Ford Ready to Reduce Plant Capacity In Sales Decline
New York, Oct. 22 (Bloomberg) -- Ford Motor Co. is prepared to reduce plant capacity to help return to annual profit in the event sales ``begin to fall off the table,'' Chief Executive Officer William Clay Ford Jr. told investors.
Bill Ford didn't specify the size of a decline that he said would prompt the world's second-largest automaker to ``respond in a capacity manner'' beyond five plants scheduled to close by 2005. The company regularly studies ``what further actions'' would be needed ``at various lower levels'' of industry sales, Chief Financial Officer Allan Gilmour said in a meeting in New York.
The company is trying to reassure investors its plans to restore profit are gaining ground after a $5.45 billion loss last year prompted the automaker to announce a plan to close plants, cut jobs and introduce new models by 2005. Bill Ford said yesterday he plans to eliminate another $1 billion in costs beyond $9 billion in cuts as part of the January plan.
Ford has fewer new models than rival automakers such as Toyota Motor Corp. and General Motors Corp., making the company's financial results ``much more vulnerable'' to lower industry sales, said IRN Inc. analyst Mike Wall, whose company forecasts vehicle plans for suppliers. Any industrywide decline ``would be magnified to some extent'' at Ford, Wall said.
Shares of Dearborn, Michigan-based Ford rose 7 cents to $9.62 at 3:12 p.m. in New York Stock Exchange composite trading. The stock has declined 39 percent this year.
The automaker regularly examines potential responses to sales declines and adjusts production to sales, spokesman David Reuter said after the meeting. The company has said it doesn't expect to reduce jobs beyond the 35,000 already announced, which include 12,000 positions eliminated last year.