Oil price surge forces Ford cutback
US car firm to cut output saying consumers turned off big vehicles by high oil prices.
Published On 23 May 2008
“Unless there is a fairly rapid turnaround in US business conditions, which we are not anticipating, it now looks like it will take longer than expected to achieve our North American Automotive profitability goal,” Alan Mulally, Ford’s president and chief executive, said in a statement.
The shift towards higher production of cars and lighter vehicles will occur in the second half of 2008, the Michigan-based manufacturer said.
Mark Fields, Ford’s president of its Americas operation, said rapidly rising steel prices and higher petrol prices that are pushing consumers away from large trucks and four-wheel-drive vehicles, “are having a tremendous impact on our sales”.
Cost-cutting
Shares in the company fell 8.46 per cent to $7.14 a share following the announcement.
Ford, which has undertaken a huge cost-cutting programme, said it was on track to cut its North American operating costs by about $5bn annually by the end of 2008.
It has bought out the contracts of more than 38,000 union-represented US workers, slashed cut-rate sales to car rental agencies and pushed to unify its global vehicle development in an effort to cut costs and boost margins.
It posted a first-quarter profit of $100m in April, a surprise turnaround after heavy losses.
Ford posted a 2007 full-year net loss of $2.7bn, after a net loss of $12.6bn in 2006.
Source: News Agencies