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Old 10-21-2005, 05:39   #1 (permalink)
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US:Ford readies downsizing:Job cuts, plant closures coming

Ford readies downsizing

Downsizing: Job cuts, plant closures coming

By Bryce G. Hoffman / The Detroit News





Ford's recovery plan

What's happened?
• Ford's automotive losses are widening, prompting deeper cost cuts.
• The company sold Hertz rental car unit for $5.6 billion to raise cash.
• 2,850 salaried positions have been eliminated.
• 401(k) match and bonuses for salaried employees have been eliminated.
• Ford, Lincoln and Mercury sales divisions have been consolidated
• Ford's supplier base will be reduced to less than 1,250 to help lower purchasing costs.

What's next?
• Ford plans more white-collar and factory job cuts early next year.
• Additional assembly and component plant closings will be unveiled in January
• Ford is seeking a deal with the UAW to cut health care costs.


Bill Ford

Almost exactly four years ago, Bill Ford Jr. took over Ford Motor Co. and promised a painful downsizing of the company founded by his great-grandfather.

On Thursday, as the automaker posted its first quarterly loss since 2003, Bill Ford once again vowed harsh measures to preserve the future of Ford and his own family legacy.

"We need a dramatically different business structure," Chairman and CEO Bill Ford said during a conference with analysts and reporters.

He plans to detail a major restructuring in January to revive Ford's money-losing North American automotive operations.

The automaker plans "significant" plant closures and other cost-cutting moves. Industry analysts say 20,000 or more blue-collar jobs are likely to be cut.

"Our industry is beginning a dramatic restructuring that is sorely needed," Bill Ford said. "And change is often uncomfortable and the consequences will be painful to some."

The sobering news at Ford comes against the backdrop of the growing crisis emerging in Detroit's auto industry. Rival General Motors Corp. reported a $1.6 billion third-quarter loss earlier this week and Delphi Corp. recently filed for Chapter 11 bankruptcy protection.

Ford's third-quarter performance did nothing to bolster confidence in the automaker.

Ford lost $284 million in the quarter, a drop of $550 million from the same period last year. Its struggling North American operations fared even worse, posting a pretax loss of $1.2 billion, compared with a loss of $481 million for the third quarter of 2004. Worldwide, Ford's automotive business reported a pretax loss of $1.3 billion, compared to a loss of $609 million a year ago.

Revenues rose 4.4 percent to $40.9 billion from $39.1 billion.

Rising gasoline prices have decimated the once-lucrative market for sport utility vehicles and trucks, and skyrocketing raw material and health care costs have eroded Ford's profits.

Ford's results would have been even worse if not for a $240 million settlement with Bridgestone Firestone over the infamous 2000 tire recall.

Bill Ford's call to action was expected, but observers were struck by the urgency of his message.

"What this really says is that major surgery is required," said David Cole, chairman of the Center for Automotive Research. "Doing nothing is not an option. It's change or die."

While GM announced additional restructuring moves, Bill Ford said he wanted to give the company's new management team time to develop their own solution -- one that he said will realign the company's manufacturing operations to match current market realties.

Mark Fields, president of Ford's Americas operation, and Anne Stevens, his chief operating officer, will work out the details of restructuring and make recommendations to Bill Ford by December. The restructuring will be announced in January.

"That plan will include significant plant closings," Bill Ford said. But, he added, "this is not a sacrifice that we will ask only the UAW and its membership to bear. There will be sacrifices asked of people throughout our company -- from top to bottom."

Some analysts, like Rod Lache with Deutsche Bank Equity Research, were disappointed Ford didn't reveal more of its plans.

"Ford's North American operating business model continues to deteriorate," Lache said.

Cole said Bill Ford wants to give his new leadership team a chance to help shape the company's turnaround plans.

"Bill Ford's philosophy is that he wants a team at the top of the pyramid," Cole said.

Ford is negotiating with the United Auto Workers to reduce health care costs. The talks have gained momentum with a tentative deal between GM and the union.

"We want to wait for the GM deal to get ratified," Ford said, "so we are not saying a lot."

Unlike GM, which is looking for a strategic partner to take control of its financing arm, Ford said its fiance arm, Ford Credit, remains an important part of its business.

Ford is also trying to respond more quickly to consumer demand for more fuel-efficient vehicles.

"While this shift is something we anticipated, the future arrived faster than we expected because of this year's sharp spike in fuel prices," Ford said.

Ford is marketing two hybrid SUVs and plans additional hybrid car models.

Despite its poor performance, Ford's balance sheet still looks better than GM's. Ford has made $1.9 billion in net income since January. So far, GM has lost $3.8 billion. Ford ended the third quarter with $19.6 billion in cash and $18.2 billion in debt. GM's debt exceeded its cash on hand by more than $13 billion.

"It was a tough quarter -- no question," Ford chief financial officer Don Leclair told The Detroit News in an interview. "But we have a plan to rectify this."

It is a plan whose implementation Bill Ford promised to see through personally.

"We can, and will, dramatically change the structure and the focus of our business. And, lest there be the slightest doubt, I will be in charge of this effort, without any reluctance whatsoever."
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Old 10-21-2005, 05:42   #2 (permalink)
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Re: US:Ford readies downsizing:Job cuts, plant closures coming

Ford restructuring to affect all staff levels

Automaker won't reveal plan until January

BY SARAH A. WEBSTER
DETROIT FREE PRESS BUSINESS WRITER

Ford Motor Co. Chairman and CEO Bill Ford said Thursday that the automaker will not announce its upcoming restructuring until January, despite posting a bigger-than-expected loss today.

