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Ford to Challenge GM for Single-Year Loss Record

By Joe Benton
ConsumerAffairs.com

September 14, 2006

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When it comes to corporate losses, Ford Motor Co. may well surpass General Motors Corp. this year. Ford now projects its worldwide automotive operations will lose nearly $6 billion and the company as a whole could lose as much as $9 billion once restructuring costs taken into account.

While General Motors holds the record, losing $10.6 billion in 2005, the depth of Ford's losses will increase depending on how many workers take advantage of the company buyout offers, thus placing a new record for losses by an automaker in a single year within Ford's reach.

The projected loss would be a nearly six-fold increase over Ford's $1 billion pretax global automotive loss last year and illustrates the depth of the automaker's problems in its core car and truck business.

The forecast is in stark contrast to Ford's pledge in 2002 that it would make $7 billion in pretax profit by 2006.

The loss projections became public as Ford's Board of Directors met to discuss the pace and scope of efforts to turn the company's fortunes around. The board is considering more job cuts and plant closures but they do not plan to eliminate any of the ford brands.

Ford's North American auto business accounts for most of the projected $6 billion pretax loss. North American automotive operations posted a pretax loss of $1.6 billion in 2005.

Ford has lost U.S. market share for 10 straight years.

Ford seems to be following the financial road map GM drew when the automaker posted a $10.6 billion loss in 2005. GM stock took a huge hit but the company put its financial problems behind it and is moving forward with its own restructuring plan in 2006.

Despite the losses, Ford will still have $17 billion in cash.

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