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Friday, September 15, 2006

Ford: Who Will Run The Company? Who Will Build The Cars?

Stocks: (GM)(F)

Ford has done it, at last. Given itself a chance to stay alive. Stay in the game.

"Those of us about to die, salute you."

This morning the company announced that it would cut white collar staff by over 30%, 14,000 people. And, it has offered buy-outs to all 75,000 of its union workers in the US.

All totalled, Ford said it would cut annual expenses by 2005 by $5 billion, a move it should have made long ago when GM announced it would reduce cost by $9 billion annually.

Ford has backed off its projection that it will make a profit in North America any time soon. The date is now set for 2009. That is a long ways away.

Ford also stated what everyone outside the company has been saying. Its share will drop from the current 17% in North America to 14% or 15%.

The question now will be whether the cuts come too late and whether the company can find a floor at a 14% share. Several industry studies say that it takes Ford longer than any other major car company to replace its old models with new ones. And, it must. Its line-up of big SUVs and pick-ups like the hugely profitable F-series don't have much of a following if gas prices stay high.

If Ford cannot keep its share from dropping more than another 3 points, the blood in the streets of Detroit may only get more copious.

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

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