Ford reports 3Q loss, delays restructuring

October 21, 2005|By DETROIT FREE PRESS

DETROIT -- Ford Motor Co. Chairman and Chief Executive Officer Bill Ford said that the automaker will not announce its coming restructuring until January, despite posting a bigger-than-expected loss yesterday that suggests its troubles could be deeper than previously suspected.

Workers at all levels of the company, Ford said, would be affected by the cost-cutting plan, which will include health care benefit changes and plant closings.

"This is not a sacrifice that we will ask only the UAW and its membership to bear," he said. "There will be sacrifices asked of people throughout our company, from top to bottom."

Ford said the company was in discussions with the United Auto Workers regarding health care benefit changes. While General Motors Corp.'s tentative agreement with the UAW could serve as a framework for Ford, the details have not been reviewed and Ford is waiting to see whether hourly workers ratify the GM deal.

Ford workers have previously been warned that the company would announce its second restructuring since 2002 by the end of this year.

Ford has earmarked $700 million for buyouts and other "personnel reduction programs" this year. Don Leclair, Ford's chief financial officer, said about 60 percent of that will be spent in the next three months as the automaker continues the process of cutting 2,750 white-collar jobs.

A Ford presentation shown to investors and journalists yesterday shows those cuts will come in North America, Europe and the Premier Automotive Group, which sells luxury brands such as Jaguar, Volvo and Land Rover.

The delay in announcing the restructuring plans means thousands of workers will have to wait through the holidays to learn the fate of their employment and benefit changes.

Bill Ford said the postponement was necessary after he put new executives in charge of the North American operations.

While Ford Motor is delaying its restructuring announcement, it is still under pressure to correct its course quickly.

The credit-rating agency Standard & Poor's said yesterday it would keep Ford on review for a possible downgrade in mid-January because of its poor performance and heightened "concerns about the company's ability to effect a timely turnaround in its critical North American operations."

Such a move would push Ford's credit further into junk, or speculative, status, and it signals the company is more likely to default on its loans. That means Ford would have more difficulty raising money and would pay higher interest rates.

Ford Motor reported yesterday that it lost 15 cents a share, or $284 million, during July, August and September.

About $200 million of that was due to the rapid decline in profitable SUV sales in the United States caused by rising gas prices, Leclair told the Free Press in an interview.

Ford said the company anticipated movement away from mid- and full-size SUVs, but not quite as rapidly as it occurred.

"The future arrived faster than we expected because of this year's sharp spike in fuel prices," Ford said.

The Dearborn, Mich.-based automaker is still profitable for the first nine months of the year - earning $1.9 billion, down from $3.4 billion a year ago - and expects to end the year in the black.

But losses in the company's North America car- and truck-making division are mounting. Including special items, Ford posted a pretax loss of $1.5 billion in the United States, Mexico and Canada during the third quarter, bringing year-to-date losses to $2.1 billion.

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