Ford Motor Co. reported a third-quarter loss of $284 million on Thursday, dragged down more than $1 billion in losses at its North American division, and said it is developing a restructuring plan that will include “significant” U.S. plant closings and staff reductions.
Ford Chairman and CEO Bill Ford said the automaker will announce the restructuring plan in January. He said the plan was painful but essential and would affect salaried workers and hourly workers represented by the United Auto Workers.
“This is not a sacrifice we will ask only the UAW and its members to share. There will be sacrifices throughout the company, top to bottom,” Ford said in a conference call with investors and media. “Our industry is beginning a dramatic restructuring which is sorely needed. While the challenges are great, so are the opportunities.”
The nation’s second biggest automaker lost 15 cents per share for the three months ended Sept. 30 in contrast to a profit of $266 million, or 15 cents per share, in the year-ago quarter.
Revenue for the quarter rose to $40.9 billion from $39.1 billion in 2004.
Excluding special items, Ford lost $191 million, or 10 cents per share. Special items included a charge of $180 million related to Ford’s agreement to take back some unprofitable plants from Visteon Corp., its former parts division, and a charge of $158 million for reduction of employees. Ford has announced plans to cut its salaried staff by 2,750 this year.
Wall Street had predicted a loss of 10 cents per share, according to analysts surveyed by Thomson Financial.
Ford said full-year earnings likely will be at the low end of the current guidance of $1 to $1.25 per share.
“For all the progress, we recognize we’re very far from the finish line,” Bill Ford said. “We need a dramatically different business structure and we need innovation to drive everything we do.”
Ford reported a $1.2 billion pretax loss in its North American automotive operations, compared to a $481 million loss a year ago. The automaker said lower dealer inventories, lower net pricing and higher material and warranty costs contributed to the decline.
Ford Motor Credit Co., the company’s finance arm, reported a profit of $577 million, down $157 million from a year ago. The decrease was due to higher borrowing costs, the company said.
Ford also announced Thursday it will be airing a new television ad campaign featuring Bill Ford talking about innovation, including the company’s goal of creating more fuel-efficient vehicles. Ford announced last month it will make gas-electric hybrid systems available on half its Ford, Lincoln and Mercury vehicles by 2010. Ford last appeared in ads for the company in 2002. Bill Ford is the great-grandson of company founder Henry Ford.
Ford is the second U.S. automaker to report a loss this week. On Monday, General Motors Corp. said it lost $1.6 billion in the third quarter, or $2.89 per share, compared to a profit of $315 million, or 56 cents a share, a year ago.
GM also announced a tentative agreement with the UAW that would lower the automaker’s health care costs by $3 billion a year before taxes and would lower its retiree health care liabilities by $15 billion, or 25 percent. GM’s hourly workers still must ratify the deal.
Ford has said it is already in discussions with the UAW to match that agreement.
Ford said its worldwide automotive pretax losses were $1.3 billion for the quarter. That is more than double the $609 million loss of a year ago. Worldwide sales were 1.5 million vehicles, up slightly from the year before.
The company’s Premier Automotive Group, which includes the Jaguar, Volvo and Land Rover brands, reported a pretax loss of $108 million for the quarter, up from a $171 million loss last year. Ford said the increase was due to a better mix of products and improved pricing at Land Rover.
Ford’s European operations reported a pretax loss of $55 million, compared to $33 million a year ago. Ford’s Asia-Pacific operations reported a pretax profit of $21 million, a decline from $35 million a year ago.