Sun, Aug 20, 2006 - Page 11 News List

Ford cuts production as drivers shun SUVs

AFP , NEW YORK

Ford pickups are loaded on a transport truck outside Ford's Kansas City Assembly Plant in Claycomo, Missouri, on Friday. The company announced sharp cuts in its North American production that will force it to temporarily shut down plants in the US and Canada as it struggles to boost profits against intense foreign competition.

PHOTO: AP

Struggling auto giant Ford Motor Co said on Friday it was slashing its US vehicle production as it battles to recapture customers who are deserting its gas-guzzling SUVs in favor of Japanese models.

Ford said it would cut its fourth-quarter US output by 21 percent or 168,000 units as it seeks big cost savings, in a move that would reduce its full-year production for this year by 9 percent compared with a year ago.

"We know this decision will have a dramatic impact on our employees, as well as our suppliers," company chief executive Bill Ford said in a statement.

"This is, however, the right call for our customers, our dealers and our long-term future," he said.

The Ford chief told employees in a message that details of additional "actions" will be announced in September.

Ford made the announcement two weeks after revising its loss for the second quarter ended June to US$254 million, more than double its initial estimate. It blamed soaring pension costs for its heavily unionized workforce.

Its share price closed down US$0.17, or 2.08 percent, at US$8.00.

The company is in the midst of an aggressive recovery program which foresees up to 30,000 job cuts and the closure of 14 facilities. It expects the cutbacks to "sharply reduce" the supply of several models while also reducing the pressure on dealers carrying large car and truck inventories.

Some analysts, however, said more changes will likely be required if Ford wants to regain its tread. Others have speculated that Ford might have to offload assets such as British luxury marque Jaguar as it seeks to restore its fortunes.

"Ford's announcement isn't too surprising. It's going to take dramatic changes on a number of fronts for Ford to get back on track," said Terrence Guay, a professor at Penn State University's business school.

Ford has been caught in a bind between rocketing fuel costs and the savvy marketing of more fuel-efficient and hybrid vehicles by its Asian rivals.

Last month, Toyota accelerated past Ford for the first time as the Japanese giant became the second most popular automaker in the US market, behind General Motors.

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