DETROIT -- Ford's hourly work force is shrinking to half its current size, following the announcement yesterday that 38,000 hourly workers have agreed to accept early retirement or buyout packages this year.
That still might not be enough to revive the nation's second-largest automaker, which is contracting in the face of multibillion-dollar losses and fierce competition. Now, say analysts, Ford Motor Co. needs to rekindle interest in its cars and reclaim market share against Asian rivals.
"They've got to learn how to build a product that is acceptable in the market at a good price," said turnaround specialist Jim McTevia of McTevia & Associates in Bingham Farms, Mich. "They've got to build it economically, and they've got to sell it economically."
Ford had expected 25,000 to 30,000 workers to sign up during an open enrollment period that expired Monday. The new reduction figure would amount to nearly 46 percent of the 83,000 unionized employees that Ford had at the start of the year.
That will eventually save about $5 billion a year, but Ford lost $7 billion in the first nine months of the year, and loses money daily. The automaker said yesterday it expects to burn through $17 billion in cash from 2007 to 2009.
On Monday, it said it would mortgage its assets to raise $18 billion in financing to pay for its restructuring.
McTevia said that move and the buyout figures signal that the automaker believes it will be able to operate profitably in the future. Ford has said it expects to return to profitability by 2009.
But McTevia said Ford faces stiff competition from companies on much stronger financial footing.
Ford's share of the domestic market has declined from around 26 percent in the early 1990s to 17.6 percent at the end of October. In July, Ford sold fewer vehicles in the United States than
Pete Hastings, vice president of corporate fixed income at Morgan Keegan in Memphis, Tenn., said the buyout announcement "represents one step among many on a long road" to Ford's turnaround.