Ford Motor Co. will cut an additional 10,000 salaried jobs in North America and close a Windsor, Ont., engine plant next year as part of a restructuring plan aimed at saving the troubled automaker.

In an announcement before markets opened Friday morning, Ford said it would close the Essex engine plant in Windsor, where 730 workers make V-6 engines, in 2007.

Ford lost $1.4 billion US in the first six months of this year.
(Ed Reinke/Associated Press)

It also said it would go ahead with previously announced plans to close a casting plant in Windsor next year, affecting 500 workers, and confirmed that it would cut the St. Thomas, Ont., plant to one shift.

But Ford had some good news for Ontario workers. It plans to move production of the Lincoln Town Car from the Wixom plant in Michigan to St. Thomas, where the Lincoln will be built beside its venerable Crown Victoria.

About 2,300 people now work at St. Thomas on an hourly basis.

Ford three-month trading

Ford will also add production at its plant in Oakville, Ont., which employs about 3,600. The company said that plant will produce an all-new full-sized crossover, based on the Ford Fairlane concept. The seven-passenger vehicle will go on sale in 2008.

Shareholders did not appear pleased with the announcement. Ford's share price fell $1.07, or 11.8 per cent, to close at $8.02 US on the New York Stock Exchange.

Job cuts moved up four years

The company has already announced plans to cut 25,000 to 30,000 hourly jobs and 4,000 salaried jobs across the continent by the end of 2012. On Friday, it said that schedule has now been moved ahead by four years.

Friday's announcement brings Ford's total number of white-collar job cuts to 14,000, or one-third of its salaried workforce in North America.

Ford has 87,000 hourly and 35,000 salaried workers across North America.

Reductions to Ford's U.S. workforce will be made through early retirements, voluntary separations, buyouts and, "if necessary, involuntary separations," the company said.

Ford did not specify how many of its 11,000 union jobs would be lost in Canada or how many would be offered buyouts. Those numbers will be announced by mid-October.

These cuts are designed to reduce the company's operating budget by $5 billion US a year by the end of 2008. Even with these cuts, Ford does not expect to make a profit in North America until 2009, one year later than expected.

"Rapid shifts in consumer demand that affect our product mix and continued high prices for commodities mean we must continue working quickly and decisively to fix our business," chairman Bill Ford said in an announcement Friday.

'Clearly needed,' new CEO says

Alan Mulally, who succeeded Bill Ford as the automaker's chief executive officer last week, added that the cuts "are clearly needed to ensure the ultimate turnaround of the business in Ford's biggest and most important market."

Company officials have scheduled a news conference for later Friday.

The announcement followed board meetings on Wednesday and Thursday to discuss the cost-cutting plan, which was first outlined in January.

Called "The Way Forward," the plan called for up to 30,000 job cuts and the closure of 14 plants by 2012.

The Detroit News reported Thursday that Ford could post a pre-tax loss of $8 billion US to $9 billion US this year, much worse than analysts had expected.

Ford lost $1.4 billion US in the first six months of the year.

The newspaper cited a leaked Sept. 6 internal report prepared by Ford's chief financial officer.

Town Car extends life of plant

Canadian Auto Workers president Buzz Hargrove said Friday the closure of the Essex engine plant would be "devastating," but he was "incredibly relieved" that St. Thomas will get the Lincoln Town Car because it almost guarantees the plant will stay open through about 2011.

"Ford wouldn't put the money in, and the transfer of the machinery and equipment it'll take to build the Town Car in St. Thomas, if their plan was to close that facility," he told the Canadian Press.

The Lincoln Town Car is built on the same chassis as the Crown Victoria and the Mercury Marquis.

The addition of the new line also raises capacity "into the ballpark of where you can sustain two shifts," he said.

He was clearly disappointed to hear that the Essex V-6 plant will close because it has consistently been Ford's best engine plant.

But Joseph D'Cruz, a management professor at the University of Toronto said the Canadian operations "have come off relatively well.

"They've got a new mandate in Oakville and they've got the Lincoln coming into St. Thomas. So the only place that is hit is the engine plant in Essex," he said.