Ford Motor Company will today announce plans for mass job cuts as part of an overhaul designed to drag the struggling car manufacturer back to profitability.
Estimates on the number of employees who will lose their jobs range from 10,000 to 20,000, including executives and factory floor workers.
The cost of the restructuring is said to be in the region of $4bn (£2.8bn).
According to reports from Detroit, at least three assembly plants in North America, including one at Edison in New Jersey, have been identified as candidates for closure with production hours likely to be scaled back at others. The company recently said it had the capacity to build 1.9m more vehicles than it can sell.
The cutbacks in production will have a deep knock-on effect among the company's suppliers and outside contractors. It is not yet clear if the impact will be felt directly in Britain and other parts of Europe.
Shares in the world's second largest car manufacturer were around 6% lower in early trade, at close to five-year lows.
Ford is on course to report a loss of some $2bn for 2001, its first deficit in almost a decade as competition from European and Asian manufacturers intensifies.
Investors are concerned that any corrective action at Ford to get the company back on its feet will be hampered by the powerful United Auto Workers union. Existing contracts mean there can be no plant closures or enforced redundancies until September 2003.
Investment bank UBS Warburg yesterday cut its recommendation on Ford from "hold" to "reduce". Analyst Saul Rubin said he expects the cuts to be the first in a long process which will ultimately account for 25,000 to 30,000 staff - around 25% of the workforce. But he added: "We fail to see how such a move can be made in one go, given the power of the UAW. The whole restructuring will have to be phased in stages over a lengthy period of time."
The restructuring is being led by chief executive William Clay Ford Jr, a member of the founding family who was brought in to restore the company's fortunes. He replaced Jacques Nasser in October last year.
Non-core parts of the business are expected to be put up for sale to raise cash, possibly including the Kwik Fit retail business in Britain.
Sales of cars and trucks reached record levels in the final three months of the year, but at a steep cost. Fears that the September 11 terrorist attacks would have a detrimental effect on sales prompted 0% finance deals that damaged margins. There is also concern that the post- September bubble will eat into sales during 2002.
DaimlerChrysler said on Tuesday that it, too, was suffering in the tough economic conditions, and admitted that it would be difficult for the car manufacturer to meet its operating profit targets this year.
But there were more positive noises yesterday coming from General Motors, the largest car maker in the world. The company said that it will report fourth-quarter results next week that will exceed Wall Street expectations.
As part of a continuing programme, GM is cutting 4,700 jobs this year.
A spokeswoman for Ford declined to comment.
