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Thursday, August 10, 2006

Ford Steps Up The Pace, Too Late?

Stocks: (F)(GM)

Ford is looking at accelerating the cutting of 30,000 employees, cutting more of its management force, and introducing new models more quickly than was originally planned. The company may invest up to $1 billion in its Michigan plants to help the changeover to new models. The State of Michigan may give Ford certain financial breaks to help the company.

The problem is that the models Ford is introducing, nine in the next six months, are heavy on gas guzzling models and no amount of job cutting or retooling can avoid the fact that this threaten Ford's share at least in the short term Among the new cars are the Shelby Mustang which drinks gas like an alcoholic drinks liquor. A new Lincoln full-sized sedan is coming out soon. That is bound to be really fuel efficient. And, the company is still dependent on the Ford F-150, 250 and 350 ultra-large pick-ups which are the largest sellers in its model line.

GM recently said that consumers are clearly shifting to more fuel efficient cars, which are less profitable for the car makers than big SUVs and pick-ups. But, at least they sell.

Is anyone at Ford listening?

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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