One of the world’s largest automakers, Ford Motor Co. posted the biggest quarterly loss in its history in the second quarter of 2008. The automaker lost $8.7 billion, as the buying trends shifted from
gas- guzzling trucks and SUVs towards fuel- efficient smaller vehicles and hybrids.

Ford took a huge charge for reducing the value of various troubled assets in the second quarter. The net loss includes a pre-tax special charge of $8 billion, of which $5.3 billion was for Ford North America alone. The North America unit posted a $1.3 billion pre-tax loss in the quarter, as compared to a $270 million loss during the same period in 2007. The Volvo unit lost $120 million, compared to a loss of $91 million a year ago.

However, Ford posted a pre-tax profit of $582 million in Europe during the quarter, up from $262 million a year ago. Along with Europe, the company also saw profits in Asia and South America.

Post- Q2, the automaker had $26.6 billion in cash, down $10.8 billion from 2007.

Plummeted by the loss and in response to the market downturn, the company announced that it will take a significant acceleration of its transformation plan with the addition of several new fuel-efficient small vehicles in North America and a realignment of its North American manufacturing.

The company will bring six small cars from its European line to North America by the end of 2012 and will realign three large truck and SUV plants in the U.S. to build smaller vehicles in December.

Ford confirms that it will strengthen its Mercury lineup by the end of 2010 and the production of the Ranger small pickup at the Twin Cities assembly plant in Minnesota will continue through 2011.

The automaker will also undergo plant conversions under the transformation plan.

The Michigan truck plant in Wayne, which builds the Ford Expedition and Lincoln Navigator will convert to small-car production in 2010. The Expedition and Lincoln Navigator will move to the Kentucky truck plant in Louisville.

The Louisville, Kentucky assembly plant, which builds the Ford Explorer mid-size SUV, will produce small vehicles, beginning in 2011.

Ford will also convert  the Cuautitlan assembly plant in Mexico, which currently produces F-Series pickups, to begin production of the new Fiesta small car for North America in early 2010.

The automaker hopes that the transformation plan will double its capacity to produce four-cylinder engines in North America by 2011 and its hybrid vehicle lineup by 2009.

Along with the realignment steps, Ford plans to layoff 15 percent of its salaried workers in North America by August 1. The automaker is extending buyout programs in its various U.S. plants and facilities.

This entry was posted on Monday, July 28th, 2008 at 6:23 am and is filed under Ford. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.