USA: Ford Motor Co. posts fourth-quarter loss of 5.8 billion dollars (USD), and ends 2006 with deepest yearly loss in company history
- 00:00:22
- ITN Source
USA: Ford Motor Co. posts fourth-quarter loss of 5.8 billion dollars (USD), and ends 2006 with deepest yearly loss in company history
In yet another sign of trouble in the American auto industry, the problems at Ford Motor Company have gone from bad to worse. The company posted a worse-than-expected fourth-quarter loss of 5.8 billion U.S. dollars (USD) on Thursday (January 25) and said it would cut production for the current quarter and lose market share through September. Overall, Ford recorded a record loss of 12.7 billion USD for all of 2006 due in large part to declining truck sales and charges for employee buyouts. It marks the worst year in the automaker's 103-year history, something that Alan Mullaly, Ford's CEO is trying to turn around. John Novak, an auto industry analyst for Morningstar, said he thinks Mullaly has his work cut out for him. "I personally think there's a lot of overlap and would like to see them trim that brand portfolio. It's gonna be a difficult decision. It's not easy to kill a brand in this industry, but it's something they should absolutely consider. And I think Mullaly being a relative outsider will take a fresh look at this." Ford is in the early stages of a four-year turnaround plan that includes closing 16 plants and cutting up to 45,000 jobs in North America. Like General Motors, Ford is reeling from high pension and health care costs that add thousands to the price of an average vehicle. Like other U.S. automakers, Ford is set to negotiate a new contract with hourly workers and is expected to seek deep concessions. Further complicating matters for Ford, U.S. sales fell by 8 percent last year and the company is forecasting a flat U.S. market in 2007 for sales of cars and trucks. "Everybody in the industry has great product and Ford, given the perception of their brand and their declining market share needs to be much better than everybody else to recapture that. So I'm not encouraged in the sense that everybody is introducing great product and Ford needs to do better than everybody else to recapture that market share and that's gonna be very difficult," said Novak. Ford has targeted a return to profitability in 2009 by slashing costs and rolling out new car-based vehicles. With gas prices not expected to fall soon, Ford can no longer rely on its SUVs and pick-up trucks as the foundation for turning the company around.
ITN Source | January 26, 2007
