Ford (F) is considering cutting another 13,000 people. According to The Wall Street Journal, the company intends to make good on its promise to make money in North America, not matter what the cost.
Ford’s US sales dropped 12% last year. It now has around 16% of the US market, which puts it in third place behind GM (GM) and Toyota (TM). Its most profitable vehicles are pick-ups that many people can’t buy because they get low gas mileage. Ford’s newest, smaller cars compete directly with the best products from Toyota, Honda, and Nissan.
The cutting at Ford will have to end because there is some minimum work-force required to be a full-line car company in the US. Ford is testing the limits of how small that work-force can be. But, the down-sizing may not solve Ford’s problems. If sales of its vehicles fall throughout 2008, the company may not be able to stay ahead of dropping revenue.
Ford’s shares trade where they did when the company faced rumors of bankruptcy. That is no coincidence.
Douglas A. McIntyre
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