Ford Motor Co. (F) may wring a few more millions in costs from its annual operations by controlling what has been a chronic money waster for the U.S. auto makers - absenteeism.

The auto maker said Wednesday its next generation Ford Focus small car will be profitable when they begin rolling out of a converted Michigan truck plant next year.

Ford Chief Executive Alan Mulally credited much of the Focus's future profitability to the new round of concessions it forged with the United Auto Workers in February.

Those concessions are also allowing the auto maker to close some of its attendance loopholes by changing the rules on overtime and ending the practice of paying cash for unused vacation.

"We can save up to $60 million with every one percent improvement in absenteeism," Ford manufacturing chief Joe Hinrichs said adding Ford's absenteeism rate was 7.6% four years ago. "In the past there were opportunities for abuse by those that wanted to work the system. That has changed."

The Dearborn, Mich.-based auto maker needs all the financial savings it can get if it hopes to weather one of the worst vehicle sales downturn in 25 years and avoid taking financial aid from the federal government. Ford posted a first-quarter loss of $1.4 billion.

Under the changes, hourly employees are now paid overtime after 40 hours of work instead of at the end of eight hour shifts. A worker can no longer cash in his unused vacation time for pay at the end of the year.

"Let's say you stayed up late watching a championship game one night and decided the next day to call in sick," Hinrichs said. "You always knew you could get paid for that day just by cashing in one of your vacation days later. Not any more."

UAW Vice President Bob King said the membership had no problem backing the changes. Ford had been introducing different plans to fight absenteeism at different plants for the past couple of years. Now it's one plan for everyone.

"Someone else has to pick up the load when a person isn't there," King said. "There is a definite negative impact on the product when people aren't there."

Controlling absenteeism will also play a crucial role as Ford looks to shift to more team manufacturing in all of its plants similar to Toyota Motor Co.'s (TM) U.S. plants. Teams work on manufacturing problems together, thereby boosting efficiency.

"Absenteeism is a serious problem because of the costs associated with keeping extra people to fill those slots and the impact on efficiency," said Ron Harbour, who produces an annual report on auto manufacturing for consultant Oliver Wyman. "If you have a team leader and he is busy covering for the absent employee then he spends all his time on the line rather than working to improve the operations."

General Motors Corp. (GM) is working on similar cost-cutting deals with the UAW. Chrysler LLC was able to secure an attendance policy that results in firing if a worker misses or arrives late for the start of a shift. Discharge occurs after seven offenses.

-By Jeff Bennett, Dow Jones Newswires; 248-204-5542; jeff.bennett@dowjones.com

(Wall Street Journal reporter Matthew Dolan contributed to this story)