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Dearborn business owners unfazed by Ford job cuts

Ian Thibodeau
The Detroit News

Dearborn — The 1,400 salaried jobs to be cut by Ford Motor Co. in North America and Asia didn’t do much to shake the company’s hometown Wednesday, where business owners are more encouraged by the automaker’s plans to revitalize its headquarters and parts of downtown Dearborn.

Ford announced Wednesday it will rely on voluntary early retirement and separation packages to convince 1,400 salaried workers to leave the payroll by Oct. 1. Details will be provided to employees in early June. Hourly production workers are unaffected.

The staff reductions come as the automaker tries to shore up its lackluster stock performance and boost lagging profits.

The official job-cuts number is much less drastic than the potential 20,000 lost jobs reported earlier in the week by some media outlets. Ten percent of roughly 9,600 salaried workers in the U.S., 1,000 in Mexico, 600 in Canada and 4,141 in the Asia Pacific and China region will be offered buyouts. The automaker did not break down how many jobs might be cut in Dearborn, and in Michigan and the U.S.

Ford said the company’s corporate, finance, marketing, sales, service, government affairs, legal, purchasing and communications teams face cutbacks. Four job areas will be spared: product development, Ford Credit, information technology, and global data and analytics. The company has been focused on growing its technology segments as it shifts attention to self-driving cars and so-called mobility areas such as ride-sharing.

Since Mark Fields replaced Alan Mulally as CEO in July 2014, Ford stock prices have dropped about 40 percent. Ford’s first-quarter 2017 profits fell by 35 percent due to rising costs, pricey recalls and a drop in fleet sales. The company expects to make $9 billion this year, down $1.4 billion from 2016, when the industry saw record vehicle sales.

That has led the company to find ways to cut some $3 billion out of its operating costs this year while it continues to invest billions to move the company into new, technology-focused territory. The buyouts were announced less than a week after shareholders and board members grilled Fields and Executive Chairman Bill Ford Jr. about the company’s financial performance.

Ford shares on Wednesday closed down 1.7 percent to $10.76 per share, on a day when stock indexes were down sharply.

Cuts not cause for concern

Though Wall Street largely hasn’t bought into Ford’s plans, Dearborn locals are more encouraged by promised growth than upset by impending cuts.

Ronda Errigo and her husband, John, own Capri Italian Bakery, a popular Dearborn lunch spot less than a mile from Ford’s Glass House.

The cuts aren’t cause for much concern, she and others said. They come amid growth in the city due largely to the Blue Oval.

“We really felt it when they didn’t buy for their meetings,” said Errigo, whose husband’s parents in 1974 opened the bakery that’s popular with both blue-collar and white-collar Ford employees. “Now it’s coming back, little by little.”

That’s the sentiment among many small-business owners in the city where Ford has been headquartered for nearly 114 years. Those who’ve watched Ford ride countless economic waves since the last third of the 20th century aren’t fazed.

The company recently started a 10-year, estimated billion-dollar transformation of its two main campuses in Dearborn. That work is tied to Fields’ push into the capital-devouring fields of electrification, mobility and autonomy. Ford is renovating its footprint to attract technology talent and compete with companies like Google, Apple and Uber.

Those investments, Fields and other Ford leadership have said, will position Ford for the future of the rapidly changing industry.

“We’re very excited that Ford is coming back,” said Errigo.

She plans to adapt to Ford’s changes over the next decade by boosting marketing and product offerings to attract some of the new talent Ford hopes to pull in. “My mother-in-law didn’t have to do that,” Errigo said. “She got by with just the traditional.”

George and Karen Nigosian, owners of Nigosian’s Oriental Rug Co., said that after 41 years on the corner of Michigan and Oakwood, they’re just happy to see Dearborn’s downtown get another chance thanks to the automaker. By next summer, the husband-and-wife shop will sit next door to part of Ford’s ground-up $60 million downtown business development, which will house 600 high-tech employees in new offices and add new retail to the strip.

She says it’s payoff for sticking with the city through all the economic misfires downtown. “All of those tech people and what (Ford is) doing are here, and we’re here,” Karen said.

Growth and innovation

U.S. Rep. Debbie Dingell, the Dearborn Democrat, pledged in a statement Wednesday to create policies that foster business growth.

“Ford Motor Co. is in my backyard,” she said in a statement. “It’s the lifeblood of our community and the men and women who work there are some of the best and hardest-working individuals I know. As I said yesterday, this is about jobs. Every job matters, and we need to ensure we are doing everything we can to ensure a strong manufacturing base and a healthy thriving auto industry that never returns to the times of 2008.”

Industry analysts said the planned job cuts make sense. Ford isn’t cutting products or product teams, which reassures investors and leaves room for innovation and growth.

“While very difficult for the employees themselves, this trimming of the workforce by Ford is unfortunately a necessary evil in an industry that is contracting, even at a very high level, and facing fierce competition from outside forces,” Rebecca Lindland, executive analyst for Kelley Blue Book, said in a note.

“It is important to note that Ford is continuing investments in product development, global analytics and other key growth departments. They’re not cutting into muscle, but instead implementing lean processes and trimming where it’s needed most.”

Morgan Stanley auto analyst Adam Jonas said in a note to investors that he expects “more moves to address cyclical and structural issues facing Ford.”


Twitter: @Ian_Thibodeau