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Wednesday, September 13, 2006

Is Ford Finally Serious About Saving It Bacon? (F)

Late word from the Wall Street Journal is that Ford will present its board with a plan to cut management workers and some other costs by 30%. That will put a lot of people on the streets of Detroit, but what choice does the flagging auto company have?

With US market share holding just above 17% and too many brands to count (several of them bleeding red ink), Ford has to get serious about restructuring. “The Way Forward” was an ill-conceived plan that did not take enough costs out of the company, and may have cost Bill Ford his job. At least half of it, anyway.

Ford and the UAW are in talks about more workers taking large packages in exchange for early retirement, but the union officers can’t put themselves out of jobs by selling all of their hourly workers down the river. The 2007 labor negotiations will be delicate, and much of the company’s future could sit with those talks even if Ford fires all of its managers.

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

Ford is still faced with the daunting question of how much is enough? If US share falls another two or three points, it could find itself back at the headcount reduction business, and it has had to revisit that issue too many times.

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