate 25,000-30,000 jobs and close 14 plants in North America in a bid to staunch crippling losses in its auto operations. The facilities, including seven vehicle assembly plants, will cease production by 2012. Ford said it hoped its hard-hitting plan would restore profitability in North America by 2008 and make cost savings of $6 billion by 2010. Company Chairman and Chief Executive Bill Ford said: “We will be making painful sacrifices to protect Ford’s heritage and secure our future.” Unions called it “Black Monday” for the workers.

Ford has seen its market share and profitability undermined by Asian rivals. “The automotive market in North America is rapidly becoming as crowded and fragmented as other global markets,” Bill Ford said in the statement. “Going forward, we will be able to deliver more innovative products, better returns for our shareholders and stability in the communities where we operate.”

Ford named five assembly factories that will be shut by 2008 — St. Louis (Missouri), Atlanta (Georgia), Wixom (Michigan), Batavia (Ohio), and Windsor (Canada). The other two sites will be named later this year. It said that in addition to the job cuts, salary-related costs were being cut 10 percent in North America with the previously announced reduction of 4,000 white-collar positions. The company said managerial ranks were being reduced by 12 percent by April.

Ford currently has about 120,000 workers in North America.

Ford’s assembly capacity in North America will be reduced by 1.2 million units or 26 percent by the end of 2008. The restructuring comes just four years after Ford cut 35,000 jobs worldwide, and eliminated several struggling brands and one million vehicles of capacity. “We’re going to do what we have to do. It’s just very, very sad,” Bill Ford told Time magazine ahead of the new announcement. But he added: “My goal is to fight Toyota and everyone else and come out on top.”

Ford also reported much better than expected fourth quarter earnings, but a slump in full-year profit. For 2005, Ford’s net earnings slumped 43 percent to $2 billion, the automaker said, down from 3.5 billion in 2004. Much of its fourth quarter profit came from the sale of car rental agency Hertz and Ford’s financial services unit, Ford Credit.

Ford’s struggling North American automotive unit posted a $1.6 billion annual loss, down $3 billion from 2004. Bill Ford told Time that in future there would be greater emphasis on hybrid gasoline-electric engines and other environmental innovations and bolder designs. “The old way of doing things doesn’t work,” Ford told the magazine. “Is (this) risky? Of course it’s risky but I tell you what: Going the way we were going is the highest risk of all.”

Analysts said investors are more worried about whether Ford will ever get its auto operations back to profitability.

Peter Morici, a business professor at the University of Maryland, dismissed Ford’s “Way Forward” plan. “The announcement contains little new or unexpected. It is merely a slick restatement of Bill Ford’s aspirations to do better,” he said.

“The plan lacks a clear statement of how Ford is going to get its labor and design costs in line with its Japanese competitors. Lacking that, Ford will not be able to offer vehicles that are competitive in price, quality and content.” “The near-term savings are not going to be as much as it needs to be,” Brian Ropp, an auto analyst with T. Rowe Price brokerage told AFP.

The savings from job cuts are limited by the automaker’s contract with its main union. Hourly employees who do not take early retirement packages enter the jobs bank retraining program, in which they collect full pay and benefits while waiting for a spot to open up on the assembly line.

Cutting production levels also will not help Ford’s declining market share. In the past 10 years, Ford has seen its share of the US market drop from 26.4 to 17.4 percent, the lowest level since the 1920s. Ford boosted overall sales in the 1990s with sports utility vehicles, but its market share in that segment waned as Japanese rivals introduced smaller, car-based, crossover SUVs.