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Ford to cut $5 bln in costs, third of salaried staff

Reuters | September 15 2006

Ford Motor Co., the No. 2 U.S. automaker, said on Friday it would cut annual costs by about $5 billion by the end of 2008 and reduce salaried staff by one-third, or 14,000 jobs, as part of an accelerated restructuring.

The automaker said its troubled North American auto operations would not be profitable on a full-year basis before 2009, a year later than first projected.

Ford also said it will suspend its quarterly dividend, further reduce capacity, and ramp up new product introductions.

The new plan, Ford's third restructuring in five years, replaces the initial "Way Forward" plan, which was announced in January and called for cutting up to 30,000 jobs and closing 14 plants by 2012.

Following Ford's $1.4 billion loss in the first half of the year amid declining sales of its high-margin pickup trucks and sports utility vehicles, the automaker promised a more aggressive restructuring.

The company and the United Auto Workers union said Thursday Ford is offering buyout packages to all of its 75,0000 U.S. factory workers.

Ford said the deal would accelerate by four years its previously announced target of cutting up to 30,000 factory workers. It said now the cuts would be completed by 2008.

In another reversal of recent forecasts, Ford also said it expects its U.S. market share to slide to a range of 14 percent to 15 percent from its current share of almost 17 percent.

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