Workers at all levels of the company, Ford said, would be affected by the cost-cutting plan, which will include health-care benefit changes and plant closings.

"This is not a sacrifice that we will ask only the UAW and its membership to bear," he said. "There will be sacrifices asked of people throughout our company, from top to bottom."

Ford said the company is in discussions with the UAW regarding health-care benefit changes now. While General Motors Corp.'s tentative agreement with the UAW could serve as a framework for Ford, the details have not yet been reviewed and Ford is waiting to see whether hourly workers ratify the GM deal.

Workers have previously been warned that the company would announce its second restructuring since 2002 by the end of this year.

Ford has already earmarked $700 million for buyouts and other "personnel reduction programs" this year, and Don Leclair, Ford's chief financial officer, said about 60% of that will be spent in the next three months as the automaker continues the process of cutting 2,750 white-collar jobs.

A Ford presentation shown to investors and journalists Thursday shows those cuts will come in North America, Europe and the Premier Automotive Group, which sells luxury brands such as Jaguar, Volvo and Land Rover.

The delay in announcing the restructuring plans means thousands of already eager workers will have to wait through the holidays to learn the fate of their employment and benefit changes.

Bill Ford said the postponement was necessary after he put new executives in charge of the North American operations.

Mark Fields, Ford's new executive vice president in charge of the Americas, and Anne Stevens, the new chief operating officer for the Americas, must have time to "make their own assessment," Ford said.

While Ford Motor is delaying its restructuring announcement, it is still under pressure to correct its course quickly.

The credit-rating agency Standard & Poor's said Thursday that it would keep Ford on review for a possible downgrade in mid-January because of the its poor performance and heightened "concerns about the company's ability to effect a timely turnaround in its critical North American operations."

Such a move would push Ford's credit further into junk, or speculative, status, and it signals the company is more likely to default on its loans. That means Ford would have more difficulty raising money and pay higher interest rates.

Despite the postponement, Bill Ford noted that the company has made incremental restructuring changes.

"It's not like we are just waiting for this puff of white smoke in December, and then we will have the plan," he said.

The automaker, he noted, has reached agreements to bail out parts supplier Visteon Corp. and sell Hertz Corp. for $5.6 billion.

The company also reached a settlement agreement with Bridgestone Firestone North American Tire LLC, in which Ford Motor will be paid $240 million for two tire-replacement programs in 2000 and 2001.

"We've delivered considerable progress over the past several months," Bill Ford said.

Still, Ford Motor reported Thursday that it lost 15 cents a share, or $284 million, during July, August and September.

About $200 million of that was due to the rapid decline in profitable SUV sales in the United States caused by rising gas prices, Leclair told the Free Press in an interview.

Ford said the company anticipated movement away from mid- and full-size SUVs, but not quite as rapidly as it occurred.

"The future arrived faster than we expected because of this year's sharp spike in fuel prices," Ford said.

The Dearborn-based automaker is still profitable for the first nine months of the year -- earning $1.9 billion, down from $3.4 billion a year ago -- and expects to end the year in the black.

But losses in the company's North America car- and truck-making division are mounting. Including special items, Ford posted a pretax loss of $1.5 billion in the United States, Mexico and Canada during the third quarter, bringing year-to-date losses to $2.1 billion.

With GM's North American automaking division posting a comparable pretax loss of $6 billion during the first nine months of the year, it's clear that the domestic auto industry will need to adapt quickly.

"Our industry is beginning a dramatic restructuring which is sorely needed," Ford said. "The consequences will be painful to some."

Ford's quarterly loss was more than the 9 cents per share that Wall Street expected, and it compares to a profit of $266 million during the third quarter a year ago.

However, John Casesa, an auto analyst with the brokerage Merrill Lynch, concluded that Ford's results were "not great, but not too bad."

Here's how some of the company's individual divisions performed in the third quarter:

•Ford Credit: net income of $577 million, down $157 million from the same period a year ago.

•South America: pretax profit of $96 million, up from $59 million a year ago.

•Ford Europe: pretax loss of $55 million, compared to a pretax loss of $33 million a year ago.

•Premier Automotive Group (the Land Rover, Volvo, Aston Martin and Jaguar brands): pretax loss of $108 million, compared with a pretax loss of $171 million a year ago.

•Ford Asia-Pacific, Africa and Mazda: pretax profit of $133 million, compared to a profit of $48 million a year ago.

•The sale of Hertz is expected to close by the end of the year. But for now, the unit contributed $262 million to Ford earnings, up $13 million from the same period a year ago.

Leclair noted that about 6 cents per share of Ford's $284 million in losses this quarter, or $174 million, also was due to special items.

For example, the bailout of Visteon cost Ford 8 cents per share, or $180 million, during the quarter. For the year, Visteon-related charges are expected to cost as much as $625 million this year.

For the full year, Ford still expects to be profitable, earning between $1 to $1.25 per share from continuing operations, excluding special items. Leclair said the results will be on the low end of that range.

He also declined to say when the company's North American operations might be profitable again.
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My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.

My next Ford.....
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Old 10-21-2005, 05:54   #3 (permalink)
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biggrin Re: US:Ford readies downsizing:Job cuts, plant closures coming

GM announced this week that they will be also cutting 25,000 jobs in the U.S.
Holden (Australia's GM brand) has already retrentched (Sacked) thousands of employees and have closed one production line due to their failing sales, they are now offering cars at Employee rates ($1500 profit Net) just to try and sell their cars.
Mitsubishi will move back to Japan if the 380 does not take off here in Australia, and by all accounts they will need someone to help pack their bags as the 380 is going very very slooooooooooooooow.
so it's not all one sided!
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