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Ford to cut managers as outlook weakens further

Ford Motor Co again lowered its earnings outlook for the full year, citing continued weakness with its North American operations, and announced plans to reduce its management ranks by an additional 5 percent.

The nation's second-largest automaker said it now expects to earn US$1 to US$1.25 per share, US$0.25 lower than its previous forecast issued in April, when the company lowered its original guidance of US$1.75 to US$1.95 per share. Ford also said then that it didn't expect to reach its goal of US$7 billion in pre-tax profits by next year.

The company said on Tuesday that the profit outlook for its North American operations had weakened over the last two months, and added that "continued supplier-related challenges" also will affect results.

Ford raised its second-quarter earnings guidance before special items to a range of US$0.30 to US$0.35 a share, up from previous estimates of break-even to a loss of US$0.15 a share.

Analysts appear to have viewed Ford's earlier full-year forecast for earnings of US$1.25 to US$1.50 per share as too optimistic, based on the average estimate of US$1.16 per share carried in a survey by Thomson Financial. The average estimate for the second quarter is US$0.13 per share.

"Although we have increased our earnings guidance for the second quarter, challenges continue to mount, especially in our North America automotive operations," chief financial officer Don Leclair said in a statement.

Ford also said it was taking new steps to reduce costs related to salaried employees this year.

The company will cut salaried positions at its North American operations by 5 percent and reduce the use of agency and purchased services by 10 percent.

The new cuts come atop 1,000 salaried job cuts announced in April.

Ford will also eliminate this year's bonuses for salaried management employees, and suspend a matching grant for salaried employees effective Friday next week.

Ford earned US$1.2 billion in the first quarter, but the company has said it is bracing for tougher times ahead because of lower vehicle production, rising healthcare expenses, decreased demand for some of its profitable trucks and SUVs, and other factors.

Last month, Standard & Poor's Ratings Services (S&P) downgraded Ford's debt, along with General Motors Corp, to below investment grade, or junk status. S&P said the automakers can no longer count on generating enormous profits from their SUV lineups, which could cause a severe blow to profits.
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