Ford to slash jobs, close factories
Hopefully the numbers I reported a while back are included in these 30,000.
Ford to slash jobs, close factories: "Monday January 23, 2:59 PM EST
Monday January 23, 2:59 PM EST
By Poornima Gupta
DETROIT (Reuters) - Ford Motor Co. (F) on Monday said it would slash up to 30,000 jobs and shed more than a quarter of its production capacity as it moves to cut costs and stem market share losses, building on a surprising 19 percent gain in fourth-quarter earnings.
Ford's bonds rose and its shares gained 6 percent after quarterly results topped Wall Street expectations on strength at its finance arm and a narrower loss in the crucial North American market.
Ford, which has faced a deepening financial crisis and struggled with a junk bond rating on its debt, said it would shut 14 manufacturing sites, including seven assembly plants, and cut between 25,000 to 30,000 jobs from plant payrolls by 2012.
The announcement follows a similar announcement from Ford's larger rival, General Motors Corp. (GM), which said in November it would cut 30,000 manufacturing jobs and close a dozen plants. Both automakers are struggling with high pension and health care costs and increased Japanese competition.
Ford said its restructuring, which will idle plants in St. Louis, Atlanta, Michigan, Ohio and Canada, would reduce 26 percent of its production capacity by the end of 2008.
Ford also said it would cut material costs by $6 billion in five years, vowing to streamline parts purchasing, even as it rolls out more fuel-efficient hybrid vehicles and small cars to respond to consumer concern over high gas prices.
"We must reduce capacity in North America," Chairman and Chief Executive Bill Ford said. "From now on our products will be designed and built to satisfy customers, not just fill a factory."
Ford projected that its market share would stabilize or improve in 2006, but suspended its practice of providing full-year financial forecasts, saying it wanted to focus investors and staff on its longer-term turnaround effort.
It forecast that its North American operations, which lost $143 million during the fourth quarter, would be profitable again by 2008.
'A STEP FORWARD' OR 'EXTREMELY DISAPPOINTING'?
Analysts were encouraged by Ford's improved fourth-quarter earnings, but more cautious about its restructuring plans, dubbed the "Way Forward."
Brian Johnson, an analyst with Sanford C. Bernstein, called Ford's announcement "a step forward," but said it still left key questions unanswered for investors.
"A lot of people on the Street are looking for more details, not just financial guidance," he said. "Can they defend market share? Can they get early retirements to match the pace of plant closings?"
Another analyst said Ford might have to cut even deeper if it fails to turn around its loss of market share, which slipped to 17 percent as of end-2005.
"With them losing market share the way they have been, they are most certainly going to lose more, so this just will not be enough," said Argus Research analyst Kevin Tynan.
Union leaders, who must negotiate a new contract with the car maker in 2007, called Ford's restructuring "extremely disappointing."
"Certainly today's announcement will only make the 2007 negotiations all the more difficult and all the more important," UAW president Ron Gettelfinger said in a statement.
For the fourth-quarter, losses at Ford's auto operations shrank to $12 million, before taxes and excluding special charges, from $470 million a year ago, while its finance arm contributed a profit of $737 million versus $859 million.
Ford earned 26 cents per share, excluding special items, soundly beating the average analyst expectation of 1 cent a share.
UBS auto analyst Robert Hinchcliffe called that result "much stronger than expected," saying better North American performance and improved results in Europe for the automaker's luxury division had made the difference.
Ford ended 2005 with a market share of 17.4 percent, excluding its luxury brands, the lowest level since the late 1920s.
Dearborn, Michigan-based Ford said total fourth-quarter revenue rose to $47.56 billion from $44.92 billion a year earlier. Automotive revenues jumped to $41.82 billion from $38.87 billion.
Ford reported a pretax gain of $1.08 billion on the sale of Hertz in the fourth-quarter, which was completed in December. The unit was sold to an investor group in a deal valued at about $15 billion, including the assumption of debt.
The company said it would invest $7 billion in plants and equipment in 2006 and end the year with over $20 billion in cash in its core automotive operations.
Shares of Ford rose 48 cents to $8.38 on the New York Stock Exchange, down from earlier high of $8.59. Ford's 7.45-percent bond due 2031 rose 1 cent to 71 cents on the dollar, according to MarketAxess.
(Writing by Kevin Krolicki in Los Angeles, additional reporting by Jui Chakravorty in Detroit)
©2005 Reuters Limited.
