As cuts loom, Ford announces $2 billion profit

[shugah]

As cuts loom, Ford announces $2 billion profit
January 23, 2006

Hours before detailing a Way Forward plan expected to cut tens of
thousands of jobs and close plants, Ford Motor Co. announced this morning it made $124 million in the fourth quarter of 2005 to finish the year with a $2 billion, or $1.04 per share, profit.

In the key North American operations, Ford reported a loss of $1.6 billion for the year, a decline of $3 billion from 2004, though still reflecting its lower U.S. market share. For the year, North America’s sales totaled $81.4 billion, compared with $83 billion a year earlier.


~snip~

Ford is expected to announce at 10:30 a.m. up to 25,000 in job cuts and to close plants, including the Wixom assembly plant.

The Way Forward plan is expected to help save Ford money by more closely aligning its labor and production with the volume of vehicles it makes. As market share fell, the company had become inefficient with too more plants and people.

http://www.freep.com/apps/pbcs.dll/article?AID=/20060123/NEWS99/60123003

[zann725]

1. Take from the poor, give to the Rich. Robin-Hood Economics.

And NOW FOrd has record profits. No doubt...they've now eliminated lots of UNION jobs, and (I'm guessing) pensions and lift-time health benefits these newly laid-off employees had accrued.

[unblock]

2. ordinarily, layoffs and profits don't sit well together, but in this case-

ford has too much debt and not enough revenue, with little hope of a sufficient revenue surge to make up for it.
ok, they have a profit, but they're screwed if they don't do something because of the looming debt payments.

i don't know enough about their situation to know if layoffs are the right way to solve the problem, but i do know that they have a major problem and have to do SOMEthing.

what definitely does NOT sit well, though, is layoffs and DIVIDENDS. if you're laying people off because you feel you must in order to survive, then you shouldn't make any common share dividend payments. to do so is just unseemly, and poor business practice to boot.

[davepc]

3. If I make 2 billion in "profit" but owe my creditors 3 or 4 billion..

in the upcoming months and years am I ahead?

Fact is Ford has about 25 billion in available cash on hand, and outstanding debts of somewhere north of 150 billion. Now, almost all of that debt isn't all due at once or anything, but Ford has some major issues to address to fix itself (an underfunded pension being one of them). The fact that it can run a profit on a per-quarter basis doesn't tell the whole story. However it is a sign that the company has the ability to fix itself. If they were bleeding money things would be that much more dire.

[JuniorPlankton]

4. Imagine you are filing taxes for 2005 in February 2006

You made some decent money in 05, but you lost your job around Christmas and you are racking your brain about how you going to pay that mortgage on your McMansion. (And that loan you took to buy a Ford SUV.) :(

[LeftHander]

5. North American....

SUVs as opposed to smaller more efficient vechicles.

The American market has rapidly changed. As a result the US makers got caught too heavily invested in the large once popular SUV.

They were stupid to think the SUV craze would last in the face of a dwindling world oil supply. They went fo the big dollar grab in the U.S. and answered the call of the American people by providing and ever increasing array of huge SUV's. SHortsighted quarterly thinking.

they will bounce back if they can stop thinking like the typical TV watching, selfish American.

[xchrom]

6. here we go through the looking glass.

as long as only certain people control all the arguments re: globalism and what the economy should look like then this is what we will get.

there other points of view regarding economies world wide -- and they never get play.