Ford Motor Credit to Cut Workforce by 1,200

While parent company Ford Motor Co. repeatedly said it doesn't need financial aid from the United States government, the lending division belonging to the automaker is still struggling to return to profitability and cost-cutting measures seem to be the best way to achieve it. Ford Motor Credit said it will cut around 1,200 jobs (almost 20 percent of its total workforce) in the next few months. Ford Motor Credit Co. reported in late January a net loss of $1.5 billion in 2008, a decrease of $2.3 billion from net income of $775 million a year earlier.

The company says it will restructure US operations to better match the current market demand, with lowered production expected to be announced for Jaguar, Land Rover and Mazda receivables. The restructuring plan will concern servicing, sales and central operations, Ford Motor Credit Co. said in a statement for the press, with this massive job cut to rely on retirements and involuntary separations.

“The drastic and rapid deterioration in the economy, credit markets and auto sales in 2008 brought unprecedented challenges to Ford Motor Credit. The historic decline in used-vehicle auction prices across the industry affected our North American lease portfolio and led to a second quarter impairment,” Chairman and CEO Mike Bannister said. “Tough external challenges are expected in 2009. However, we will continue to manage our business through consistent and sound risk management, lending and servicing practices.”

Ford Credit says the layoffs will begin this month and will last until July, The Detroit News reported today quoting the company's spokeswoman Meredith Libbey. "We have told employees that departures will occur from mid-February to late July," she said without providing other details.