More cuts loom as Ford plans meeting
DETROIT — In an ideal world, the chief executive officer of Ford Motor Co. should know all the details of a restructuring plan that is critical to the company’s future.
But Ford’s world is far from ideal these days, and as its executives head into Thursday’s board meeting to present what likely will be a deeper round of cuts and faster new product introductions, new CEO Alan Mulally won’t know the plan’s intricacies.
That’s because much of it was drawn up under President of the Americas Mark Fields while Mulally was being wooed away from Boeing Co. during the summer.
Shortly after announcing Mulally’s appointment as president, CEO and a board member last week, now-Executive Chairman Bill Ford said that Mulally will be able to make changes in the plan after it’s presented.
While it’s an odd way to do business, some industry observers say it’s the only way Ford can react.
“They’ve got a crisis over there, and things aren’t going to happen the way they teach you in business school,” said Gerald Meyers, former chairman of American Motors Corp. who now teaches leadership at the University of Michigan.
The company has too much factory space and too many workers for its reduced market share to support.
“Ford has to take certain actions to reduce costs immediately due to the losses they’ve incurred this year,” said Charles Moore, managing director of the Birmingham-based corporate turnaround and restructuring firm of Conway, MacKenzie and Dunleavy. “They can’t wait for the new CEO to get up to speed.”
Ford lost $1.4 billion during the first half of the year and is under pressure from Wall Street to do more to cut costs, increase revenue and perhaps sell off some of its assets.
The cuts, according to some analysts, must go deeper than those announced in the first version of the “Way Forward” restructuring plan unveiled in January. The company said at that time it would cut up to 30,000 jobs and close 14 facilities by 2012. Ford now expects 12,000 workers to leave by the end of this year alone, through attrition as well as buyouts and early retirement packages offered mainly at plants scheduled to be closed.