By Justin Hyde
DETROIT, Sept 30 (Reuters) - Ford Motor Co. will cut about 1,500 contract workers and eliminate 1,300 open salaried jobs as part of a plan to slash costs by the end of the year, the company told workers on Tuesday.
The move came the same day the United Auto Workers announced it had ratified new contracts with Ford and Visteon Corp. that lets Ford close four plants employing nearly 4,600 people over the next four years.
The cuts are part of Ford's drive to maintain its profit forecasts despite worse-than-expected effects from Detroit's price wars. The world's second-largest automaker had already been forced to raise its cost-cutting target for this year to $2.5 billion just to hit its earnings estimate of 70 cents a share, or roughly $1.3 billion.
Through June, Ford had cut $1.9 billion, mostly through reducing the cost of building current models and lowering its estimates for future warranty repairs. In July, it announced it would cut salaried worker costs 10 percent by the end of year, through every method possible, including job cuts.
"It's a little hard to tell whether (the cuts) are part of Ford's original turnaround program or whether they're turning up the heat because they need to cut faster," said Burham Securities analyst David Healy. "It's probably a little of both."
Ford spokesman Oscar Suris said the contract worker and open job cuts were announced Tuesday in an e-mail to employees from Jim Padilla, head of Ford's North American automotive operations. A company source said another 50 salaried employees would also likely be cut.
Ford has about 79,000 salaried employees worldwide, with about 45,000 in North America. In addition to the North American cuts, Ford's German arm is offering buyouts to 700 salaried workers and 1,000 hourly workers.
UAW DEAL
The new UAW contracts cover more than 72,000 workers at Ford and more than 21,000 workers at Visteon, as well as more than 77,000 retirees and 24,000 surviving spouses.
The contracts follow the economic terms set in the UAW's contract with DaimlerChrysler AG's Chrysler arm, giving hourly workers a $3,000 signing bonus, a performance bonus in the second year, a 2 percent raise in the third year and a 3 percent raise in the fourth year.
The deals also pave the way for Ford to close two assembly plants in Ohio and New Jersey, and two parts plants in Michigan and Ohio. Ford also has the option of closing or selling a third parts plant.
Workers in the affected plants will "retain full job income and security protections," including a right to transfer to open jobs in other Ford plants, the union said in a statement.
The UAW said the deal requires Ford to give first preference on new business to Visteon, which has struggled since its spin-off from Ford in 2000, and to send enough work to Visteon to support UAW members there.
In return, Visteon won the right to pay new hires at a lower rate than under previous union contracts. Wages for Visteon UAW workers typically run about $25 a hour, while many U.S. parts suppliers pay roughly $16 a hour for unionized workers, with workers in Mexico paid far less.
The UAW did not disclose what percentage of its members voted to approve the deals.