Ford recently declared losses of £3 billion in three months and is to ‘restate’ its earnings since 2001. According to my (failed) eleven-plus maths, that’s around £30 million a day. How long can any company survive such haemorrhaging?
All right, it includes one-off job-shedding and writing-down asset costs, with provisions for restructuring and 30,000 redundancies. But, even allowing for that, it’s still losing around £6–£8 million a day, with no end in sight despite new CEO Alan Mulally’s prediction that North American operations will return to profit in 2009.
Conventional wisdom has it that Ford’s problems are structural and deep-rooted, worsened by US pension, medical and legal liabilities. But essentially its problem is that it can’t sell enough cars to support the superstructure that has grown on the back of previous market dominance. Other, younger manufacturers have muscled into Ford’s space, new cars are cheaper than ever and there is worldwide over-capacity.
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