Sun, Aug 19, 2001 - Page 11 News List

Ford to cut thousands of jobs

AUTOMAKER After the US manufacturing giant posted its first quarterly loss since 1992 in July, the company seems to have decided to start tightening its belt

BLOOMBERG , DEARBORN, MICHIGAN

Ford Motor Co plans to eliminate as many as 5,000 salaried jobs in North America and said profit won't meet estimates this year, pushing the shares down 7.5 percent.

Ford's actions suggest the industry will decline more after two years of record US vehicle sales. Automotive stocks fell as Standard & Poor's said it may lower credit ratings for Ford and General Motors Corp and analysts downgraded stocks of parts-makers including Lear Corp, a big Ford supplier.

"Everyone was hoping there was a recovery," said Prudential Securities analyst Michael Bruynesteyn, who rates Ford a "hold."

"There's been no pain yet -- the pain is still going to come."

Chief Executive Jacques Nasser is shaking up operations after Ford last month posted its first quarterly loss since 1992, stung by the US$2.1 billion cost to replace Firestone tires it deemed unsafe. A new chief for North America is trying to improve sagging vehicle quality and plant efficiency. Its US sales are down 11 percent this year and overseas-based rivals including Toyota Motor Corp are eroding its market share.

Ford plans a fourth-quarter charge of US$700 million, or 40 cents a share, for the job cuts, three-quarters of which will come through early retirements. It also plans a third-quarter charge of about US$200 million, or 10 cents, mostly from writing down investments in electronic commerce and automotive ventures.

Full-year 2001 earnings will be about US$0.70 a share before the charges, Ford said. That's less than the US$1.20 average analyst estimate in a Thomson Financial/First Call poll. The automaker blamed declining demand and higher sales incentives.

Dearborn, Michigan-based Ford fell US$1.77 to US$21.70 after earlier touching US$21.23, its lowest price in a year. General Motors declined US$3.10 to US$59.47, while Lear, the largest maker of car and truck interiors, fell US$5.09 to US$37.05.

Ford plans to cut 4,000 to 5,000 salaried workers, or 11 percent of the US office workers, by the end of the year. The company expects 75 percent of the workers will retire early and that the rest will take buyouts, spokesman Nick Sharkey said. Ford had 45,822 US salaried workers at the end of last year.

"Five thousand white-collar jobs? That's nothing," said analyst Bruynesteyn, who doesn't own any Ford shares and whose firm doesn't have banking business with the automaker.

"These guys are going to have to cut a lot more before they're done."

Today's actions are part of "a broader, more comprehensive restructuring of our North American operations" that may be announced by year-end, Chief Financial Officer Martin Inglis said on a conference call. "Nothing is off limits. We will make ourselves much more competitive." Ford's market share fell 1.6 percentage points to 23.2 percent so far this year, hurt in part by new truck models at General Motors and Toyota.

The job cuts may save as much as US$300 million a year, Inglis said. He declined to say whether Ford plans actions that would affect union-represented factory workers and said he has no reason to recommend a cut in the company's US$0.30 quarterly dividend.

Federal officials are investigating 203 highway deaths linked to Bridgestone/Firestone Inc tires, most mounted on Explorers, one of Ford's most profitable products. Ford and the tiremaker's owner, Bridgestone Corp, each say the other bears the main responsibility for the problem.

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