Struggling Ford Motors Co could be forced to shutter seven more plants and ask its unions for a 20 percent cut to wages and benefits as it faces a financial "meltdown," a respected analyst said on Tuesday.
The recent steep decline in Ford's market share has brought the automaker to the brink of a crisis which could undermine the assumptions in its current restructuring plan, said Sean McAlinden, chief economist at the Center for Automotive Research.
"We're really, really worried about Ford," McAlinden said during a presentation to a group of investment bankers, journalists and human resources managers.
Ford will have to identify at least seven more plants that it will have to close in North America by mid-summer before the current contract expires, he said.
The labor agreement will expire in mid-September.
Ford and the union declined to comment on negotiations.
The world's third-largest automaker lost a record US$12.7 billion last year on plunging sales of pickups and sport-utility vehicles and does not expect to post a profit again until 2009.
The company is in the midst of a massive restructuring plan aimed at shuttering 16 plants and eliminating up to 44,000 jobs in North America.
McAlinden said a 20 percent wage and benefit cut would save Ford between US$1.4 billion and US$2 billion annually and protect the company from running out of cash reserves, he said.
"If Ford's market share falls to 10 or 12 percent by this summer and if they start to burn cash at twice the rate they've planned, something will have to be done," McAlinden said.
The company's market share was hovering 15 percent last month.
Ford believes it has enough money to complete its turnaround plan, spokesman Tom Hoyt said.
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