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Last Updated: Monday, 23 January 2006, 22:15 GMT
Ford to slash up to 30,000 jobs
The Ford Edge on show at the recent Detroit Motor Show
US demand for cars is strong but Ford is facing stiff competition
Carmaker Ford is closing 14 North American plants with the loss of 25,000 to 30,000 jobs as it attempts to revive its business there.

The cuts, representing nearly a quarter of its North American workforce, come as Ford faces tough competition from Asian rivals such as Toyota and Nissan.

It wants to reduce costs in its North American business by $6bn by 2010.

The closure of 14 plants there will slash its annual car production by 1.2 million units, or 26%, by 2008.

Last year Ford's share of the US car market slumped to 17.4%, the lowest it has been since the late 1920's.

Shares in the car maker gained 42 cents on Monday, or 5.32%, to close at $8.32.

Losses

We will be making painful sacrifices to protect Ford's heritage and secure our future
Bill Ford, chairman and chief executive

Earlier on Monday, Ford said that net income had risen by 19% in the last three months of 2005, topping market forecasts.

However, the figure was helped by the proceeds from the sale of the Hertz rental car business.

For the full year, Ford's North American vehicle operations lost $1.6bn before taxes.

Despite the loss, Ford was profitable for the full year, earning $2bn in 2005 as its finance arm posted a net profit of $2.5bn.

Ford expects to make a profit from its non-US carmaking business this year, and hopes the cost-cutting programme will return its North American operations to profit by 2008.

'Last resort'

"These cuts are a painful last resort and I'm deeply mindful of their impact," said Bill Ford, chairman and chief executive, talking about the firm's "Way Forward" restructuring plan.

"They're going to affect many lives, many families and many communities, and we'll do everything we reasonably can to ease the burden."

Ford dealership in Kent, Washington state
Ford's share of the US car market has slumped to 17.4%

Plants scheduled to close by 2012 include the St Louis, Atlanta and Wixom assembly plants, and the Batavia transmission factory in Ohio.

As part of the restructuring, the company said it was planning a new low-cost manufacturing site and would use more global vehicle designs to reduce investment costs.

It also said it wanted to cut the time it takes to develop new cars from six to 12 months - by copying the way its third-owned Japanese subsidiary Mazda does it.

Production of hybrid petrol-electric vehicles is to be ramped up, with 250,000 cars produced annually by 2010.

Plant closures announced so far
St Louis Assembly, Missouri
Atlanta Assembly, Georgia
Wixom Assembly, Michigan
Batavia Transmission, Ohio
Windsor Casting, Canada

Ford's strategy was not welcomed by all industry experts.

"The Way Forward looks like the road to Chapter 11 (bankruptcy)", said Peter Morici, professor at the University of Maryland's Robert H Smith School of Business.

"The plan lacks a clear statement of how Ford is going to get its labour and design costs in line with its Japanese competitors.

"Lacking that, Ford will not be able to offer vehicles that are competitive in price, quality and content."

One of many

Ford is not alone in having to revamp its operations in an effort to compete with more efficient Asian and European rivals.

HAVE YOUR SAY
A leaner Ford is only part of the solution to its problems
Brian MacDonald, Washington, DC, USA

Last year, General Motors (GM) unveiled plans to save $2.5bn a year by cutting 30,000 jobs in North America.

Earlier this month, GM said the cost-cutting drive was going better than it had expected, and that it would trim outgoings by $4bn this year.

Another company hit by the current difficult market conditions was car-parts maker Delphi, which filed for bankruptcy protection in October of last year.


BBC NEWS: VIDEO AND AUDIO
Chairman Bill Ford announces the job cuts



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