British jobs threat as Ford sales slump

FORD has slashed its full-year earnings outlook and says it may not break even in its core automotive division as North American vehicle sales continue to slide. The company says it will axe nearly 2000 jobs in the US.

So far it has not earmarked any job losses in Europe, but, in an ominous sign for UK workers, Ford said it was 'evaluating options for reducing personnel-related costs outside North America'.

'We're taking steps to immediately reduce our salaried-related costs,' chief financial officer Don Leclair said.

'Challenges continue to mount,' he said, referring especially to Ford's North American automotive operations. It is the second profit warning from the car giant this year.

Ford said its full-year profit outlook was being cut to a range of $1 (67p) to $1.25 a share, excluding items, down from a previous forecast of $1.25 to $1.50 a share.

Wall Street analysts had been expecting Ford to earn $1.19 a share, excluding one-offs such as Ford's costly bailout of former auto parts subsidiary Visteon, which Ford now says will cut 16 cents from this year's earnings.

It has been a disastrous year for Detroit's top carmakers which have seen sales slide, particularly in their profitable sports utility vehicle markets, as fuel costs soar. At the same time they are facing higher costs, with both Ford and competitor General Motors (GM) both having their credit rating slashed to junk status last month.

Ford is now is axeing bonuses for salaried management this year and curbing pension payouts. It has also been forced to increase incentives to shift stocks.

Last week the company said it had begun offering its workers and retirees up to $1000 (£670) to get their friends, family and neighbours to buy vehicles with special employee discounts.

The move follows similar action by GM, which this month launched an aggressive discount programme in an attempt to shift its old stock. But that price war is hitting Ford and GM's bottom line hard.

In addition to its main British plants at Dagenham and Liverpool's Halewood, Ford owns premium marques Aston Martin and Jaguar in the UK.

While Aston Martin sales have been holding up, the Jaguar division is in trouble after Ford's decision to share a platform with the firm's premium US marque, the Lincoln.

In an drive for greater efficiency, Ford decided to share undercarriage architecture with the Lincoln, but that move backfired when customers saw the move as eroding the famous marque's British heritage.