Since many Americans haven’t driven a Ford lately, the automaker is taking drastic measures to stay in business.
Ford Motor Co. plans to cut up to 30,000 jobs and shutter 14 plants in a sweeping restructuring that the nation’s second biggest automaker hopes will tackle declining market share and rising costs that led to hefty losses in its North American operations.
Ford shares rose on Monday’s news, indicating some investors were pleased with the long-awaited “Way Forward” plan as well as the company’s larger-than-expected $124 million overall profit in the fourth quarter. Union leaders called the planned cuts “extremely disappointing.”
Ford shares rose 42 cents, or 5.3 percent, to close at $8.32 on the New York Stock Exchange.
Ford said the plan will restore profitability by 2008. But some analysts said the plan was short on details, leaving them uncertain if it would boost Ford profits as the company struggles with aggressive competition, higher gasoline prices, rising costs for labor and raw materials and a junk credit rating. [...]
Ford and its larger rival, General Motors Corp., have been hurt by falling sales of profitable sport utility vehicles, growing health care and materials costs and restrictive labor contracts. GM announced a similar restructuring plan in November that will shave its work force by 30,000 and close 12 North American facilities.
Ford also has seen its U.S. market share slide as a result of increasing competition from foreign rivals. The company suffered its tenth straight year of market share losses in the United States in 2005, and for the first time in 19 years, Ford lost its crown as America’s best-selling brand to GM’s Chevrolet. Ford sold around 2.9 million vehicles for a market share of 17.4 percent in 2005, down from 18.3 percent the year before and 24 percent in 1990.
Related:Â Neal Boortz comments on what could’ve prevented the job cuts at Ford.
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