updated 1/12/2007 3:27:14 PM ET 2007-01-12T20:27:14

Ford Motor Co.’s plan to return to profitability by closing plants and slashing thousands of jobs in North America is ahead of schedule, Chief Executive Alan Mulally said Friday.

Faced with increasing competition from overseas rivals such as Toyota Motor Corp., Mulally said Ford’s restructuring plan remains “absolutely the right thing to do.”

Mulally said during a meeting with analysts in Dearborn, Mich., that the company is focused on accelerating new product development, while bringing its offerings in line with changing consumer demand and promoting profitable growth.

“It’s got to be profitable growth,” he said. “The growth is for the employees, the investors, for the dealers, for the communities in which we operate. If you’re not growing, then you must be shrinking. Right?”

Mulally added that the automaker’s “Way Forward” restructuring plan, which is operating on a 5-year timetable, will need to be periodically revised.

Mulally, who previously led a turnaround at the commercial jetmaking division of Boeing Co., was brought in by Ford in September at one of the most crucial junctures in the company’s history.

Ford has seen its market share deteriorate in recent years, as high gas prices have driven consumers away from its signature sport utility vehicles and light trucks. At the same time, Toyota has seen its U.S. sales rise, beating Ford out for the No. 2 sales spot in July and November.

The Dearborn, Mich.-based automaker, which lost $7.2 billion in the first nine months of 2006, took several drastic steps during the year to refashion itself into a smaller, more competitive company.

Not long after Mulally replaced Bill Ford, a member of the automaker’s founding family, the company announced a more aggressive restructuring that would cut 14,000 white-collar jobs in addition to the 38,000 hourly employees that accepted buyouts and early retirement packages.

Ford wants to reduce its total North American work force by 29 percent, to about 92,000 by the end of 2008 from the current level of some 130,000 and close 16 plants.

Ford also has mortgaged its assets to borrow up to $23.4 billion to fund the restructuring plan and cover the billions in losses expected until 2009. The company expects to burn up $17 billion in cash during the next two years.

Mulally also said Friday that Ford has made significant progress in bringing together its various units around the world and will continue to focus on that in the future.

“There’s no way we’re going to complete in a global marketplace without working together and leveraging their assets,” he said.

Mulally added that Ford continues to work to consolidate its bloated dealer network, but added that the process will take time.

He also said the company has not made any decisions regarding the possible sale of its Premier Automotive Group, which includes the Jaguar and Land Rover brands, but continues to review its long-term role in the company.

General Motors Corp., which is also undergoing a massive round of cost cuts, updated analysts on Thursday, saying it plans to boost yearly capital spending by as much as $1 billion as it attempts to revitalize its product line. General Motors CEO Rick Wagoner said GM was slashing expenses by an annual rate of $9 billion at the end of 2006, ahead of its $6 billion target.

Ford shares rose 11 cents to $7.88 in afternoon trading on the New York Stock Exchange. GM shares shed 12 cents to $30.74.

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