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In a filing with the Securities and Exchange Commission that surfaced yesterday, Ford estimated that it the accelerated restructuring plan announced last September will cost $11.2 billion when the books are finally balanced. In other words, it will cost Ford$11.2 billion to let go of 38,000 hourly and 10,000 salaried workers. The estimate includes ongoing costs for health care for any workers that didn't take the lump-sum buyout. Who knew it was that expensive to reduce your workforce?

If there is any good news here, it's that Ford has already accounted for $10 billion of that cost in 2006. The rest of the associated costs of the restructuring plan will be billed to the first quarter of 2007. Nothing like pulling the Band-Aid off quickly.

[Source: Automotive News - sub. req'd]



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  • 38 Comments
      • 8 Years Ago
      Dearborn Observer,
      it is OK to desire the latest, but be realistic.

      Ford has Hybrids now and more coming. Check.
      Ford is first with clean Diesel here. Check.
      Ford is a leader in bio-fuels. Check
      Ford is has Hydrogen running today on fleets of buses. Check
      Ford has more 6-speed transmissions than anyone. Check
      Ford leads in emissions reduction technology, while licensing it to Toyota, and Ford has more PZEV vehicle choices than anyone else. Check

      In addition, here is what Ford has advertised recently:

      Ford has fuel cell cars running all over the place as it prepares that technology.

      Ford has plug-in Hybrids in the works.

      Ford will be DI across their lineup soon, along with GTDI. People still want power, and the idea of an efficient, direct-injected Ethanol fuel powered by dual-turbo's - instead of Hemi's is a serious benefit. Awesome.

      This is all just powertrain, which I happen to know a little about. But Ford is serious about innovation and the world will soon see just how serious.

      Ford will be following nobody, and will in fact lead. Name me corporation that has all that going for it. You can't.

      • 8 Years Ago
      To the Ford management;

      I'm suprized the buy out cost is that low. That means you have about $12 bils. to spend on Product development. Given the fact that you just got rid of a third of your engineering assets, and for the last few years when I was in Product Planning the primary reason new products could not make it through was engineering containability, how are you going to proceed with your new product development effort?

      I'm sorry,I forgot, silly goose that I am, you still have marketing and finance staffs to engineer new products.
      • 8 Years Ago
      ToddMN you have some good points. However we could add also the devaluation of the yen compared to the dollar and the tariffs to import a US, Australian or European car (I talk of mainstream cars like Renault, Citroen and Fiat not the luxury cars like BMW and Mercedes) in Japan

      And who knows? Maybe Japan might face the same music as the Big 3 from Hyundai or China or India.
      • 8 Years Ago
      Greek boy,

      Your may or may not be correct with respect to R&D spending, but that isn't the problem.

      The problem is getting new technologies through Ford's formal Program Approval system. Once the Finance guys say "our analysis says we cant afford it", and the Marketing guys say "jeeezz, this is different from what we have done before, we don't know how to sell it". Then they both think "if I sign up to this technology and it fails, I WON'T GET PROMOTED", there is zero chance.

      The hybrid Escape program was a notable exception, but remained a battle royal to get into production even after formal approval.

      Until Ford starts promoting senior mamagers with technological vision and leadership, versus their political savy, Ford's implementation of new technologies will continue to lag its competitors.

      • 8 Years Ago
      g00fba11:
      about keeping the "brain" in us.. it is also cheaper to use eastern engineers. Not only are they brighter, there are lots of them. In China alone, each year they train 100x the amount US trains. And they are dirt cheap.. less than 500 US$ for project leaders.. it is even better to outsource development.. as you don't have to transport cars..
      • 8 Years Ago
      Big Rocket, thanks for English lesson, but this is not the 1940's, post-Pearl Harbour. How many take offense to being called Jap anymore? I am Greek, and my friends call me the Greek. I suppose I could be small about it, and take offense, but why.

      Jap is just easier to type and so that's what I will type.

      far jr
      • 8 Years Ago
      Let me just clarify further. I do not want Ford to fail nor people to loose thier livelyhood. I want Mullaly to do with Ford what he did at Boeing.

      They were struggling against Airbus because they kept re-hashing the same jetliners with slight modifications and calling them the "new and improved" version. They are now doing much better because they chose to revolutionize the commercial aircraft with the 787...Major steps forward for Boeing and the commercial aircraft industry.

      That is what American auto manufacturers need to do as well.
      • 8 Years Ago
      Poor company management, big labor, and an activist government made this disaster. I don't know if Ford will come out of this. The company doesn't have a Taurus to save it like it did in the 1980s. The big truck market is deflating almost as fast as classic muscle car values. The Fusion is a good small car, but the Edge doesn't help Ford's poor mileage ratings. Ford is still stuck on the big pickup and SUV. I, along with the public, would recommend killing off the Lincoln-Mercury division, but that would only cost Ford more money. Ford could make billions selling Volvo, Mazda, Land Rover, and Jaguar, but it wouldn't be left with many good products. (The Fusion and Mustang aren't enough.)
      far jr
      • 8 Years Ago
      Dearborn... of course that is not what I want.

      I do however feel that America's auto industy has not upheld traditional roots of Americans designing and producing the best, most inovative, and reliable products that they possibly could. They allowed marketing to take over rather than the engineers.

      Sorry but aerospace, defense, electronics, and many other engineering fields have evolved much more rapidly than the automotive industry. We should have had econmical fuel cells or other efficient power sources long ago. How about automated control systems (like Mercedes and Japanese brands). There is very little "cutting edge" technology coming from the American auto industry.

      Yes American consumers can be resistant change, but let the marketing people persuade us to buy a better product not slight variations of Henry Ford's model-T from 100 years ago!
      • 8 Years Ago
      "This nation is losing it's sovereignty and the younger people better snap out of it."

      I'd just like to point out that as far as the auto industry is concerned, the young people inherited that mess. It wasn't their doing.

      The big 3:

      The unions squeezed them, the bean counters squeezed them, and management was arrogant and ignored the sleeping giant in Japan. Haven't been able to recover since. It's amazing and sad how half a century of dominating the market can be squandered away.
      • 8 Years Ago
      iQuack wrote (13) "... Chrysler is a disappointment with mediocre cars that aren't nearly as good as buyers expected considering its Mercedes parent.

      Chrysler has done as much to harm Mercedes as Mercedes has helped Chrysler. And who needs the latest Mitsubishi-engineered, boring cars in Chrysler drag (Caliber, Compass, Sebring, etc.)? ..."

      By what logic do you absolve Mercedes in the debacle that is the Chrysler Group? Mercedes-Benz's German administrators are not the victims here. They run the company. DaimlerChrysler's good moves and its bad moves were approved by its German leadership. If you want to credit them with the Crossfire, 300C, and Jeep Liberty, then you have to blame them for the Caliber, Compass, and Sebring.
      • 8 Years Ago
      "Chrysler is a disappointment with mediocre cars that aren't nearly as good as buyers expected considering its Mercedes parent.

      Chrysler has done as much to harm Mercedes as Mercedes has helped Chrysler. And who needs the latest Mitsubishi-engineered, boring cars in Chrysler drag (Caliber, Compass, Sebring, etc.)"

      Mercedes has cut back and run Chrysler into the ground. If Chrysler had BILLIONS of dollars stored away before Daimler came around and now NOTHING? Chrysler was forced to use old MB parts, Chrysler was forced to use the Mitsu platform, and Chrysler is forced to cut corners on every single thing they build because of the Germans not wanting to spend more then they have to. Please don't give me that load of garbage that Chrysler screwed up Mercedes, it's the other way around.
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