Layoffs hit salaried Ford workers, who anxiously await fate

Ian Thibodeau
The Detroit News
The first of 500 U.S. Ford Motor Co. salaried employees are expected to be notified in meetings Tuesday that they're being let go.

Ford Motor Co.’s final round of salaried layoffs hit Dearborn on Tuesday, leaving some employees distracted and others anxiously waiting for the months-long cost-cutting initiative to be over.

But one of the automaker's Wall Street critics who's engaged in several barbed exchanges with CEO Jim Hackett suggested the carnage could continue well past the cut of 7,000 white-collar job cuts to be completed around the world by August. Other investment analysts were more optimistic.

Ford could "require more than a further 23,000 salaried headcount reduction," especially if the company makes no other moves to cut costs, Morgan Stanley's Adam Jonas wrote in a note to investors. Ford officials pushed back against Jonas' suggestion, saying the automaker would cut $25.5 billion in operational costs over the next few years by trimming operational costs in addition to the job cuts. 

"We have been very clear that we are in final stages of a reorganization of our salaried workforce," Ford spokesman Brad Carroll said in a statement. "At the same time, we are working across the company in many other ways to reduce costs and become more fit. As we have said, this is not simply a restructuring or cost-cutting plan, it’s a complete redesign of our business now and in the future."

Last year, Jonas said Ford would have to cut at least 20,000 jobs to hit the profit targets outlined by its executives. Based on Hackett's note to employees Monday saying the 7,000-person headcount reduction would net the company savings of $600 million annually, Jonas estimated that the automaker would need to cut even more jobs, especially if global revenue slides. 

In a note, Bank of America Merrill Lynch analyst John Murphy appeared to disagree. He wrote that the final phase of Hackett's turnaround gives "credence" to the slower approach for which he was criticized — most openly by Morgan Stanley's Jonas. 

"Ford has made a number of one-off announcements on various restructuring actions, which are starting to add up," Murphy wrote. "In our view, Ford's workforce reduction announcement ... illustrates that the company's ongoing efforts are very much concrete, and should start to be better appreciated by the investment community. Ford's 'Tough' days are starting to fade into the rearview."

Meantime, the first of 500 U.S. salaried employees were notified in meetings with their direct supervisors Tuesday that they're being let go as part of the final phase of Ford's white-collar job cuts. Several Ford employees at various ranks within the company told The Detroit News that many were anxious and waiting to hear their fate from supervisors.

One employee who works in Ford's Product Development Center in Dearborn, one of the largest Ford offices, said individuals were called into meetings with supervisors, which at times was distracting. Groups were called into private rooms typically to be told they were "safe," that employee said.

The Ford employees who spoke to The News asked that their names not be published for fear of retribution.

In an email Monday, Hackett told employees that Ford was nearing the end of its months-long bout of white-collar layoffs that would eliminate roughly 10% of the automaker's global salaried workforce. When the U.S. layoffs wrap by June, Ford will have cut around 800 jobs in addition to 1,500 buyouts that occurred late last year, or around 7% of its U.S. salaried workforce. 

Ford’s operations in Dearborn were quiet Tuesday morning as parking lots filled with employees. Hackett told employees that some 500 job cuts would take place in the U.S. this week. The actions took place in various segments of the company, including Ford Credit, and in offices in Ford's Product Development Center and other buildings. Most of the 500 job cuts were expected to be completed Tuesday, one source with knowledge of the situation said. 

People posting anonymously on an online forum for layoffs wrote that meetings were held in several segments of the company throughout the day. Six other Dearborn-based Ford employees who spoke to The News during their lunch break expressed fear, saying they are relying on media coverage for insight. Workers said there is no indication when layoffs would be announced this week, but expected them toward the end of each day through Thursday.

The workers wore Ford identification badges, but chose not to give their names fearing retribution since they were unsure of their future employment status, they told The News. Many other employees declined to comment, some said they were not affected, and others said it wasn’t an appropriate time to speak.

Restaurant workers at popular lunch spots in Dearborn said they saw fewer Ford employees on Tuesday. One group of men wearing Ford badges told The News they did not work for Ford.

A 30-year veteran said he’s not only nervous to lose his job, but also to leave friends behind. He said regardless of his own job, he’s trying to stay strong for his family, colleagues that have grown to be his family, his neighbors and church members who all work salaried jobs in Dearborn.

The worker, who wouldn’t disclose which department he worked for, said the department was thriving and hiring in the last few months but employees are now carrying loads of anxiety saying it could be anyone.

The layoffs come months after General Motors Co. cut 15% of its global salaried workforce. Both sets of layoffs are largely a result of a slowing auto market and looming economic recession. Ford's layoffs are part of a $25.5 billion pool of cost cuts expected to roll out over the next few years.

Hackett said in his note to employees that the salaried cuts were entering a final phase this week with 500 to be eliminated. About 100 more in information technology and human resources will lose their jobs by the end of June.

A strong economy could offer a softer landing for Ford employees affected by the layoffs, an assessment GM also made amid its own salaried restructuring and plan to idle five plants in the United States and Canada.

David Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, expects those let go from Ford this week won't go without jobs for long — should they want a new one. Unlike the layoffs of a decade ago amid the Great Recession, Ford's latest round of cutbacks aim to prune management levels, enabling quicker ascension through executive ranks and quicker decision-making.

"They're not going to go on welfare," Cole said. "They're going to find a job fairly quickly. Other companies need the people that Ford is going to be letting go."

Staff writers Sarah Rahal and Nora Naughton contributed.

Twitter: @Ian_Thibodeau