Ford Plans Methodical Workforce Cuts

DALLAS – Ford Motor Co. will take a methodical approach as it works to trim 10,000 salaried positions from its North American workforce as part of its ongoing Way Forward restructuring plan, Mark Fields, president-The Americas, says.

The auto maker will avoid the “lawnmower approach,” Fields says, referring to a strategy involving indiscriminate cuts across the board that could lead to the loss of key personnel in critical areas.

“I have done this (downsizing) before when I was at Mazda (Motor Corp.),” Fields says of his stint as president and CEO of the Japanese auto maker, in which Ford holds a controlling stake.

“We have a very specific strategy and set of processes to make sure all of our people know where we’re heading and how the departments will be structured, and we’ll work through this in an intelligent way,” he tells Ward’s in an interview at the Texas State Fair, where Ford recently unveiled its new ’08 F-450 pickup.

Ford officials long have maintained that Way Forward will be a product-driven recovery strategy. As such, the auto maker’s engineering and product-development ranks will be carefully scrutinized as the workforce is trimmed, Fields admits.

“Some areas are relatively lean, but we’re not going to walk away from the overall number that we laid out,” he says. “The bottom line in product development is that we need the absolute best resources to make sure we back up our claim that this is a product-led recovery.”

Mid-level salaried workers are not the only ones who could be facing the chopping block. Key senior executives also have left the auto maker in recent weeks, including Anne Stevens, executive vice president and chief operating officer-The Americas, and David Szczupak, group vice president, manufacturing-The Americas.

Fields says Ford will avoid

Executive cuts are done for now, Fields says, adding that he is pleased with the leadership team currently in place.

“I’m very happy with the team I have right now,” he says. “We have very good depth of people within the organization. As we said, we’re trying to take structure out of the company, and structure is defined as levels between me and entry-level people within the company.”

Ford’s salaried workforce currently is being informed of the options open to them, Fields says. The auto maker hopes the cuts will come courtesy of generous buyout packages or early retirement incentives, but involuntary departures remain an option, if necessary, he says.

The salaried workforce is not the only area Ford has targeted for cuts. The auto maker also has disclosed plans to trim its dealership network, which currently includes some 4,300 Ford and Lincoln-Mercury outlets.

When Ford first announced the plan last month, it was hesitant to say cash buyouts would be offered to dealers willing to close shop. However, executives with close ties to the dealer network now appear to be shifting their stance.

“That seems to be the question of the day,” Al Giombetti, Ford executive vice president and president of Lincoln Mercury, says of the potential for cash payouts to dealers.

“But the idea is to first go and figure out the metropolitan areas, which is where we’re going to be concentrating on. And we’re going to need our dealers’ help for that.”

So far, most dealers are receptive to the plan to trim their ranks, Giombetti says. Ultimately, the plan was designed to optimize dealer profitability by eliminating redundant dealers in certain regions that cannibalize sales from their neighbors.

“I talked to a lot of dealers every day, and dealers as a whole think it’s the right thing to do, probably overdue. But no one ever wants to be the one that says, ‘Hey, I want to go,’” Giombetti tells Ward’s. “So that’s something we’ll work our way through.”

Kevin Collins, president of dealership Bill Collins Ford in Louisville, KY, and vice chairman of the Ford National Dealer Council, is a proponent of cutting back the dealer network.

“Personally, I feel that if Toyota (Motor Corp.) has 1,400 dealers selling an average of 1,200 new vehicles per year, and Ford has 4,000 dealers selling an average of 600 per year, maybe that is a case for a resized dealer distribution system,” Collins says. “Clearly, some large metros have too many dealers for the current and near-future sales share results.”

Ford has yet to formally disclose specific markets targeted for dealership consolidation.

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