New Ford plan fails to ease crisis
New Ford plan fails to ease crisis
By Bernard Simon in Detroit and Ralph Atkins in Frankfurt
Copyright The Financial Times Limited 2006
Published: September 15 2006 12:49 | Last updated: September 15 2006 22:42
The crisis at Ford Motor deepened on Friday as its shares plunged following the release of a new restructuring plan that suspended the dividend and delayed its target for returning to profit in North America by a year.
Turmoil in the US auto market also hit DaimlerChrysler, the German-based carmaker, which warned that higher-than-expected losses at its Chrysler unit would slash about €1bn ($1.3bn) from forecast operating profits this year, sending its shares down 6 per cent.
Ford’s latest version of its Way Forward plan – its third restructuring effort in five years – aims to shrink its North American workforce and speed up the launch of models.
But Ford stopped short of revealing plans to sell its Jaguar luxury division or its Ford Credit financing unit, and it acknowledged that its share of the US light vehicle market was likely to erode from 16 per cent to a range of 14-15 per cent. The company had a 25 per cent market share in the mid-1990s.
Ford shares closed 11.77 per cent lower in New York at $8.02 and the cost of buying protection against the risk of a future default by Ford duly rose in the credit derivatives market.
“Ford’s plan lacks the scope in terms of asset sales and falls short of the critical level of strategic commitment to stabilising financials,” said analysts at CreditSights in New York. “The market is not going to be happy with this plan.”
The carmaker now aims to return North American operations to profitability by 2009, a year later than envisaged under January’s Way Forward plan.
The latest cost-cutting measures include axing an additional 10,000 white-collar jobs and offering buy-outs to its entire US blue-collar workforce, as General Motors did earlier this year. The extra white-collar job cuts combined with 4,000 earlier this year will shrink the North American salaried workforce by about a third. Nine assembly and parts plants in the US and Canada will close by the end of 2008.
Bill Ford, executive chairman, said he was less concerned about the possibility of Toyota overtaking Ford in North America than the importance “for this plan to be based on what I consider to be conservative assumptions”. He said his family, which owns about 4 per cent of the equity and controls 40 per cent of the votes, had no plans to take the carmaker private.
Alan Mulally, who took over as Ford’s chief executive earlier this month, added that senior management was “not waiting for external factors to make it OK”.
Additional reporting by Michael Mackenzie in New York
By Bernard Simon in Detroit and Ralph Atkins in Frankfurt
Copyright The Financial Times Limited 2006
Published: September 15 2006 12:49 | Last updated: September 15 2006 22:42
The crisis at Ford Motor deepened on Friday as its shares plunged following the release of a new restructuring plan that suspended the dividend and delayed its target for returning to profit in North America by a year.
Turmoil in the US auto market also hit DaimlerChrysler, the German-based carmaker, which warned that higher-than-expected losses at its Chrysler unit would slash about €1bn ($1.3bn) from forecast operating profits this year, sending its shares down 6 per cent.
Ford’s latest version of its Way Forward plan – its third restructuring effort in five years – aims to shrink its North American workforce and speed up the launch of models.
But Ford stopped short of revealing plans to sell its Jaguar luxury division or its Ford Credit financing unit, and it acknowledged that its share of the US light vehicle market was likely to erode from 16 per cent to a range of 14-15 per cent. The company had a 25 per cent market share in the mid-1990s.
Ford shares closed 11.77 per cent lower in New York at $8.02 and the cost of buying protection against the risk of a future default by Ford duly rose in the credit derivatives market.
“Ford’s plan lacks the scope in terms of asset sales and falls short of the critical level of strategic commitment to stabilising financials,” said analysts at CreditSights in New York. “The market is not going to be happy with this plan.”
The carmaker now aims to return North American operations to profitability by 2009, a year later than envisaged under January’s Way Forward plan.
The latest cost-cutting measures include axing an additional 10,000 white-collar jobs and offering buy-outs to its entire US blue-collar workforce, as General Motors did earlier this year. The extra white-collar job cuts combined with 4,000 earlier this year will shrink the North American salaried workforce by about a third. Nine assembly and parts plants in the US and Canada will close by the end of 2008.
Bill Ford, executive chairman, said he was less concerned about the possibility of Toyota overtaking Ford in North America than the importance “for this plan to be based on what I consider to be conservative assumptions”. He said his family, which owns about 4 per cent of the equity and controls 40 per cent of the votes, had no plans to take the carmaker private.
Alan Mulally, who took over as Ford’s chief executive earlier this month, added that senior management was “not waiting for external factors to make it OK”.
Additional reporting by Michael Mackenzie in New York
posted by Carlos T Mock @ 10:31 AM
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