Ford reported a $1.2 billion third-quarter loss in its core North American division and warned it would begin another overhaul in January...
WASHINGTON — Ford reported a $1.2 billion third-quarter loss in its core North American division and warned it would begin another overhaul in January with “top-to-bottom” job cuts and “significant” plant closings.
Ford’s announcement comes days after General Motors (GM) announced its own restructuring plans. The carmakers’ troubles have tipped the nation’s biggest auto-parts supplier into bankruptcy and put pressure on unionized workers to deliver concessions.
Responding to a sustained slide in market share, the auto companies are undertaking two of the largest overhauls in years. GM and Ford aim to be smaller, lower-cost producers with fewer plants and fewer workers.
William Clay Ford Jr., Ford’s chairman and chief executive, said the changes gripping the industry are painful but necessary.
Most Read Stories
- Friends honor artist’s last wishes with water ballet in a Seattle kiddie pool WATCH
- Experts answer your burning questions about the 2017 solar eclipse
- Sorrow at the Space Needle: Dinner at one of Seattle’s most expensive restaurants VIEW
- Pilots, check your bearings: Boeing Field catches up with Earth’s magnetic field
- NY Times' editorial page editor: No apology for Sarah Palin
“In the most open market in the world, the landscape is constantly changing,” Ford said. “Our industry is beginning a dramatic restructuring, which is sorely needed.”
Executives at Ford and GM said the collapse of the market for large sport-utility vehicles has hastened the pace of the overhaul.
William Ford said yesterday the future arrived faster than the automaker had anticipated because of the sharp rise in fuel prices. He said the company is tackling cost-cutting with a “renewed sense of urgency” and that restructuring plans would be outlined in January.
William Ford said the automaker is already talking with the United Auto Workers to match the union’s recent agreement with GM, but he wouldn’t give details about how much the company could save or when an agreement could be ratified.
“This is not a sacrifice we will ask only the UAW and its members to share. There will be sacrifices throughout the company, top to bottom,” William Ford said in a conference call with investors and media.
Ford shares fell 5 cents to close at $8.42 yesterday.
GM and Ford have steadily lost market share in the United States because of escalating global competition. They are stuck with high overhead costs from too many plants and too many workers for the number of cars they sell, analysts say.
Ford’s condition isn’t as bad as at GM, which has lost money in each quarter this year, the analysts said. Including its latest quarterly results, Ford has earned $1.87 billion this year. It reiterated its forecast for a profitable year.
In 1990, GM, Ford and Chrysler (now a division of Germany’s DaimlerChrysler) together represented 74 percent of the U.S. market, according to J.D. Power and Associates.
So far this year, the automakers have 58 percent of the market. That loss of 16 percentage points is roughly equivalent to 2.7 million vehicles, or the annual output of 18 North American vehicle-assembly plants.
Ford has many key products in the flagging SUV category and has been described as the industry’s North American truck company. It benefited from the SUV boom because of its strength in trucks.
Ford became a pioneer in the category by using truck frames as the basis of its large SUVs. Ford makes the Expedition and Explorer SUVs and the F series pickup trucks.
Over the years, the models have come under fire from safety advocates because they were more prone to roll over and to squash smaller cars in crashes.
As gas prices have risen, consumers have been racing to trade in large SUVs for cars and for smaller SUVs that are engineered and assembled more like cars than trucks.
William Ford said the company has high hopes for the Ford Fusion, a new midsize car that is competing with the Toyota Camry and Honda Accord, two of the best-selling vehicles in the country.
Ford said today’s buyers are increasingly turning to cars and gasoline-electric hybrids. Last month, Ford pledged to increase hybrid output by 250,000 by 2010, up from about 25,000 planned for this year.
“The days of unlimited inexpensive gas are over, and we are planning our product line accordingly,” Ford said.
Ford has two hybrid models on the market, the Ford Escape and Mercury Mariner, two small SUVs. Ford’s worldwide automotive operations lost $1.3 billion in the third quarter, reflecting losses in its European division and at Ford’s luxury brands, which include Volvo, Land Rover, Jaguar and Aston Martin.
Those losses were partially offset by a profit of $900 million at Ford’s credit arm.
Companywide, Ford reported a $284 million after-tax loss, or 15 cents a share, in the quarter.
William Ford’s comments on union health-care deal provided by The Associated Press.