DETROIT With the U.S. auto market worsening for Ford Motor Co. almost daily, managers have told union officials that the company will have to further reduce its factory work force in the coming months.
The slumping U.S. economy has cut U.S. auto sales by 8 percent during the first five months of the year, but it's been a double hit on Ford, General Motors Corp. and Chrysler LLC as consumers shun their high-profit pickup trucks and sport utility vehicles for more fuel-efficient models as they cope with $4 per gallon gasoline.
United Auto Workers union officials were told in a meeting Friday that Ford needs to make additional cost cuts "so that we can make the vehicles in an efficient way that customers are buying," said Ford spokeswoman Anne Marie Gattari.
At the meeting, attended by about 300 executives, plant managers and union officials from across the U.S., Ford reiterated previous statements that it would make buyout and early retirement offers at targeted factories as it tries to further pare its payroll.
Gattari said Ford is still trying to determine which factories would get the offers, but prefers to use them over more dramatic steps such as closing factories.
"We have a lot of cost-cutting elements that we can work on together," Gattari said. "We're looking at doing those kinds of things before we do anything more drastic that no one wants to do."
Ford announced in May that it would cut production of trucks and SUVs, but increase factory output of cars and crossovers through additional shifts and overtime and the realignment of some of its manufacturing capacity. The company also said it plans to accelerate the North American introduction of some of its small cars from Europe and South America, although it didn't reveal which vehicles.
Industry analysts have said Ford simply has too many factories making trucks for a market that even the automakers say has permanently shifted to vehicles that get better gas mileage. Many are operating with only one shift, which is inefficient, analysts have said.
Also in May, Ford announced it will further cut its salaried work force.
"We have to do the same thing in our manufacturing operation," Gattari said Friday.
During the past three years, Ford has cut its hourly work force by about 40,000 in the U.S. and Canada, she said.
Earlier this year, Ford had announced corporate-wide buyout and early retirement offers for U.S. hourly workers, but only 4,200 took the offers, about half of what the company wanted.
Ford now is hoping more workers will take the buyouts.
"We need the help of our local union leadership to help make that happen," Gattari said.
The company has about 54,000 hourly workers represented by the United Auto Workers union.
The market deterioration and possibility of plant closures could make workers rethink the offers.
Ford says it will cut production and retool some factories to align itself with the rapidly changing consumer demand. Details of its plans are expected in July.
The company announced May 22 that it was cutting North American production for the rest of this year and no longer expects to return to profitability by 2009. Ford sales fell 16 percent in May compared with the same month last year and were down 11 percent for the first five months of the year.
Although Ford made $100 million in the first quarter, it lost $15.3 billion during the previous two years and had to mortgage its assets to stay afloat.