Updated from 9:27 a.m. EST
rolled out a broad restructuring program Friday morning under which it will close five plants and take a $4.1 billion charge.
The company also set plans to slash its worldwide workforce by 35,000 jobs, or about 10%. In addition, Ford cut its dividend for the second time in a year, reducing its quarterly payout to 10 cents from 15 cents in the preceding quarter and 30 cents in the third quarter. The moves come as Ford seeks to reduce cash consumption amid a recession.
The company said at a press conference that the moves would allow it to slash billions of dollars from its cost structure by the middle of the decade, boosting profits even as sales fall. The No. 2 carmaker will cut its annual capacity to 4.8 million vehicles from 5.7 million. The restructuring program is designed to generate a $9 billion profit improvement by the middle of the decade. The company expects to have lost money for 2001, the first time Ford will have posted a full-year loss since 1992.
The plants Ford is closing are located in Michigan, Missouri, New Jersey, Ohio and Canada. Eleven other plants will undergo major downsizing, the company said. The job cuts will cover about 22,000 workers in North America. Ford also plans to eliminate four low-margin vehicles in the next few years.
In addition to the charge Ford will record, the company plans to sell noncore assets for close to $1 billion. The automaker also plans to raise additional funds with equity offerings. Last month, Ford filed a shelf registration with the Securities and Exchange Commission covering around $10 billion in debt and equity securities.
Only a few years ago Ford was widely viewed as the best-managed of the Big Three car companies, owing to the success of its wildly profitable sport utility vehicles. But a dispute with
over the safety of those SUVs and their tires began to deflate the automaker last year, and a slowing economy started playing havoc with profit margins last summer.
In the aftermath of Sept. 11, Ford has lost ground to rival
, which grabbed headlines by offering zero-percent financing to keep cars moving off dealers' lots. Ford appeared indecisive before deciding to match the costly offers, which boost sales at the expense of profits, something none of the Detroit automakers can easily afford considering their massive overhead and declining favor among American consumers.
After trading lower earlier in the session, shares of Ford reversed course to gain 33 cents, or 2.2%, at $15.62.