Don Leclair, Ford group VP-chief financial officer sent the order via e-mail Nov. 12, a spokesman confirmed. Employees were instructed to end subscriptions by Nov. 30 and seek a refund for any balance. "The company is undergoing extensive cost-cutting efforts," the spokesman said. He estimated savings from the move in the millions of dollars. The automaker's public affairs' staff, which the spokesman estimated holds a couple of hundred subscriptions globally, is exempt.
It's difficult to estimate how many subscriptions would be affected. The company said in January it had 350,000 employees worldwide, including roughly 60,000 at its base in Dearborn, Mich. Employees needed supervisors' approval for company-paid subscriptions, which include Harvard Business Review, Dow Jones & Co.'s The Wall Street Journal, McGraw-Hill's Business Week, Time Inc.'s Fortune and trade magazines such as Crain Communications' Automotive News and Advertising Age.
Jim Watt, chairman of American Business Media and chairman of Watt Publishing, said he was "floored" to learn about Ford's move. "I don't ever recall a major company putting out a memo like that." But he speculated ABM's members would not feel a big impact because he believes many have controlled circulation.
Mr. Leclair said in a prepared statement Nov. 12 Ford had reduced costs by $2.7 billion through the first nine months of 2003 and was on track to reach $3 billion in savings by year's end. That news came as Ford responded to S&P's downgrade of its long-term credit rating to BBB-, one step above junk.
Ford disagreed with S&P's decision. "We are in a solid position with a strong plan in place," Mr. Leclair said. He cited Ford's $48 billion in cash and cash equivalents and a "strong range of products" plus 40 introductions worldwide in the coming year. "We have every reason to believe our financial position will continue to improve."
Ford is trying to bounce back from the massive 2001 loss. It announced improved results last month, reporting a third-quarter net loss of $25 million vs. $326 million from the year-ago period. Worldwide revenue in the last quarter declined to $36.9 billion from $39.3 billion. The results reflect a new accounting standard that reduced third-quarter net income by $264 million.
Last week's order was the result of one of dozens of inside teams studying cost efficiencies, the spokesman stated, who realized that most employees are getting their news online.
Ford's cost-cutting extends to its agencies. Earlier this year, the automaker worked out a deal with WPP Group to negotiate contracts centrally for the first time.