As Japanese automakers continue to increase their market shares, the Big Three are definitely feeling the heat. After General Motor’s announcement of its restructuring plans in November last year, now comes another restructuring plan from Dearborn. As part of its massive restructuring plan to stem the $1.6 billion loss in North American operations in 2005, Ford Motor Company announced that it will shut down 14 facilities and cut at least 25,000 jobs or close to 25 percent of the company’s entire North American workforce by 2012.
Ford, the second largest automaker in America has been gradually losing market share, now at 17.4 percent the smallest since 1920 and down from 25 percent in the 1990s. Last year, Ford earned only US$2 billion, down 42 percent from a year earlier but still the company’s third consecutive yearly profit. The restructuring plan, dubbed as “Way Forward†is an effort to stop this downward trend and improve the company’s profitability.
Ford’s executive vice president and President of the Americas, Mark Fields, engineered the sweeping restructuring plan which aims to strengthen the Ford, Lincoln and Mercury brands as well as achieve a more competitive fixed-cost structure and foster an environment of innovation. The plant closures will reduce the company’s assembly capacity by 1.2 million units by late 2008. Fields hopes that this action will significantly improve the assembly capacity utilization rate. However, this also means the loss of almost 30,000 jobs from 2006-2012.
Fields further said that, “Rest assured, our Way Forward is not a retrenchment. It’s about taking back our future; Cutting our own path; Having a clear point of view, and being bold, American and innovative.”
Related posts brought to you by Yet Another Related Posts Plugin.
January 25th, 2006 at 6:15 pm
Definitely not a good news for the labor market in North America. Cutting down the number of assembly units of Ford will cause phasing out of a substantial number of jobs. Well, I’m just hoping that the affected employees of this company move will be given due and proper consideration.
On one hand, let’s not put all the blame on Ford Motors. Well, maybe, they are just experiencing a sort of market decline but sooner or later cycle will move again and Ford will say goodbye from recession. I think this is just one of Ford’s strategies in confronting the competition. They need to redeem a larger market share because Japanese carmakers are in the hype right now.
Blogwise, it’s good. Informative. I would appreciate more if statistics like comparative quarter sales for every carmaker is shown. Or maybe, some new car models on the side. But in general, this is a good blog.