Ford promises more cuts to come as it plunges into the red

Click to follow
The Independent Online

Ford, the all-American car maker, has promised to go "farther and faster" in its restructuring efforts, after plunging unexpectedly into the red.

The company lost $123m (£67m) in the past three months, and losses in its North American operations have passed $1bn for the year to date, as demand for sports utility vehicles (SUVs) has tumbled and buyers have preferred cheaper foreign imports.

Bill Ford, the chief executive, said the company would unveil additional cuts in the next two months to try to halt the slide. "It's an all-cost attack on all fronts," he said.

Mr Ford has already pledged to cut 30,000 jobs and close 14 factories by 2012 but analysts believe this restructuring programme, detailed only six months ago, is too conservative. Last month, the Ford board decided to halve the dividend and cut its pay, citing "headwinds" in the car industry that required sacrifices from shareholders, directors and employees alike.

Mr Ford said yesterday the company would slash production in North America by 15 per cent - 700,000 vehicles - by the end of this year.

Ford's North American operations are heavily focused on the production of SUVs and pick-up trucks but demand for these large vehicles has slipped since petrol prices shot up to $3 a gallon. In the three months to the end of June, Ford's worldwide sales fell to $42bn from $44.6bn in the same period last year. The quarterly loss of $123m compared with analysts' forecasts of a $210m profit, and the $946m profit recorded in the same three months of 2005.

Mr Ford repeated the company's promise to return the North American business to the black in 2008 but warned it was challenging. "I am encouraged by what is going on behind the scenes," he said. "When we get North America back on track, we will be a formidable and profitable competitor."

Ford shares closed down 14 cents at $6.19 on Wall Street and analysts widened their forecasts for losses this year.