Ford Motor Company plans to close fourteen factories and cut as many as thirty thousand jobs in the United States and Canada. Its North American operations employ more than one hundred twenty thousand people.
Ford plans to do this over six years. The action will affect workers in Michigan, Ohio, Missouri and Georgia, and in Ontario, Canada.
The news from Ford last week was not unexpected. General Motors announced similar cost-cutting measures in November.
G.M. and Ford have both been losing market share in North America. As recently as nineteen ninety-eight, Ford had twenty-five percent of the United States market. Autodata, an industry information provider, says the number has shrunk to around nineteen percent.
By closing factories, Ford and G.M. expect to reduce costs. They are also reducing their production capacity in North America. Experts say the carmakers have been making too many vehicles for their share of the market.
Credit rating companies have also been concerned about the cutting of prices through sales incentive programs. Low prices sell more cars, but they also lower profits. G.M., for example, sold more than nine million vehicles last year, its second highest total ever. Yet it reported a loss of more than three thousand million dollars.
Ford reported a profit of two thousand million dollars last year. But most of the gains were from financial services. Ford's automotive business lost about one thousand million dollars. Most of that was from its sales in North America. Ford reported profits in South America, Europe and Asia.
Both Ford and G.M. have reported fast growth in Asia. Ford says its sales in China grew forty-six percent last year. Sales growth in South America has also been strong.
The market in North America is changing. Strong sales in trucks and sports utility vehicles provided big profits in recent years. Today, with fuel prices up, many people are buying more economical cars.
America’s Big Three carmakers -- G.M., Ford and DaimlerChrysler -- face competition from another big three. Those are Toyota, Honda and Nissan of Japan. In fact, Toyota could soon pass General Motors to become the biggest seller of automobiles in the world.