Ford to slash jobs, close factories: "Monday January 23, 2:59 PM EST
Monday January 23, 2:59 PM EST
By Poornima Gupta
DETROIT (Reuters) - Ford Motor Co. (F) on Monday said it would slash up to 30,000 jobs and shed more than a quarter of its production capacity as it moves to cut costs and stem market share losses, building on a surprising 19 percent gain in fourth-quarter earnings.
Ford's bonds rose and its shares gained 6 percent after quarterly results topped Wall Street expectations on strength at its finance arm and a narrower loss in the crucial North American market.
Ford, which has faced a deepening financial crisis and struggled with a junk bond rating on its debt, said it would shut 14 manufacturing sites, including seven assembly plants, and cut between 25,000 to 30,000 jobs from plant payrolls by 2012.
The announcement follows a similar announcement from Ford's larger rival, General Motors Corp. (GM), which said in November it would cut 30,000 manufacturing jobs and close a dozen plants. Both automakers are struggling with high pension and health care costs and increased Japanese competition.
Ford said its restructuring, which will idle plants in St. Louis, Atlanta, Michigan, Ohio and Canada, would reduce 26 percent of its production capacity by the end of 2008.
Ford also said it would cut material costs by $6 billion in five years, vowing to streamline parts purchasing, even as it rolls out more fuel-efficient hybrid vehicles and small cars to respond to consumer concern over high gas prices.
"We must reduce capacity in North America," Chairman and Chief Executive Bill Ford said. "From now on our products will be designed and built to satisfy customers, not just fill a factory."
Ford projected that its market share would stabilize or improve in 2006, but suspended its practice of providing full-year financial forecasts, saying it wanted to focus investors and staff on its longer-term turnaround effort.
It forecast that its North American operations, which lost $143 million during the fourth quarter, would be profitable again by 2008.
'A STEP FORWARD' OR 'EXTREMELY DISAPPOINTING'?
Analysts were encouraged by Ford's improved fourth-quarter earnings, but more cautious about its restructuring plans, dubbed the "Way Forward."
Brian Johnson, an analyst with Sanford C. Bernstein, called Ford's announcement "a step forward," but said it still left key questions unanswered for investors.
"A lot of people on the Street are looking for more details, not just financial guidance," he said. "Can they defend market share? Can they get early retirements to match the pace of plant closings?"
Another analyst said Ford might have to cut even deeper if it fails to turn around its loss of market share, which slipped to 17 percent as of end-2005.
"With them losing market share the way they have been, they are most certainly going to lose more, so this just will not be enough," said Argus Research analyst Kevin Tynan.
Union leaders, who must negotiate a new contract with the car maker in 2007, called Ford's restructuring "extremely disappointing."
"Certainly today's announcement will only make the 2007 negotiations all the more difficult and all the more important," UAW president Ron Gettelfinger said in a statement.
For the fourth-quarter, losses at Ford's auto operations shrank to $12 million, before taxes and excluding special charges, from $470 million a year ago, while its finance arm contributed a profit of $737 million versus $859 million.
Ford earned 26 cents per share, excluding special items, soundly beating the average analyst expectation of 1 cent a share.
UBS auto analyst Robert Hinchcliffe called that result "much stronger than expected," saying better North American performance and improved results in Europe for the automaker's luxury division had made the difference.
Ford ended 2005 with a market share of 17.4 percent, excluding its luxury brands, the lowest level since the late 1920s.
Dearborn, Michigan-based Ford said total fourth-quarter revenue rose to $47.56 billion from $44.92 billion a year earlier. Automotive revenues jumped to $41.82 billion from $38.87 billion.
Ford reported a pretax gain of $1.08 billion on the sale of Hertz in the fourth-quarter, which was completed in December. The unit was sold to an investor group in a deal valued at about $15 billion, including the assumption of debt.
The company said it would invest $7 billion in plants and equipment in 2006 and end the year with over $20 billion in cash in its core automotive operations.
Shares of Ford rose 48 cents to $8.38 on the New York Stock Exchange, down from earlier high of $8.59. Ford's 7.45-percent bond due 2031 rose 1 cent to 71 cents on the dollar, according to MarketAxess.
(Writing by Kevin Krolicki in Los Angeles, additional reporting by Jui Chakravorty in Detroit)
©2005 Reuters Limited.
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