Ford expected to announce 25,000 job cuts Monday (AFP)

[Up2Late]

(Does this mean the economy is NOT booming?)

Ford expected to announce 25,000 job cuts Monday

22/01/2006 04h30

CHICAGO (AFP) - Ford Motor Company is expected to announce plans to cut 25,000 jobs and several plants on Monday but analysts are warning the move will not be sufficient to allow the automaker to return its struggling North American unit to profitability. "The near-term savings are not going to be as much as it needs to be," Brian Ropp, an auto analyst with T. Rowe Price in Baltimore, Maryland, told AFP in a recent interview.

"What it does is keep them from producing cars they don't need and they won't have to discount the cars as much." The savings from job cuts are limited by the peculiarity of the automaker's contract with its main union.

Hourly employees who don't take early retirement packages enter the jobs bank retraining program in which they collect full pay and benefits while waiting for a spot to open up on the assembly line. Cutting production levels also won't help Ford stabilize its steadily declining market share. In the past ten years, Ford has seen its share of the massive US market drop from 26.4 to 17.4 percent, the lowest level since the 1920's.

While Ford has managed to overcome the quality problem which dogged sales in the 1990's, it has still not been able to come up with small cars that excite consumers. The world's third largest automaker did manage to boost overall sales in the 1990's with the introduction of sports utility vehicles but its market share in that highly profitable segment soon began to wane as Japanese rivals introduced smaller, car-based crossover sports utility vehicles.

The real trouble hit in 2005 when gas prices topped three dollars a gallon and Ford's light truck sales - which include the highly profitable SUVs - fell 8.7 percent. Ford's North American unit posted a 1.4 billion dollar loss in the first nine months of 2005 and Standards and Poor's has warned the unit's pre-tax losses could reach two billion for the year.

(more at link below)

<http://www.afp.com/english/news/stories/060122032339.xr4xdy2p.html>