Struggling Ford Motor Co. has managed to substantially trim its losses but will have to make more cuts in the face of a slowing US economy, the automaker said Thursday.
“Although our automotive operations are improving on a year-over-year basis, the US economy is slowing and the outlook for the auto industry remains challenging,” said Alan Mulally, the company's president and chief executive officer.
“To help ensure we are able to deliver our commitments despite the difficult external environment, we will be taking further cost reduction actions in North America.”
Those cost reductions include offering a new round of buyouts to union workers, cutting the salaried workforce, trimming operating costs, and continuing to “adjust production to the changing business environment.”
Ford also plans to accelerate the introduction of new products to help stimulate flagging demand, but warned that its US market share could continue to slip to the “low-end” of 14 to 15 percent from 14.8 percent in 2007.
Ford, which lost the number two spot in its home market for the first time since 1931 to Japan's Toyota Motor Co. last year, reported a fourth-quarter net loss of 2.8 billion dollars.
For the full year, the loss amounted to 2.7 billion. That came after a record loss of 12.6 billion dollars in 2006 for the struggling automaker.
The quarterly loss was in line with analyst forecasts, translating to a deficit of 20 cents per share. Ford closed down 0.63 percent at 6.26 dollars.
Revenue totaled 44.1 billion dollars for the quarter, up from a year-ago total of 40.3 billion.
Ford's 2007 revenue, excluding special items, was 173.9 billion, up from 160.1 billion a year ago, helped by a weaker dollar and higher auto prices.
For 2008, Ford said it sees a loss but it expects the loss to be “better” than its 2007 performance and it remains committed to returning to profitability in 2009.
Some 12,000 employees — or about 22 percent of Ford's remaining hourly workers — will be eligible for the early-retirement buyouts, officials said in a conference call.
But officials would not indicate how many of those jobs would be lost for good and how many would be replaced with the lower cost workers it won the right to employ in the latest labor contract.
Ford also expects to make further cuts to its salaried workforce, which has shrunk from 34,500 North American employees in 2005 to 23,700 people at the end of 2007. It will attempt to make most of the reductions through attrition, officials said.
The Michigan-based automaker has already slashed unpopular models, eliminated some 38,500 workers since 2005 and is in the process of shuttering 16 plants in North America.
When asked when further job cuts or plant closures were in the works, Mulally told reporters and analysts that there was nothing to announce at the moment but “there's always the opportunity to continuously improve our productivity.”
Ford is also in the process of selling its Jaguar and Land Rover nameplates. It is in negotiations with India's Tata Motors.
While it has managed to improve the results at both those brands, its remaining luxury European nameplate, Volvo, continues to drag on profits.
When asked whether Volvo's poor results could entice the automaker to sell the Swedish brand, Ford officials said there were “no plans” in the works.
“We are doing a comprehensive review of the business,” chief financial officer Don Leclair said. “Our main focus is to improve the brand and the business results.”
The company's automotive operations outside North America were profitable on an operating basis. But the loss of 3.5 billion dollars for North America dragged down the results for its worldwide auto business to a loss of 1.1 billion dollars.
The company reported a profit for its divisions of Ford Europe, Asia Pacific and Africa, South America, its Mazda division in Japan and its Premier Automotive Group that includes Jaguar and Volvo.
Ford sold 6,553,000 vehicles for the year, down slightly from 6,597,000 in 2006.
