Ford: on Track with Restructuring

GENEVA Reuters reported that the world's second largest auto company Ford Motor Co is on track with its restructuring plan and will take further steps if needed to meet its targets, chairman and chief executive William Clay Ford Jr. said on Tuesday.

He told reporters at the Geneva Car Show that Ford, which in January announced 35,000 job cuts and the closure of up to seven North American plants, had prepared a "worst-case scenario" which it could implement if necessary.

"We are on track in our restructuring plan in terms of what we are doing and the market," Ford said.

"We would be foolish if we didn't have a Plan B fairly well thought out," he added, noting there was still uncertainty about economic developments, marketing costs and currency fluctuations.

It aims to break even in 2002 and to post annual pretax operating profits of $7 billion by the middle of the decade.

He said positive developments at the group's European unit, also in the midst of an overhaul, provided hope for the U.S. Ford Motor had a net loss of $5.07 billion in the fourth quarter of last year after a difficult year that included the Firestone tire crisis, costly vehicle recalls and a U.S. recession that brought on a heated incentives war, led by domestic rival General Motors Corp. for new car sales.

Despite worries among analysts that only GM can survive a prolonged incentives battle, Ford said the company would continue to use incentives to help sales as long as needed.

"I think marketing costs as an industry have to come down but we will not buckle under pressure," he said.

Ford sales fell 13.5 percent in February compared with a 0.4 percent rise in GM's sales.

Ford has emphasized that product is at the center of the group's recovery plan and he reiterated that the company was working on improving its tarnished reputation for quality.

He also said the group was trying to improve relations with its suppliers and dealers and with Firestone, although that was still at an early stage.

He also said he was in talks about disposals for non-core businesses such as Kwik-Fit.

FORD EUROPE MODEL

Ford praised Ford Europe's efforts to return to profit, saying it had given the parent company a template for recovery.

"Ford Europe is in the right spot for our company, it is blazing the trail the rest of the company is trying to follow," said Bill Ford.

Ford Europe, which broke even in 2001 and aims for a significantly higher profit this year, has in the last two years cut costs by some $900 million by slashing jobs and capacity. The unit has also launched a raft of new products including the Mondeo and small Fiesta.

Ford Europe chief David Thursfield said the company was on track with its plan to reach a 3-4 percent return on sales in Europe in 2005-6 despite tough market conditions.

He estimated industry-wide European sales of 16.9 million vehicles this year compared with 17.5 last year.

"We keep our feet on the ground in Europe -- we are in no way where we should be," he said.

He aims to increase Ford Europe's market share to 9.3 percent this year from 8.7 percent in 2001.