DETROIT -- Ford Motor Co. slashed its 2005 earnings guidance and announced major new job cuts Tuesday as it strives to put its turnaround back on course.
Ford said it would cut the workforce in its North American automotive operations by 5 percent, or about 1,700 jobs, by Oct. 1. The cuts won't affect Ford Motor Credit employees. The reductions are on top of actions announced in April that reduced salaried positions by 1,000.
Ford now expects to earn between $1.84 billion to $2.3 billion this year, or $1 to $1.25 per share excluding special items and discontinued operations. That's the second profit warning this year and down from April guidance of $2.3 billion to $2.76 billion.
The struggling automaker said the profit outlook for its core North American automotive business has worsened due to weaker vehicle sales and "continued supplier-related challenges."
"Our market share has not been tracking the way we thought it would in April. SUVs continue to be softer than we thought," said Ford CFO Don Leclair in an interview with Automotive News Tuesday night. "Also, our carryover vehicles -- which is Taurus, Ranger and Focus -- we have just not matched the competitive level of incentives, so that has cost us some volume. We think that's the right thing to do, but that has cost us some volume and some profit."
Leclair also said that suppliers -- under pressure from lower Big 3 volumes -- haven't been able to deliver the productivity improvements and price savings expected. "They end up with excess capacity," he said. "They have to do restructuring in their own operations."
Ford did upgrade its second-quarter guidance to 30 cents to 35 cents per share, up from a forecast of breakeven to 15 cents per share. But that's primarily because of a reduced tax-rate assumption and better-than-expected results from Ford Motor Credit.
Tuesday's announcements continue a series of actions planned to address Ford's operating challenges, Leclair said. Since an earlier profit warning in April, Ford has initiated a spinoff of its Hertz Corp. rental car unit. It also agreed in May to take back 24 plants and offices from former inhouse part supplier Visteon Corp. More restructuring actions are expected this year, he said.
"We remain committed to improving our cost structure, optimizing our global footprint and making essential investments for the future," Leclair said.
Other steps announced on Tuesday include:
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