Ford Sees $11.18 Billion Cost for Restructuring
Ford Motor estimates that its restructuring plan, dubbed "Way Forward," will cost the
automaker a total of $11.18 billion, with most of that going to programs to lay off employees.
The No. 2 U.S. automaker said in a Securities and Exchange Commission filing that it had already accrued $9.98 billion of the restructuring costs in 2006. The balance, primarily related to salaried job cuts, would be spent in the first quarter, Ford said.
Ford , which lost $12.7 billion last year, is closing 14 North American plants and cutting 37,000 union workers and 14,000 salaried workers in the region as part of a plan to return to profit by 2009.
The restructuring costs include $5.96 billion on worker reduction programs, another $2.74 billion on pension-related charges, $2.2 billion for fixed-asset impairment charges and $281 million associated with plant idlings. Ford said it also expects a curtailment gain for other post-retirement employee benefit obligations related to hourly job cuts occurring in 2007.
Separately, Ford said in its annual report that it is subject of a lawsuit that alleges the company failed "to prudently and loyally manage funds held in employee savings plans."
The lawsuit also says Ford violated fiduciary duties owed to plan participants by continuing to offer Ford stock as an investment option in the savings plans.
Ford, denying wrongdoing, said it intends "to defend the matter vigorously." The automaker also said in its annual report that it spent $3.1 billion in health care in 2006 for U.S. employees, retirees, and their dependents, including $1.8 billion in retiree health care costs. Ford expects its health care costs to continue to increase this year.
Ford's overall U.S. sales slipped 13 percent in December and 8% for 2006, partly because of lower demand for its best-selling F-Series pickup trucks. By Ford's own estimate, its North American unit will lose money until 2009 and run through $17 billion cash in the next three years.