The Detroit automaker has cut its earnings outlook for the rest of 2005, citing a decline in sales.
America’s number 2 car maker will implement several cost-cutting measures, as sales for vehicles continued to nosedive in the face of skyrocketing fuel costs, reduced demand for heavy gas using vehicles, and relentless competition from Toyota and other makers.
According to Reuters, the full year profit outlook for 2005 had been $1.25 to $1.50 per share. That forecast will now be trimmed to $1.00 to $1.25 per share.
The company will evaluate options for more cost cutting. At this time, they have proposed a 5 percent cut in its salaried work force, which will affect about 1,500 jobs. 401K matching contributions for salaried workers will be eliminated, as will bonuses for salaried management employees.
Ford, like its equally troubled Detroit counterpart GM, enjoyed tremendous success with its line of SUVs and mid-size and large trucks. But those type of vehicles have great appeal while fuel prices were reasonable.
With OPEC powerless to affect oil prices, world refineries running at close to full capacity, and a consumer thirst for gas that refuses to be slaked, oil has traded at nearly $60 per barrel of light sweet crude on the New York Mercantile Exchange.
Further, declines in the US stockpiles and a fear among traders of demand exceeding supply for winter, plus the continual specter of terrorism disrupting the supply chain, has contributed to pile a big premium on oil pricing.
Currently, analysts think the US stockpile may have risen slightly. That condition has brought oil prices down to $58.90 a barrel, still a 57 percent increase over last year. An Energy Department report due tomorrow will either confirm analyst speculation, or trigger possibly higher prices in the event of a decrease.
David Utter is a staff writer for Murdok covering technology and business. Email him here.
