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Automaker says it is on track in plan to earn $2 billion in '04

BY JAMIE BUTTERS
FREE PRESS BUSINESS WRITER

Ford Motor Co. eliminated 7,000 hourly, salaried and contract positions in 2003 in North America, the company said Friday.

Chief Financial Officer Don Leclair said he expects the company to meet its goal of cutting 35,000 jobs worldwide by the end of the year or early 2005. That objective was defined in a sweeping revitalization plan Ford executives outlined during the North American International Auto Show two years ago.

Like the Chrysler Group and General Motors Corp., which have also shed tens of thousands of jobs in the last three years, Ford is turning its attention to cutting the cost of making models like the F-150 and perfectly launching new models, like the Five Hundred sedan and Freestyle crossover vehicle it unveiled at this year's show.

"In North America, in particular, the shift from our cost phase to the product phase is going to be very apparent," Chairman and Chief Executive Officer Bill Ford told Wall Street experts in a presentation of this year's financial goals at the company's headquarters in Dearborn.

Executives said the company expects to earn $1.85 billion to $2.04 billion this year.

That would be at least a doubling of profits from 2003's net income, which is to be announced Jan. 22, and steady progress from losses of $5.5 billion in 2001 and almost $1 billion in 2002.

But it would still be just a fraction of the company's industry-leading profits of the late-1990s, and no better than Wall Street experts were predicting.

Shares of the Dearborn automaker fell 50 cents, or 2.9 percent, on Friday to $16.60.

Ford said it expects an operating profit of $1.20 to $1.30 a share. The consensus among analysts who advise investors was that Ford will earn $1.30 a share.

Including $300 million in charges, mostly related to the ongoing restructuring of Ford of Europe, the Dearborn automaker expects a net profit of about $2 billion.

Smaller is better
The gist of Ford executives' argument is that the automaker has become a better company, even as it has gotten smaller.

Losses will narrow for the Ford brand in Europe to less than half a billion dollars, while the European luxury brands that lost $1 billion in 2002 and earned a small profit in 2003 will earn at least half a billion.

In North America, the company is no longer stuffing rental-car lots with unprofitable Taurus sedans. It canceled four unprofitable models. It is improving quality and customer satisfaction with its remaining, more-profitable business.

The reason Ford has struggled so much -- and will not see major progress for another year and a half -- is that the current generation of cars and trucks, such as the 2004 F-150 and the 2005 Mustang, were conceived under former CEO Jacque Nasser's leadership with the belief that vehicle prices would be higher across the board, said Leclair.

Instead, prices have tumbled relative to the utility, power and gizmos customers now get.

"Our forecasting ability is not that good -- it's not perfect," said Nick Scheele, Ford's chief operating officer. "What our resolve is, is to deliver the bottom line -- and we'll get there."

For now, the company is working hard to cut costs on newly launched models, such as redesigning the structure behind the F-150 bumpers to save $75 dollars per truck or $50 million per year. But by the 2006 model year, Ford is to introduce vehicles designed for the industry's current brutal pricing environment, he said, without singling out the Futura sedan, which is based on the Mazda6.

Shrinking job picture
Although the most recent economic downturn did not involve the massive layoffs and plant shutdowns common to previous recessions, the combination of slower sales and tougher competition from foreign automakers has eliminated thousands of jobs, mostly through attrition -- positions that are never filled after workers retire or resign.

Chrysler cut 5,000 jobs last year, for a total of 35,000 since it announced a turnaround plan three years ago.

GM has shed more than 17,000 white-collar jobs in North America over the last three years, though it expects that rate to slow considerably this year. And it winnowed its hourly ranks by about 6,000 last year.

Ford's plan calls for cutting a total of 35,000 jobs, including some eliminated during 2001 in Europe, as well as 12,500 hourly jobs, 5,000 salaried positions and 1,500 contractors in North America.

Ford did not specify how many jobs have been eliminated from each category, or exactly how many are to be cut this year.

In the coming months, Ford plans to close its pickup plants in Edison, N.J., and Oakville, Ontario, and to eliminate one shift at its sport-utility vehicle plant in St. Louis. Those moves will likely eliminate about 3,000 positions at those plants, as workers retire or relocate.

Some targeted buyouts may be offered, but no widespread programs are planned, Leclair said.
 
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