Ford Motors tonight announced plans to axe 4,000 to 5,000 jobs in North America this year as it sliced its 2001 earnings outlook, sending its shares into a dramatic slump.
The auto giant cut its earnings per share forecast for 2001 to just 70 cents from 1.25-to-1.35 dollars and said it would reduce jobs in a voluntary redundancy program to improve efficiency.
Ford blamed lower sales volumes, higher marketing expenses and costs for customer satisfaction initiatives, alluding to a planned settlement to a dispute over allegedly faulty ignition systems.
On Wall Street, Ford shares dove 9.54 per cent at one point, dragging down the entire auto sector.
In the early afternoon, Ford was trading at $21.69, down $1.78 or 7.54 per cent. General Motors slumped $3, or 4.8 per cent, to trade at $59.57.
Standard and Poor's rating agency placed Ford and General Motors on CreditWatch with negative implications, meaning it may downgrade their credit ratings.
The two car makers had failed to cut costs fast enough in the face of tough price competition, it said.
"Hence, their profitablity in North America has deteriorated significantly, boding ill for their financial performance if a significantly weaker market environment were to evolve."
Ford was already suffering after announcing in May it would spend $2.1 billion to replace all 13 million Firestone Wilderness AT tires on its vehicles due to safety fears.
AFP