Ford Motors Co. could be forced to close seven more plants and ask its union for a 20% cut to wages and benefits as it faces a financial “meltdown”, an analyst said lately. The recent dramatic decline in Ford’s market share has brought the automaker to the brink of a crisis, which could undermine the assumptions in its current restructuring plan, said Sean McAlinden, chief economist, Center for Automotive Research.
“We’re really, really worried about Ford”,said McAlinden during a presentation to a group of investment bankers, journalists and human resources managers.
Ford will have to identify at least seven more plants that it will have to close in North America by mid-summer before the current contract expires, he predicted. The current labour agreement expires in mid-September. Both Ford and the union declined to comment on negotiations.
Ford, the world’s third-largest automaker, lost a record $12.7 billion (Rs56,140 crore) last year on plunging sales of pickups and sport-utility vehicles and does not expect to post a profit again until 2009. The company is in the midst of a massive restructuring plan aimed at shuttering 16 plants and eliminating up to 44,000 jobs in North America.
McAlinden said 20% wage and benefit cut would save Ford between $1.4 billion and $2.0 billion annually and protect the company from running out of cash reserves. “If Ford’s market share falls to 10% or 12% by this summer, and if they start to burn cash at twice the rate they’ve planned, something will have to be done”, McAlinden added. The company’s market share was hovering 15% in January. Ford believes it has enough money to complete its turnaround plan, spokesman Tom Hoyt told AFP.