Ford production cuts foreshadow more plant closures, layoffs

In the wake of continuing large-scale losses, Ford said Friday it would dramatically reduce production in the fourth quarter at 10 US and Canadian plants. The company cited high gasoline prices as the primary reason for its deepening financial crisis. Sales of Ford’s profitable but fuel-inefficient SUV and truck models, which account for the bulk of the company’s production, have been hard bit by the rise in gas prices.

Ford indicated it would cut car and truck output by 168,000 vehicles, down 21 percent from a year ago. Third-quarter production will decline by 20,000 vehicles, a 10 percent drop compared to the previous year. For the full year, Ford production is expected to decrease by 9 percent, the sharpest fall since the recession of the early 1980s, when the company verged on bankruptcy.

The Ford announcement followed by two weeks the release of adjusted second-quarter profit figures, which showed the company losing $254 million. At that time, the company cited rising pension obligations as a major reason for its continued losses. Ford lost $1.4 billion in the first two quarters of 2006.

Ford officials have broadly hinted that the company will announce even more drastic measures after a full review of restructuring plans. “The question will be, does this do enough? Does this get across what we need to get across?” said one Ford official.

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