Ford slashes US production to counter sliding vehicle sales

The struggling car maker Ford is to slash vehicle production in North America, silence factories and cut 6,000 salaried jobs in response to slumping sales.

The company said yesterday it will order workers to down tools at nine of its US manufacturing plants so as to cut output in the final three months of the year by a fifth and bring production back into line with demand.

Ford now expects its total 2006 production in North America to be 3.05 million vehicles, a 9 per cent reduction from 2005 aimed at lessening the pressure on dealers to cut prices. Ford dealers are sitting on more than three months' worth of unsold cars, almost twice as many as usual.

There will be particularly deep cuts in the output of Ford's gas-guzzling pick-up trucks, which have been shunned by consumers since petrol prices spiked higher.

The cuts are among the most aggressive attempted in North America in the past 20 years, and reflect the sliding market shares of its rust-belt manufacturers. In July, Toyota overtook Ford as the second most popular car manufacturer in the US, behind General Motors, which also lost market share.

Company officials would not say what specific impact the production cuts would have on workers. In general, hourly workers on temporary layoff get 95 per cent of their wages through state unemployment benefits and a supplement from Ford.

Bill Ford, the chief executive, said the cuts were painful, but it was necessary to speed up the restructuring of the loss-making North American business. "We know this decision will have a dramatic impact on our employees as well as our suppliers. This is, however, the right call for our customers, our dealers and our long-term future."

The 6,000 job cuts, affecting one in six of its white-collar workers, are set to be announced next month. The company is already cutting 30,000 jobs across the North American business, and it hopes the extra redundancies can be achieved on a voluntary basis.

Ford shares dipped by more than 3 per cent. The decision to slash fourth-quarter production targets by a fifth in effect tears up the company's earnings forecast for the year.

Ford is examining even more radical surgery to bolster its finances. Last month, it appointed a heavy-hitting investment banker to consider asset disposals. Kenneth Leet is understood to be examining the future of Jaguar, the UK-based luxury car marque, and Ford's profitable vehicle financing arm.