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Friday, 11 January, 2002, 22:04 GMT
Ford hit by 'perfect storm' of woes
Ford share price
David Schepp

In making their intentions known to cut thousands more from the payrolls and shutter five plants, Ford officials have admitted that the world's second largest auto maker has gone astray.


They've got to get good new, exciting products out

David Andrews, analyst, UBS Warburg
After suffering sinking quality evaluations, numerous recalls and a bitter fight with tyre maker Firestone, Ford said on Friday it is ready to get back to basics, which include making quality once again its first priority.

"These guys know what to focus on. I think they'll get it right," says Scott Hill, analyst with Sanford Bernstein. "You saw an enormous focus on product and quality, which has let them down."

Of course, products are the other side of the equation. While Ford holds the ranks of number one selling car and truck in the world with its Focus compact car and F-Series truck, some analysts are concerned too little excitement has been generated at recent car shows to help Ford remain dominant.

Exciting products needed

In order for Ford to master its turnaround, "they've got to get good new, exciting products out," says David Andrews, bond analyst for UBS Warburg.

Mr Andrews expressed concern over Ford's showing at the North American International Auto Show, underway in Detroit, because its display drew little attention during press previews.

By contrast, General Motors and DaimlerChrysler's domestic unit, Chrysler Group, dazzled automotive journalists with a series of unveilings of exciting and - more importantly - viable products.

Meanwhile, Ford unveiled four vehicles, including the Ford Forty Nine retro convertible and the Ford F-350 Tonka truck, which some viewed as a preview to the next generation of F-Series trucks. None, however, are destined for production.

Perfect storm

Analysts have compared Ford's woes to a "perfect storm" of events that have colluded to push the auto maker to its first yearly loss since 1992.

While Ford has yet to announce its 2001 earnings, analysts are expecting a loss of $800m for the period ending 31 December.

Ford recently endured the ousting of its former chief executive Jac Nasser, as well as nagging quality-control issues, resulting in numerous product recalls.

Add to that the high-profile recall and replacement of Firestone tyres on pre-2002 Ford Explorer models and falling market share as Japanese manufacturers continue to make inroads into the US market.

No one, including William Clay Ford, the firm's recently installed CEO, expects Ford to make a miraculous turnaround anytime soon.

It is a tough restructuring, and Mr Ford will need cooperation on many fronts, including unions, suppliers, employees and its network of dealers.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Stephen Evans at Ford's Global HQ
"It is a very aggressive restructuring plan"
Ford Chairman & Chief Executive Bill Ford
"Our success led us to under estimate the economic downturn"
Former director of Ford Europe, Karl Ludwigsen
"It is not that long ago we we were talking about Ford overtaking GM"


Background
See also:

11 Jan 02 | Americas
End of road for luxury car
05 Dec 01 | Business
Ford warns of steep losses
03 Dec 01 | Business
Ford cuts more jobs as sales flag
17 Oct 01 | Business
Ford reports huge loss
11 Jan 02 | Business
Automotive Empires
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