Print

Mail

wiki links

Ford announces plan to downsize US operations

"There will be sacrifices asked of people throughout our company, from top to bottom."

William Clay Ford Jr., Ford chairman and CEO

The Ford Motor Co is the latest Detroit giant to stall.

Ford's chairman and chief executive, William Clay Ford Jr., said Thursday that his company will announce a plan for its US operations in January that includes "significant plant closings" and job cuts.

His statement came as Ford reported a US$284 million loss in the third quarter, its first quarterly loss since the final three months of 2003. The company said it lost US$1.49 billion, before taxes, in its North American automotive operations.

"This is not a sacrifice that we will ask only the UAW and its membership to bear," Ford's chairman said of the United Auto Workers union in a teleconference. "There will be sacrifices asked of people throughout our company, from top to bottom, in these very difficult circumstances, and we will reduce structure as well as jobs."

Ford's gloomy news came on the heels of a report on Monday by its cross-town rival, General Motors, that it had lost US$1.6 billion in the third quarter, its largest quarterly loss in more than a decade. Earlier this month, Delphi, GM's former parts subsidiary, filed for bankruptcy protection. And in September, Ford was forced to bail out its ailing former parts division, Visteon, by reclaiming 24 of its plants and facilities.

Both Ford and GM, the only two domestically owned automakers, have been buffeted by high labor costs and the continued defection of us customers to rivals like Toyota. And now, both are seeking major concessions from the UAW on health care costs.

On Thursday, not long after Ford spoke, the UAW's president, Ron Gettelfinger, announced details of the union's tentative agreement with GM to cut health benefits for retirees. Under the deal, GM retirees would for the first time have to pay deductibles, monthly premiums and hospital co-payments, and current workers would have to give up US$1 an hour next year.

GM retirees will still have enviable health benefits, but the concessions are the latest sign that the benefits built up over the last century cannot survive. In an interview on Thursday, Rick Wagoner, GM's chairman and chief executive, said of the agreement, "It's a very important step."

The major debt ratings agencies have cut GM and Ford ratings below investment grade this year, making it more expensive for their financial divisions to raise money. On Thursday, Standard & Poor's said it would keep Ford on a negative credit watch, meaning it could lower Ford's rating deeper into junk bond territory.

"This poor financial performance heightens concerns about the company's ability to effect a timely turnaround in its critical North American operations," the agency said in a statement after Ford's results were released.
This story has been viewed 1767 times.