Post by TonyV on Jan 30, 2010 1:34:18 GMT -5
Does Ford's progress point to rebound for country?
BY TOM WALSH
FREE PRESS COLUMNIST
Is this the year that Ford finally stops shrinking?
That's the hint from the numbers and projections in Ford's 2009 financial report. Company executives are not yet forecasting higher employment numbers for 2010, but several signs point that way:
• After boosting North American vehicle output by 34% in the fourth quarter of 2009, Ford said it is adding another 20,000 units to its production forecast for the current quarter.
• After slashing structural costs by $5.1 billion in 2009, Ford President and CEO Alan Mulally said he expects those costs to be "somewhat higher" in 2010 "as we increase production to meet demand."
At Ford, as at many other U.S. companies returning to profitability, bottom-line gains have come largely from cost-cutting, not revenue growth. That's why the nation's jobless rate has remained stubbornly high at 10% and why Michigan's is stuck around an abysmal 15%.
Growth trends
Just look at Ford's North American employment numbers for the past five years -- knowing that General Motors, Chrysler and scores of auto suppliers have been trending the same way.
Ford employed 135,700 people in North America at the end of 2005. The number dropped to 122,400 the next year and then plunged to 89,000 in 2007 and 75,300 in 2008. After a more modest decline of 2,700 workers in 2009, Ford's total headcount was 72,600 at the end of last year, meaning the company cut 46% of its domestic workforce in just four years.
With many fewer employees and a concerted push to slash vehicle inventories last year, Ford managed to post a net profit of $2.7 billion in 2009 -- a $17-billion positive swing from a horrendous 2008 loss -- in a year when Ford's worldwide sales revenue declined by $20 billion.
It now appears that Ford is poised to grow. Its market share is rising, U.S. consumer spending is inching upward, and some Ford competitors -- notably Toyota with its massive recall problem -- are hurting.
Harbinger for U.S.?
In a telephone interview Thursday, Lewis Booth, Ford's chief financial officer, said, "I certainly think we're expecting to see some growth in revenue." But he balked at projecting net job growth immediately. "I think it's probably premature to talk about employment. We still have a few surplus employees, for example."
Ford doesn't publicly project total head count, but it is adding a shift of 1,200 people in Chicago later this year to build the next-generation Explorer SUV. The company has about 600 hourly employees on indefinite layoff, who would be offered first crack at those jobs.
Still, it's possible that in Chicago, Ford may finally hire its first workers at the second-tier wage of about $14.20 per hour, allowed under the 2007 UAW contract for new hires.
So maybe, just maybe, the long period of shrinkage and job cuts at Ford is about to end.
And who knows?
To tweak an old line about GM: As Ford goes, perhaps, so goes the country.
Contact TOM WALSH: 313-223-4430 or twalsh@freepress.com
BY TOM WALSH
FREE PRESS COLUMNIST
Is this the year that Ford finally stops shrinking?
That's the hint from the numbers and projections in Ford's 2009 financial report. Company executives are not yet forecasting higher employment numbers for 2010, but several signs point that way:
• After boosting North American vehicle output by 34% in the fourth quarter of 2009, Ford said it is adding another 20,000 units to its production forecast for the current quarter.
• After slashing structural costs by $5.1 billion in 2009, Ford President and CEO Alan Mulally said he expects those costs to be "somewhat higher" in 2010 "as we increase production to meet demand."
At Ford, as at many other U.S. companies returning to profitability, bottom-line gains have come largely from cost-cutting, not revenue growth. That's why the nation's jobless rate has remained stubbornly high at 10% and why Michigan's is stuck around an abysmal 15%.
Growth trends
Just look at Ford's North American employment numbers for the past five years -- knowing that General Motors, Chrysler and scores of auto suppliers have been trending the same way.
Ford employed 135,700 people in North America at the end of 2005. The number dropped to 122,400 the next year and then plunged to 89,000 in 2007 and 75,300 in 2008. After a more modest decline of 2,700 workers in 2009, Ford's total headcount was 72,600 at the end of last year, meaning the company cut 46% of its domestic workforce in just four years.
With many fewer employees and a concerted push to slash vehicle inventories last year, Ford managed to post a net profit of $2.7 billion in 2009 -- a $17-billion positive swing from a horrendous 2008 loss -- in a year when Ford's worldwide sales revenue declined by $20 billion.
It now appears that Ford is poised to grow. Its market share is rising, U.S. consumer spending is inching upward, and some Ford competitors -- notably Toyota with its massive recall problem -- are hurting.
Harbinger for U.S.?
In a telephone interview Thursday, Lewis Booth, Ford's chief financial officer, said, "I certainly think we're expecting to see some growth in revenue." But he balked at projecting net job growth immediately. "I think it's probably premature to talk about employment. We still have a few surplus employees, for example."
Ford doesn't publicly project total head count, but it is adding a shift of 1,200 people in Chicago later this year to build the next-generation Explorer SUV. The company has about 600 hourly employees on indefinite layoff, who would be offered first crack at those jobs.
Still, it's possible that in Chicago, Ford may finally hire its first workers at the second-tier wage of about $14.20 per hour, allowed under the 2007 UAW contract for new hires.
So maybe, just maybe, the long period of shrinkage and job cuts at Ford is about to end.
And who knows?
To tweak an old line about GM: As Ford goes, perhaps, so goes the country.
Contact TOM WALSH: 313-223-4430 or twalsh@freepress.com