Ford Motor Co. said Monday it plans to close 14 factories in North America by 2012 with the loss of between 25,000 and 30,000 jobs.

But, contrary to expectations, Canada appears to have escaped the brunt of the cuts.

Only two plants will be affected, so far anyway. A major plant in St. Thomas, Ont. that assembles Crown Victoria large sedans will be cut to one shift, affecting about 1,200 of the 2,300 hourly workers.

CEO Bill Ford announces layoffs Monday.
CEO Bill Ford announces layoffs Monday.

And Ford's aging engine-casting plant in Windsor, Ont. will be shut in late 2007, as announced some time ago. About 500 jobs will be affected.

But there was a collective sigh of relief at Windsor's Essex engine-assembly plant. It was not included among the cuts, raising hopes that it will survive. About 730 workers make V-6 engines there.

Ford also appeared to confirm an earlier guarantee that it would maintain 4,000 jobs at the Oakville, Ont. van plant, just outside Toronto.

Bill Osborne, president of Ford of Canada, recently described that plant as "the jewel in the crown of Ford Motor Co.," adding that it would be converted to the new Ford Edge crossover vehicle.

CAW president Buzz Hargrove said Ford's closures amount to "a shocking, painful blow that will shake the foundations of the whole North American auto industry."

He called the St. Thomas move "a very negative and surprising development. The only positive news is that Ford remains committed to the $200-million investment in updating the Crown Victoria and Grand Marquis in St. Thomas."

In a speech Monday morning, Bill Ford, the company's chief executive officer, said the decision to cut jobs and close plants was a painful but necessary "last resort" that was caused, in part, by a slump in SUV sales that came sooner and harder than expected.

Ford has also been hurt by growing health care and materials costs, and low efficiencies at some plants. Ford has almost as many workers as General Motors Corp. but it makes far fewer cars.

A recent study showed that Ford uses only 79 per cent of its capacity, the worst record of any North American auto manufacturer.

These factors helped slash Ford's profit by 42 per cent to $2 billion US in 2005. It made a profit of $3.5 billion US or $1.04 a share the year before. Sales rose slightly, to $178.1 billion, from $171.7 billion.

St. Thomas appears to have escaped the worst of the cuts. Several U.S. cities were not as lucky.

Assembly plants in St. Louis, Atlanta, and Wixom, Mich. will be closed by 2008, as well as the Batavia transmission plant in Ohio.

Ford also plans to reduce its North American white-collar workers by 12 per cent by the end of March, about 4,000 people.

The cuts represent 20 percent to 25 percent of Ford's North American work force of 122,000 people. Ford has approximately 87,000 hourly workers and 35,000 salaried workers in the region.

Ford has around 300,000 employees worldwide.

The restructuring will involve more than cuts, Ford said. "You can't cut your way to success," Ford said.

Instead, Ford is determined to make sweeping changes to the culture of the company and to the product line.

"We will be making painful sacrifices to protect Ford's heritage and secure our future," Ford said. "Going forward, we will be able to deliver more innovative products, better returns for our shareholders and stability in the communities where we operate."

The customer will be the main focus in future, he vowed. "From now on," he said, "our products will be designed to satisfy our customers, not to fill plants."

Workers will be empowered to make their own decisions. Ford will come out with a new people-mover that will be smoother, roomier, and more fuel efficient. And, he said, Ford will lead a major push to hybrid and flex-fuel cars that can run on ethanol, gasoline, electricity or other fuels.

"We must be guided by our long-term goals of building our brands, satisfying customers, developing strong products, accelerating innovation, and, most importantly, producing a sustainable profit from our automotive business," Ford said.

Ford's restructuring plan appeared to win the approval of the shareholders. Ford shares (NYSE:F) rose 48 cents to $8.38 by early afternoon on the New York Stock Exchange on a volume of 46.8 million shares.

Meanwhile, Ford said it earned $124 million US in the fourth quarter, up 19 per cent from the quarterly profit in 2004, thanks to the sale of its Hertz Corp. rental division and improved profits for its luxury brands.

But profit for the year fell 42 per cent to just $2 billion.

Ford said its North American auto operations lost $143 million in the quarter, far better than the loss of $470 million a year ago. That improvement was due to cost reductions and higher selling prices.

The quarter was also pulled up by the sale of the Hertz Corp. rental car division for a profit of $1.4 billion. There was also a pre-tax charge of $1.3 billion to account for the restructuring of the Jaguar and Land Rover divisions and a $962-million charge to account for layoffs and personnel buyouts.

Without these special, one-time items, Ford said it would have made $511 million in the fourth quarter, down slightly from $554 million in the same quarter the year before. Quarterly revenue rose to $47.6 billion for the quarter, from $44.9 billion a year ago.

For the year, Ford's profit fell to $1.04 a share from $3.5 billion or $1.73 per share in 2004. Full-year revenues were $178.1 billion, up from $171.7 billion a year ago. That profit was held down by a $468-million one-time charge to account for the restructuring of the Visteon Corp. parts division.