Ford posts largest quarterly loss ever

by amyjudd | July 24, 2008 at 02:29 pm | 446 views | 15 comments

Ford Motor Company today announced that they are going to be transforming their vehicle lineup due to the largest reported loss for the company in its 105 year history.

Their stock also fell about 16% - which is a LOT for anyone who is unsure what that number means. Especially in the case of a global company with a long history of success.

"Because of deteriorating economic conditions, demand has declined dramatically, especially in North America," said Ford CEO Alan Mulally, who also blamed rising gas prices for the decline.

Mulally said the company is working toward reducing its salaried workforce by 15%. The company aims to save $5 billion annually, and has managed to reduce costs by $1 billion so far.

He also said the company is now shifting its focus "to bring to the North American market smaller, more fuel-efficient vehicles that people increasingly want."

Ford is going to start selling smaller cars in North Amercia and not such big trucks.
The three large truck and sport utility plants in Michigan, Kentucky and Mexico will be switched over to the manufacture of smaller cars starting this December. But production of smaller cars in general will be ramped up regardless.
Ford is hustling to keep up with demand of the smaller cars as gas has just become too expensive to drive the larger trucks. Some lines will continue for now though.

Ford said it lost $8.7 billion, or $3.88 per share, in the second quarter, including pre-tax special charges primarily due to the write-down of assets. A year earlier, the automaker announced a profit of $750 million, or 31 cents per share.

Without charges, Ford reported a loss of $1.4 billion, or 62 cents per share, in the latest quarter.

I think this is a good idea for Ford. I know they are losing money right now, but a switch over to smaller cars and more economic vehicles will benefit everyone. I hate big trucks anyway, but that's just my opinion...

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liamssoft

at 15:46 on July 24th, 2008

good stuff:

amyjudd, I like this story. It's sad stuff but they can turn it around. Cars that use less fuel are what the public want.

SOLARLIFE

at 18:53 on July 24th, 2008

good stuff:

amyjudd, oh henry Ford, the man creating steel mills, inventing the first igniton system with a braker, inventing the automatic gear box, producing the 8 cylinder, inviting philosophers, Trine others, paying the highest salaries for american workers, creating wealth. I think you are right, he would opt for a small Tin Lizzy Eco mass car. Volkswagen same failure, no ECO car low cost, the founders driving innovation are missing.

rmeneses

at 19:25 on July 24th, 2008

This image is from an old firemen truck that even being out of duty, still works!! I have another images from this truck

rmeneses has contributed a photo to this story.

pedro vit

at 20:56 on July 24th, 2008

Just loved the symmetry and the colour of the car I was watching and decided to take this photo.
Photo in Flickr

http://farm4.static.flickr.com/3293/2534981215_d4a06a40fb_b.jpg

pedro vit has contributed a photo to this story.

chesterhogston

at 21:18 on July 24th, 2008

Picture taken at Columbus Ohio Good Guys National Car Show.

chesterhogston has contributed a photo to this story.

kferaday

at 21:22 on July 24th, 2008

good stuff:

amyjudd, I like this story. It's good stuff.

It's really strange that they are in this position. When I first went to Europe years ago, everyone was driving the Ford Escort. They also came out with some really great European models a few years ago. It's too bad they didn't move forward with some of their small car designs.

infomatique

at 22:20 on July 24th, 2008

good stuff:

amyjudd, I like this story. It's good stuff.

Paschen

at 04:11 on July 25th, 2008

good stuff:

amyjudd, I like this story. It's good stuff.

Ouch, that will hurt!

lahijadeunminero

at 08:33 on July 25th, 2008

lahijadeunminero has contributed a photo to this story.

kahemartins

at 10:40 on July 25th, 2008

This picture was taken in Ribeirão Preto, São Paulo - Brazil, from a Ford Belina

kahemartins has contributed a photo to this story.

mettacara

at 12:24 on July 25th, 2008

good stuff:

amyjudd, I like this story. It's good stuff.

thepeoplespoetsw

at 17:09 on July 25th, 2008

This photo was taken at a local Kit Car Exhibition in Carrickfergus, County Antrim in Northern Ireland. It was a sticker stuck to one of the cars.

On the one hand, it is sad that one of the world's oldest and longest running car companies are having problems but it isn't solely a Ford problem, it effects everyone. They haven't got everything right in the past, and who knows, maybe a serious revamp might boost peoples interest in the brand again. I hope so. There have been many marques come and go during the history of the car industry, but if Ford were to be one of them, I think that would be a very sad day. They were, after all, the first company to make motoring accessable to everyone and I for one, hope that they can continue to do so.

thepeoplespoetsw has contributed a photo to this story.

thepeoplespoetsw

at 17:12 on July 25th, 2008

good stuff:

Great stuff!

kferaday

at 23:34 on July 25th, 2008

John Boyd of BlindReason gave his perspective on Paul Kedrosky's blog:

Essentially Ford's message was-- "Hey we just lost $8.7 billion. But don't worry, we got this idea...we are going to make smaller cars".

Now don't get me wrong, it seems like an obviously sound idea but I wonder if they are not a little late on this and more than a dollar short.  All the <?XML:NAMESPACE PREFIX = ST1 />US car makers are in the same boat and their pace of adaption to business changes are glacially slow so I am not picking on Ford alone here. Chrysler which is privately owned now seems equally flat footed so I don't think it's necessarily a function of managing short term business profits to long term strategic plans.

This would ordinarily be 20/20 hindsight commentary but this has happened before in the 1970s and 1980s. High oil prices caused a shift to higher fuel economy cars and smaller cars and the Japanese destroyed these companies for decades with various crisis and requests for bailout assistance.

No question Americans love big SUVs, and they don't mind forking over a higher margin for them temping car companies all around the world..

Much like Charlie Brown aiming for the football with Lucy promising that the football won't be pulled away again these high margins seem especially tempting for American car companies.  But are the short term higher margins worth the big write offs you take when the fuel price jumps and you have to retool plants?

Since Americans don't mind paying so much for large SUV's why not just make them with alternative fuel engines that give them ultra high fuel economy.  It may cost quite a bit more but American's have shown a propensity to pay extra for big behemoths and it would shield them from fluctuations in gasoline.  Of course if they do this they will sell less of them but they won't have to retool plants and risk bankruptcy on huge write offs every 20 years. This thinking never seems to be factored in, time and again-- Just like Charlie Brown and his football..