Ford trims loss, says new job cuts ahead
Ford's quarterly loss much narrower than a year earlier; announces new round of hourly worker buyouts.
NEW YORK (CNNMoney.com) -- Embattled Ford Motor capped a difficult year by trimming its quarterly loss and announcing a new round of companywide buyouts for its remaining 54,000 hourly U.S. workers.
The buyouts are part of the company's continued effort to end three years of losses on its core automotive operations. Despite the latest improvements and plans for further cost cuts, the automaker warned it expected losses to continue this year.
Ford, which lost its long-held position as the nation's No. 2 automaker to Japanese rival Toyota Motor (TM) last year, lost $429 million, or 20 cents a share, in the fourth quarter, excluding special items.
That's down from just under the $2 billion, or $1.03 a share, it lost on that basis a year ago, and was close to the forecast of a 19 cents a share loss from analysts surveyed by earnings tracker Thomson First Call.
Special charges related to severance packages in North America and Europe, the planned sale of some of its European brands and an asset writedown at Volvo brought Ford's quarterly net loss to $2.8 billion, or $1.30 a share.
That was also an improvement from the $5.6 billion, or $2.98 a share, net loss for the year-earlier period, when the company was completing a year that saw a record $12 billion loss from continuing operations.
Ford said it would take further cost reduction actions in North America, including offering a new round of companywide buyouts to its remaining workers represented by the United Auto Workers union.
The company saw more than 30,000 UAW members leave the company under a round of buyouts offered in 2006. A source familiar with the talks between the union and company said the new round of offers will be similar to previous packages, which ranged from $50,000 to $140,000, depending on workers' retirement eligibility, job duties and whether they forfeited their rights to expensive post-retirement healthcare coverage.
The automaker has been trying to bring North American capacity better in line with reduced demand for its products, and buying out more senior autoworkers will allow it to hire new employees at lower pay scales with benefits packages not nearly as expensive as those under terms of labor deals reached last year between the UAW and Ford as well as rivals General Motors (GM, Fortune 500) and Chrysler LLC.
Ford did not give any target for the headcount reduction it expects from such a move, although one source said an estimate made by The Wall Street Journal was incorrect. That report said the new wave of buyouts could trim another 11,000 hourly jobs and that the automaker is also looking to reduce 2,000 management positions.
Ford did not detail specific earnings guidance for the year, although it said that automotive losses would continue at or below the $1.1 billion that core unit lost on a pre-tax basis in 2007. It said its financial services operation would make a profit. For the overall company, it forecast a smaller loss than in 2007.
The company had previously said it expected its core North American auto operations to not return to profitability before 2009, but this guidance confirms that it expects companywide losses, as well as losses throughout all of its auto operations worldwide, to continue in 2008.