Ford to slash up to 12% of salaried jobs

Ford Motor Co. will cut its U.S. salaried work force by between 10 percent and 12 percent in an effort to jump-start a turnaround plan stalling in the face of rising gasoline and raw materials prices. And this time, it won't be voluntary.

That was the sobering message delivered to senior employees in Ford's sales, marketing and service division during a "town hall" meeting with Vice President Jim Farley on Friday morning. He told his team that Ford is struggling to cope with "a structural change to our economy," and said "we need to act fast" to keep the company's restructuring effort from failing.

Farley said the company also is taking a hard look at the merit increases it usually gives salaried employees in July. Other departments are being told to develop similar plans.

CEO Alan Mulally warned that more cuts were coming a week ago when he announced that Ford was abandoning its public commitment to return to profitability in 2009. At that time, Mulally also announced further production cuts that he said were necessary to align Ford's factory output with changing consumer demand.

"Gas prices and changing consumer preferences have killed demand for trucks and SUVs, two high volume and high margin products," said analyst Shelly Lombard of Gimme Credit. "For Ford, the good news is that it's selling lots of its popular cars and crossovers and therefore will be increasing production of models like the Fusion and Lincoln MKX. But it's cutting production of trucks and SUVs so total production for the second quarter will be down 15 percent year-over-year; the third quarter will be down 15 percent to 20 percent, and the fourth quarter will be down 2 percent to 8 percent."