Ford expects changes, buyouts will equal profit in 2009

DETROIT -- That's because Ford continues to push its strategy of matching production with actual consumer demand, "which is new for many automakers," Ford CEO Alan Mulally says. What it means is that if sales fall this year, so will production. In the past, Ford and other automakers tried to push through bad times by continuing to manufacture cars and trucks and encouraging consumers to buy by offering hefty discounts.

"Although our automotive operations are improving on a year-over-year basis, the U.S. economy is slowing, and the outlook for the auto industry remains challenging," Mulally said on a conference call to discuss fourth-quarter results.

Plans for this year include a new round of buyouts, being offered to every one of Ford's 54,000 United Auto Workers-represented employees. That doesn't mean Ford plans to eliminate all its hourly workforce — the automaker knows how many jobs it wants to cut, but won't make that number public.

On Thursday, Ford reported it lost $2.7 billion in 2007, compared with a $12.6 billion loss for 2006.

"While there's significant improvement, the year-ago numbers were so cartoonish, it's hard to put in context," says Kevin Tynan, an analyst at Argus Research.

A big step in reaching the company's 2009 goal will be further cost cutting, including the new buyouts, which should take effect in the second quarter.

There are about 12,000 hourly workers who are eligible to retire. Ford won't say if it wants all those workers to leave, but ushering a substantial number of them out the door would help the bottom line.

That's because the new labor agreement with the UAW allows Ford to hire new workers at much lower wages. Older workers make about $70 an hour, including benefits, but the new class of workers will earn about $40 an hour, with benefits.