Ford cuts N. American production, cuts profit goal
Dearborn-based Ford also on Thursday cut back its projections for total U.S. sales in 2008 to between 15 million and 15.4 million vehicles. That's down from 17 million vehicles as recently as 2005.
"Unless there is a fairly rapid turnaround in U.S. business conditions, which we are not anticipating, it now looks like it will take longer than expected to achieve our North American Automotive profitability goal," Ford President and Chief Executive Alan Mulally said in a statement.
Its shares sank 59 cents, or 7.6 percent, to $7.21 in morning trading.
Ford said it will cut production by 15 percent in the second quarter, 15 to 20 percent in the third quarter and 2 to 8 percent in the fourth quarter. The cuts will primarily affect pickups and sport utility vehicles, which have seen sales plummet in recent months due to rising gas prices and the slowdown in new home construction.
Ford plans to increase its production of cars and crossovers through additional shifts and overtime. Ford's smallest offering, the Focus sedan, saw sales jump 29 percent in the first four months of this year, while its Ford Edge crossover was up 38 percent.
But the company's mix of vehicles remains heavily tilted to trucks and SUVs. Ford's F-series trucks, long the best-selling vehicles in the U.S., were down 16 percent in the same period.
Ford said in addition to realigning its manufacturing capacity to produce more small cars and crossovers, it plans to accelerate the North American introduction of some of its small cars from Europe and South America.
Ford had said in March it planned to cut second-quarter production by 10 percent and confirmed additional cuts at a factory in Michigan earlier this week. But it revealed the full extent of the cuts Thursday.
Production cuts hurt revenues, because automakers book vehicles as sold once they leave the factory.
Consumers have been shifting to smaller, more fuel efficient cars in the last few months at a pace that stunned the industry. Through April, U.S. sales of subcompact cars shot up 33 percent, while sales of large SUVs were down 29 percent, according to Autodata Inc. Overall U.S. sales were down 8 percent in that period.
Ford said it is on track to reduce North American automotive operating costs by $5 billion by the end of this year. But it said the rising price of steel and other commodities are offsetting expected gains from its new contract with the United Auto Workers.
Last updated: 9:06 pm Thursday, December 13, 2012