Ford prepares to lay off thousands
By August Cole, CBS.MarketWatch.com
Last Update: 4:52 PM ET Jan. 7, 2002
DETROIT (CBS.MW) - Ford Motor Co. is preparing a major restructuring to be announced Friday that could lead to as many as 20,000 job cuts, as the second-largest U.S. automaker struggles to turn a profit in 2002 amid declining margins and a weak economy.
Ford President Nick Scheele declined to comment Monday on a report in the Financial Times newspaper that said up to 20,000 jobs will be slashed, though he did say that nation's second-largest automaker needs to match its production capabilities with expected demand for the rest of this year. About 8,000 of the jobs would be white collar and the rest hourly workers, according to the newspaper.
"We'll do what's right, first and last," Scheele said during a briefing in Detroit at the North American International Auto Show.
The restructuring, which is expected to be severe, comes as U.S. auto dealers face a squeeze on profit margins following an unprecedented autumn of steep discounts and deals to sell cars after the Sept. 11 terrorist attacks.
Dearborn, Mich.-based Ford (F: news, chart, profile) is set to report its third consecutive quarter of losses on Jan. 14 as the industry just closed out what looks to have been it's second-best year ever. The company, which is now headed by heir Bill Ford Jr. with Scheele in the No. 2 spot, said Dec. 5 that it expects a 50-cent per-share loss. During the prior quarter, the company lost 28 cents a share.
Ford has yet to formulate its buyer incentive structure for 2002. General Motors (GM: news, chart, profile), which set off the last round of zero-percent financing after Sept. 11, has already said it will offer a $2,002 discount on its new vehicles. Scheele noted that the true cost of such a program is difficult to calculate when each manufacturer has a different portfolio of loans and credit losses.
"Market share is not the only goal. It has to be profitable market share," he said.
Ford shares closed down 44 cents at $16.50.
August Cole is spot news editor at CBS.MarketWatch.com in Chicago |
