Ford Motor Co. Re-organizes; Big Loss in 2001
This is Steve Ember with the VOA Special English program IN THE NEWS.
Last week, the second-largest American automobile manufacturer, Ford Motor Company, announced plans to re-organize. It said it would close five factories and cut thirty-five thousand jobs worldwide. Ford also said it would stop making four of its car models. Ford expects to be manufacturing about one-million fewer cars by the year Two-Thousand-Five than it does now.
Most of the job cuts will affect workers in North America. Four of the factories that will close are in the United States. The other is in Ontario, Canada. Ford will end about twenty-two-thousand jobs in North America. The rest of the cuts will happen in Europe.
The company's chief executive officer, William Ford, announced the cuts. He said the company is sorry that some of its plans will cause pain. But, Mr. Ford said he believes the reductions are necessary for the company to compete.
Mr. Ford also said he would not accept any pay from the company, except in stocks. He said, this way, he will only earn money if the re-organization succeeds.
On Thursday, Ford announced it had lost almost five-and-one-half thousand-million dollars last year. The loss includes more than four-thousand-million dollars Ford will spend to re-organize. The last time the company had a yearly loss was in Nineteen-Ninety-Two.
In Two-Thousand, Ford recorded a profit of more than six-and-one-half-thousand-million dollars. Mr. Ford says that great success may have led the company to underestimate the growing strength of competitors. He said Ford also under-estimated the effect of the slowing of the economy.
Financial experts say all three large American car companies were hurt by the terrorist attacks in the United States. Sales of new cars dropped after September eleventh. Car companies began to make limited special offers to get shoppers interested in buying new cars. These offers included interest-free loans to buy cars.
The offers did increase car sales. Yet, experts say the increase may have been too great. They say that some people who planned to buy new cars in Two-Thousand-Two bought them early in order to get the special offer. That means car companies lost the business of people who would have paid a higher price.
American car companies were also hurt by foreign competition. Sales of Japanese and Korean made cars are increasing in the United States.
Ford had other increased costs last year after the media began reporting serious crashes of Ford Explorers. The crashes appeared to be caused by the sudden failure of tires made by the Bridgestone/Firestone company. Ford had to replace the tires.
Experts say this year will be difficult for the Ford Motor company. But company officials hope the re-organization plan will lead to increased profits in the future.
This VOA Special English program IN THE NEWS was written by Caty Weaver. This is Steve Ember.