Wednesday, June 22, 2005

Ford Reacts to Markets

William Clay Ford, Jr. Posted by Hello

Ford Plans to Cut 5% of Salaried Work Force: "While the challenges facing Ford are severe, it is still in a better position than General Motors, which has stopped giving earnings guidance for the year. This month, G.M. said it would eliminate more than 20 percent of its blue-collar work force over the next three years.

Though Ford is better off than G.M., the news Tuesday that it expects weaker earnings this year underscores the two largest automakers' struggles to remain profitable.

"The same thing has hit G.M., but a lot harder," said David Healy, an analyst with Burnham Securities. "But they're essentially in the same situation as G.M. They're producing a lot less gas-thirsty S.U.V.'s than they used to."

Mr. Healy said the elimination of 401(k) matching contributions and the planned job reductions were signals to Ford's largest union, the United Automobile Workers, that it should accept reductions in union employees' health care benefits, which cost the automaker billions each year. "This is firing a shot over the bow of Solidarity House," he said, referring to the U.A.W. headquarters in downtown Detroit."

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