By Sholnn Freeman
Washington Post Staff Writer
Saturday, September 16, 2006; D01

Ford Motor Co. yesterday mapped out its future as a leaner automaker focused more on small vehicles and destined for a diminished position in the U.S. market.

In announcing an accelerated turnaround plan, the company said it would cut one-third of its white-collar jobs in addition to offering buyouts to 75,000 hourly workers, and shut down or sell off more plants.

Ford's broad restructuring reflects an industry malaise that was further underscored yesterday by DaimlerChrysler AG's projection that it expects its Chrysler unit to lose $1.52 billion this quarter. Like Ford, General Motors Corp. has undertaken drastic measures to jettison workers and close plants to recover from steep losses.

Ford's financial condition has steadily worsened this year because of higher gasoline prices, escalating raw material costs and a sharp decline in sales of pickup trucks. To return to sound footing, the company is hoping to slash annual operating costs, compared with 2005, by $5 billion by the end of 2008. It will cut 14,000 white-collar positions through early retirements, voluntary separations and "if necessary, involuntary separations," the company said. Most employees will be gone by the end of March, Ford said.

The automaker will also suspend payment of its quarterly stock dividend beginning in the fourth quarter. Ford said it doesn't expect to return to full-year profitability in its North American operations until after 2009.

"The most important thing we can do is size our company and our capacity to the current demand . . . and continue to invest in the cars and trucks that customers really, really want," Alan R. Mulally, Ford's new president and chief executive, said in a news conference yesterday.

Ford will ramp up new model introductions with an emphasis on smaller vehicles in an attempt to bring the truck-focused car giant in line with the changing U.S. market. The small cars will be similar to those Ford already sells in Europe and Asia. Ford also will expand the number of Mustang models.

The company said that 70 percent of Ford, Lincoln and Mercury vehicles by volume will be new or significantly upgraded by the end of 2008. Ford will try to defend its stronghold in pickup trucks while expanding in the growing segment of crossover sport-utility vehicles. It said it would introduce a new crossover based on the Ford Fairlane concept that will replace its poor-selling minivan. The Fairlane will go on sale in 2008. Ford said it would bring out its new pickup truck in 2008, a year before analysts had expected. The vehicle will have engine, design and feature upgrades.

Ford said it expected its U.S. market share to fall to "the low-16 percent range" by the end of the year and to as low as 14 percent in coming years, a level that endangers Ford's position as the No. 2 U.S. automaker. The company controlled a quarter of the U.S. market in the 1990s and was once considered to be within striking distance of claiming the No. 1 slot long held by GM. In July, Ford slipped behind Toyota Motor Co. to become the No. 3 automaker in monthly sales for the first time.

The revised turnaround plan comes just eight months after Chairman William C. Ford Jr. outlined his original "Way Forward" restructuring plan. It called for as many as 30,000 job cuts and closing or idling 14 manufacturing plants. At the time, Ford set a goal of profitability by 2008.

The company added two more plants to its closings list: one in Maumee, Ohio, near Toledo, with 680 workers, and another in Ontario, Canada, with 695 employees. Ford will trim its North American production capacity by 26 percent by the end of 2008, compared with 2005.

Around the country, Ford workers were dreading the announcement. In Norfolk, Ford said it would shut down its pickup truck assembly plant in 2007, a year earlier than previously announced. The company will eliminate one of Norfolk's two shifts in January before the plant closes. Many of the Norfolk workers got the news at home yesterday. Ford has halted production at the plant for five weeks because of weak demand for pickups.

"Everybody is probably pretty well depressed," Chris Kimmons, president of UAW Local 919 which represents the Norfolk workers. "I don't think there is a smile in the place."

Kimmons said the buyout offers negotiated this week were better than nothing. "It's not like they are just kicking them to the curb," he said of the workers. "But everyone would rather have a full-time job and benefits such as they've had since they've been there."

Kimmons said union leaders and state and local officials will have to speed up their plans, too, by pushing up the dates of job fairs and educational programs.

At Ford's Van Dyke transmission plant in Sterling Heights, Mich., a 44-year-old worker said morale in the plant was falling. He said workers were worried, confused and hostile and some felt betrayed by leaders in the UAW for allowing Ford to make the cuts.

The autoworker, who spoke on condition of anonymity because he had not yet decided whether to take a buyout, complained that workers had too little information. He said they were being given only a month to make a life-changing decision: choosing to stay on at Ford or take a buyout. "We feel hung out to dry. We are in limbo," he said. "People have homes to sell or other jobs to look for and we're still operating on hearsay."

Ford will speed up its goal to eliminate 25,000 to 30,000 manufacturing workers by four years, to 2008. On Wednesday, the United Auto Workers outlined an agreement with Ford for buyout packages for blue-collar workers that will range from $35,000 to $140,000. Ford said most of those workers will be out of jobs by the end of September 2007. The automaker said it would sell or close its auto-parts plants, which will result in additional employee cuts.

Wall Street wasn't impressed by the accelerated turnaround plan. Ford's shares sank 11.8 percent, to close at $8.02.

John Murphy, an analyst at Merrill Lynch, said in research note yesterday that the details of Ford's accelerated plan fell "below expectations." He said the company didn't address its large losses at Jaguar or possible asset sales. Murphy did not believe the company's production introductions were accelerated enough and said the capacity cuts fell short. The plan is "missing a lot," he wrote.