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By Poornima Gupta
DETROIT, May 17 (Reuters) - Ford Motor Co.'s finance arm will slash branches, shift jobs, and add services in an effort to streamline operations, the automaker said on Monday.
Ford Credit, which funds vehicle purchases and leases through Ford dealerships, will pare down its U.S. and Canadian sales operations from 163 to 78 branches, and have them focus on financing all of the company's car brands instead of a few as in the past.
About 30 percent of the 3,100 employees who work at the existing Ford Credit branches and in the regional offices will be asked to relocate or change positions over the next two years as a result of the plan, Ford said.
However, all affected employees will be offered relocation funds if they choose to transfer, and the new organization is expected to have the same number of employees, Ford Credit spokeswoman Melinda Wilson said. No layoffs are planned.
Currently, there are separate branches for each of the automaker's finance brands, such as Jaguar or Ford. But most car dealership groups that work with these credit branches are multi-brand.
"What they are doing is aligning the credit operations a lot more along the lines of dealers," said Peter Glassman, a senior economist with Bank One Corp.
They are trying to have every Ford Credit branch cover every brand, he said. "Not only is it more efficient, they can reduce overhead at the same time."
Ford is in the midst of a multiyear restructuring program that aims to cut costs and boost profits. Regional sales offices of its credit unit will also be combined, resulting in 11 new regions instead of the 18 currently. Sales hours will also be extended.
Ford Credit funds auto purchases through Ford's more than 12,500 dealerships. It finances new, used, and leased vehicles and also offers fleet financing. Its insurance arm offers automobile insurance.
Ford Credit had its best-ever quarter this year, posting net income of $688 million in the first quarter. The company has $179 billion in managed assets and 19,000 employees worldwide.
Though presently an important source of profit for Ford, the credit arm had some problems a few years ago. In December 2001, Ford fired the head of the unit and warned it would place hundreds of millions of dollars in reserve to cover credit losses from bad loans.
The new Ford Credit branches will offer larger, brand-specialized staffs, providing more service to dealers on weekends, and career-advancement opportunities for staff, Ford said.
Ford dealers "wanted increased service and longer hours," Wilson said. "This is responding to their needs."
Ford shares closed down 2.93 percent at $14.27 amid a broad market decline on Monday on the New York Stock Exchange. (Additional reporting by Michael Ellis in Detroit)