Ford planning further cost cuts as US economy slows: report

Mumbai: Ford Motor Co is planning major cost cuts as the slowing US economy puts the automaker at risk of missing key financial goals in 2008 and 2009, the The Wall Street Journal reported in its online edition.

"There's more risk than there is opportunity going forward," the Journal quoted Ford executive vice president Mark Fields as saying.

He said Ford is holding down fourth-quarter production to avoid building excess inventory amidst weak US jobs data, and the turmoil in the debt and home mortgage markets.

Fields, who heads Ford's North and South American operations, said the company's North American turnaround is on track to meet the 2008 cost-cutting target and 2009 profitability goal.

Ford's auto business currently has about $40 billion in cash on its balance sheet, and investors expect the company to raise more funds through the expected sale of luxury brands such as Land Rover, Jaguar and Volvo.

Investors may be choosing GM as their bet on Detroit's labor negotiations because it's in better financial shape than Ford, but with so much pessimism baked into its stock price, the No 2 US automaker may be a better bargain for the investor, say analysts.

Analysts, meanwhile, pointed out that General Motor's ongoing negotiations with the United Auto Workers over a new labor contract could result in a boost to Ford's bottom line, if the two sides agree to create a union-controlled health care trust fund.

That outcome still isn't a certainty. The UAW's master labor contract with GM, the lead negotiator for Detroit's Big Three automakers, expired two days ago, and the threat of a strike hangs over the ongoing talks.

The New York Times had earlier reported that the negotiations were in danger of faltering, and union leaders were considering choosing another automaker, such as Ford, as the lead negotiator. But talks are still going on - a sign that a deal between GM and the UAW is still possible.