Ford to Slash Salaried Expenses 15%

Ford Motor Co. says it will cut salaried-workforce expenses 15% in the wake of escalating gasoline prices and soaring commodity costs that have undermined the auto maker’s turnaround effort.

Ford spokeswoman Marcey Evans says employees learned of the reduction plans via an internal email sent yesterday from Mark Fields, president-The Americas.

Contrary to some media reports, the plans call for a 15% cost reduction, not a 15% cut in Ford’s overall salaried workforce, Evans says.

“It will include cuts in full-time salaried employees but also contract employees, attrition and the consolidation of open positions,” Evans tells Ward’s.

Unlike Ford’s past workforce-reduction initiatives, the coming round of layoffs will be involuntary.

The cuts come in the wake of Ford’s announcement last month that it would miss its goal to return to profitability by 2009 due to consumers’ dramatic shift away from large trucks and SUVs.

In a related move, Ford tells its salaried workforce it will delay merit raises and cut some benefits.

“As part of yesterday’s announcement from Fields, the merit increase payments scheduled for July 1 have been delayed until Oct. 1,” Evans says, adding Ford’s U.S. salaried tuition and dependent-scholarship program also have been suspended.

Additionally, Ford says it is deferring previously offered jobs to some 100 college graduates and is offering them $5,000 payouts as compensation for their inconvenience.

“There are some instances where we unfortunately had to defer starting dates for some hires, not in every case, but in some cases we’ve had to do that,” Evans says.

The deferments are “indefinite” at this point, as new starting dates for the new hires have yet to be determined, she says, adding new hires will continue in some “very specialized areas.”

The salaried-job cuts are expected to be completed by Aug. 1. Those leaving the company will receive severance payments based on their years of service, Evans says.

Since the end of 2005, Ford has cut its salaried workforce by 11,000 positions as the auto maker sought to return to profitability in North America by 2009.

Today, Ford has approximately 24,000 workers in the U.S., Canada and Mexico.

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