The Telegraph
Since 1st March, 1999
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Ford to put brakes on overhead costs

Detroit, Oct. 22 (Reuters): Ford Motor Co. chairman and chief executive Bill Ford Jr. said on Monday that he was seeking an additional $ 1 billion in cuts from the automaker’s overhead costs next year to offset any possible downturn in the US economy.

Ford’s shares reversed a three-week slide in dramatic fashion, closing up 15.6 per cent Monday to $ 9.55 and leading a gain among other auto stocks. Some analysts said the gain was likely driven by “short” sellers who had sold borrowed Ford stock on the expectation it would continue to fall and now were buying the shares back.

Ford, great-grandson of company founder Henry Ford, made the comments at a meeting of analysts and investors called by the automaker to tout its plan for growing profits to $ 7 billion a year before taxes by mid-decade, a plan that already includes at least $ 6 billion in cost cuts.

“I have no idea what next year’s going to hold ... We are notoriously poor predictors,” Ford said. “But I’ve gone back to our folks and said I need more, we need more, to make sure next year is robust.”

While US auto sales have stayed strong this year, thanks mostly to incentives, some analysts have recently lowered their sales forecasts for 2003, citing concern American consumers’ spending power will flatten out.

Ford said the cuts, if made, would come from “general overhead” and would not come from product development funds. He said a list of possible cuts was being drawn up for review, but declined to specify what might be included.

Company spokesman David Reuter said it was not clear yet how the cuts, first announced with Ford’s third-quarter earnings, would fit into the rest of Ford’s turnaround plan. The plan already calls for $ 1.5 billion in overhead cost cuts in the wake of last year’s $ 5.45 billion loss.

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