Ford falls short of buyout target

Bryce G. Hoffman / The Detroit News

Ford Motor Co. appears to have fallen short of its goals in the latest — and Ford says last — round of company-wide buyouts for hourly workers, according to people familiar with the situation.

CEO Alan Mulally hinted as much during a speech to Wall Street analysts Wednesday morning, but said there are "other levers" the automaker can pull if necessary to further downsize its North American manufacturing base to match declining demand for its cars and trucks.

"We have a lot of different mechanisms to keep right-sizing the place," Mulally said during a speech at the Morgan Stanley Global Automotive Conference in New York. Although Mulally would not discuss what Ford might do to further reduce its U.S. factory work force, a person familiar with the situation told The Detroit News that the company might offer targeted buyouts at certain facilities or to certain categories of employees. That person stressed that Ford has no interest in another round of nationwide buyouts.

Labor expert Gary Chaison, a professor at Clark University in Worcester, Mass., said the automaker would have to sweeten the pot for those buyouts to be effective.

"The idea of targeted buyouts makes some sense," he said. "But they can only offer buyouts so many times."

Ford is also considering cuts in other parts of the company to meet its cost-cutting goals.

The Dearborn automaker had hoped between 8,000 and 10,000 hourly employees would sign up for one of the buyout or early-retirement packages Ford began offering a month ago. As of last week, however, only about 2,000 workers had done so.

Workers had until Tuesday to sign up for the offers. While the final number of takers is not yet available, sources said it was substantially higher than 2,000 but still significantly lower than Ford had targeted.

Analysts also were expecting a much higher number.

Citigroup analyst Itay Michaeli said Tuesday that he hoped more than 11,500 hourly workers would sign up. He said every 1,000 workers that leave the company translates into a nickel for each shareholder.

"Clearly, an acceptance rate below 10,000 would be a net negative for Ford’s earnings outlook and shares," he said.

Ford spokeswoman Marcey Evans said the company is still processing buyout applications.

"We will make an announcement when we have a final number," she said, adding that it is unlikely to occur before next week because of the Easter holiday.

Over the past couple of years, Ford has convinced 32,800 hourly employees to leave through buyout and early-retirement offers. The company still has about 54,000 hourly employees in the United States. Approximately 12,000 are retirement-eligible.

Ford needs to further reduce its factory headcount to match its capacity to declining automobile sales. Mulally said Wednesday that Ford expects U.S. light vehicle sales to total 15.7 million vehicles this year — down from more than 16.1 million in 2007 and nearly 16.6 million in 2006.

Based on January and February sales, the industry is trending at about 15.3 million vehicles on an annualized basis. However, on Tuesday, J.D. Power and Associates cut its annual sales forecast to 14.95 million, the lowest level since 1994.

Mulally said Ford can cope with lower sales as long it continues to make progress on its turnaround goals.

"We have the cash, we have the liquidity," he said. "We just have to absolutely stay on our plan."