Ford takes axe to 35,000 jobs

FORD today unveiled the largest restructuring plan in decades, including multiple plant closures, a higher-than-expected 35,000 lost jobs, slashed dividends and a mammoth fourth-quarter restructuring charge of $4.1bn (£2.7bn).

The figures appeared to include the 2,300 redundancies already announced at Dagenham, Essex, where car making will end next month. Sources said there would be no further UK cuts, and Europe was singled out as one of the company's bright spots.

Chief executive Bill Ford, who pledged to take all compensation in stock options so he will not get paid unless the company prospers, outlined measures he said would lead to $9bn (£6bn) profit improvement by mid-decade.

'These are strong first steps on a difficult journey' to return Ford to its former glory, he said. Most of the job cuts will come in North America, where three plants will be shut down within 20 months and four low-profitability vehicles phased out. In total, five plants will be closed. The announced job cuts for North America alone - 22,000 - were higher than analysts expected. Ford also said it would cut 13,000 overseas jobs out of a worldwide labour force of 345,000.

Chief Operating Officer Nick Scheele said it would close assembly plants in Edison, New Jersey; Hazelwood, Missouri; and Oakville, Ontario. The Canadian and New Jersey plants build pick-ups, while the Missouri plant builds the Ford Explorer sport utility vehicle. Scheele also said Ford would close two parts plants in Cleveland, Ohio, and Dearborn, Michigan.

In addition, 11 plants will undergo major restructuring, including shift cuts, with production cuts at nine additional plants. Four models - the Ford Escort, the Mercury Cougar, the Mercury Villager and the Lincoln Continental - will be cut from its range.

The company singled out Europe and its premier cars group, which includes Land Rover, Jaguar and Volvo, as bright spots, saying 'Europe is off to a great start' in focusing on three areas key to Ford's restructuring strategy - product development, cost reduction and 'right-sizing of the business'.

The firm promised that it would introduce 10 new products annually in the US by mid-decade and would sell non-core assets. Ford added it would slash its fourth-quarter dividend by 33%, the second dividend cut in four months. The company will report its first annual loss since 1992 when it releases earnings next week.

One key aim of the restructuring plan is to reduce production bloat. Ford will make 1.1m fewer vehicles a year, addressing analysts concerns that the company has been dragged down by overproduction and weak pipeline development - a former Ford strength -that no longer drives the bottom line.

The cost-cutting began last autumn before Bill Ford replaced Jacques Nasser as chief executive, but the extent of the restructuring and the employment blood-letting outlined today far exceeded analysts expectations.

Ford decried what he saw as the loss of brand momentum. 'We strayed from what got us to the top of the mountain, and it cost us greatly,' he said.