Ford to cut 25,000 jobs

Ford Motor, the US car manufacturer, will eliminate 25,000 to 30,000 jobs and close 14 plants in North America to try to stem big losses in its operations.

    The US auto giant is scaling down its capacity to cut losses

    The facilities, including seven vehicle assembly plants, will cease production by 2012.
    Ford said on Monday it hoped that its plan would restore profitability in North America by 2008 and save of $6 billion in costs by 2010. 
    Bill Ford, the chairman and chief executive, said: "We will be making painful sacrifices to protect Ford's heritage and secure our future."
    Unions called it "Black Monday" for the workers. 

    Shrinking market share
    Ford's market share and profitability has been undermined by Asian competitors.
    "The automotive market in North America is rapidly becoming as crowded and fragmented as other global markets," Bill Ford said in a statement. 

    The US auto giant has yielded
    ground to Asian rivals

    "Going forward, we will be able to deliver more innovative products, better returns for our shareholders and stability in the communities where we operate."   

    The company named five assembly factories that will be shut by 2008 - St Louis (Missouri), Atlanta (Georgia), Wixom (Michigan), Batavia (Ohio), and Windsor (Canada). The other two sites will be named later this year.
    It said that in addition to the job cuts, salary-related costs were being cut 10% in North America with the previously announced reduction of 4000 white-collar positions.
    The company said managerial ranks were being reduced by 12% by April.
    Ford currently has about 120,000 workers in North America. 
    Its assembly capacity in North America will be reduced by 1.2 million units, or 26%, by the end of 2008. 

    Painful restructuring
    The restructuring comes just four years after Ford cut 35,000 jobs worldwide, and eliminated several struggling brands and a million vehicles of capacity.
    "We're going to do what we have to do. It's just very, very sad," Bill Ford told Time magazine before the latest announcement. But he said: "My goal is to fight Toyota and everyone else and come out on top." 

    Ford also reported much better than expected fourth-quarter earnings, but a slump in full-year profit.
    For 2005, Ford's net earnings fell 43% to $2 billion, the company said, down from $3.5 billion in 2004.
    Much of its fourth-quarter profit came from the sale of Hertz, the car rental agency, and Ford Credit, the financial services unit.
    Ford's struggling North American automotive unit posted a $1.6 billion annual loss, down $3 billion from 2004. 

    "We're going to do what we have to do. It's just very, very sad"

    Bill Ford,
    Ford chairman and chief executive

    Bill Ford told Time that in future there would be greater emphasis on hybrid petrol-electric engines and other environmental innovations and bolder designs.
    "The old way of doing things doesn't work," he told the magazine. "Is [this] risky? Of course it's risky but I tell you what: Going the way we were going is the highest risk of all."

    Sceptical analysts  
    Analysts said investors are more worried about whether Ford will ever get its auto operations back to profitability.
    Peter Morici, a business professor at the University of Maryland, dismissed Ford's "Way Forward" plan.
    "The announcement contains little new or unexpected. It is merely a slick restatement of Bill Ford's aspirations to do better," he said.
    "The plan lacks a clear statement of how Ford is going to get its labour and design costs in line with its Japanese competitors. Lacking that, Ford will not be able to offer vehicles that are competitive in price, quality and content."
    Neither will cutting production levels help Ford's declining market share. Ford's share of the US market has fallen from 26.4% to 17.4% in 10 years, the lowest since the 1920s.



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