Ford Motor Credit Co. said Thursday it expected to cut 20 percent, or about 1,200 employees, of its workforce. The reduction was partly due to a decline in sales at Ford Motor Co., but the move was also attributed to the sale of several brands previously owned by its parent company.
The move will impact 275 employees at the company’s central staff in Dearborn, Mich. A Ford Motor Credit official said the company’s finance arm began transitioning the financial segments of the business to new providers after the sale of Jaguar and Land Rover to India’s Tata Motors.
Ford’s sales dropped 20.1 percent in 2008. The automaker said it lost $5.9 billion in the fourth quarter and went through $5.5 billion in cash. Its captive finance company reported a net loss of $1.5 billion in 2008, a decrease of $2.3 billion from a net income of $775 million a year earlier.
Ford Motor Credit also said it realized a fourth quarter loss of $228 million, a decline of $414 million from a profit of $186 million a year earlier. Company officials attributed the losses to higher provisions for credit losses, high net losses related to market valuation adjustments to derivatives, lower volume and lower financing margin.
“The drastic and rapid deterioration in the economy, credit markets and auto sales in 2008 brought unprecedented challenges to Ford Motor Credit. The historical decline in used-vehicle prices across the industry affected our North American lease portfolio and led to a second quarter impairment,” said Mike Bannister, Chairman and CEO of Ford Motor Credit. “Tough external challenges are expected in 2009. However, we will continue to manage our business through consistent and sound risk management, and lending servicing practices.
The restructuring of its U.S. operations will allow the captive finance company to meet changing business conditions, including lower auto sales, and the planned reduction of receivables from Jaguar, Land Rover, and Mazda, and to maintain a competitive cost structure. The job cuts will affect servicing, sales and central operation, and will occur throughout this year through attrition, retirements and involuntary separations.