Ford Loses $8.7 Billion

Ford Motor Company issued its quarterly earnings yesterday, and the company lost $8.7 billion, or $3.88 a share. Realizing at long last that SUVs and other light trucks are wasteful when gasoline if the far side of $4 a gallon, Ford has decided to bring 6 small European models to the US market. Three plants are to be retooled in December. One can expect further losses as a result of the delay.

Ford Chief Executive Alan Mulally, in a prepared statement, said, “Ford is moving aggressively, using our global product strengths to introduce additional smaller vehicles in North America and to provide outstanding fuel economy with every new product.” One respectfully disagrees. “Moving aggressively” would mean retooling now.

As part of the $8.7 billion loss, Ford decided to take pre-tax special charges primarily due to the write-down of assets. Stripping out those charges, Ford lost $1.4 billion, or 62 cents per share, in the latest quarter. Excluding special items, revenue for the quarter was down to $38.6 billion from $44.2 billion in the same quarter last year.

Actually, the revenue result beat most expectations in the market. A Thomson/First Call compilation of guesstimates suggested revenue of $34.6 billion. However, the same compilation anticipated a loss of $0.27 a share excluding special charges.

Moreover, Ford’s efforts at trimming labor costs are not going particularly well. Ford is trying to shed 15% of its employees by August 1. It has offered 54,000 workers buyouts, but only 4,200 have accepted the offer. Earlier this week, Ford made additional offers of buyouts and early retirement packages to those at 17 locations.

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