Here is a cool summary of the overall cost cutting Ford has undergone in 2008 (from www.seekingalpha.com):
Cost Reductions:
* Reduced automotive structural costs by $1.9 billion vs $1.3 billion in 2008
* Reduced automotive debt obligations by $10.1 billion
* Lowered annual cash interest payments by over $500 million (note that this is negligible since management indicated credit facility negates net benefit of this expense)
* Lowered annual U.S. labor costs by $500 million
* Manufacturing and engineering costs were over $800 million lower
* Spending related costs improved by about $200 million (lower depreciation)
* Pension and retiree health care expenses were $300 million lower
* Overhead costs were over $300 million lower (achieved via layoffs)
* Advertising and sales promotions were about $300 million lower
Total cost reduction as reported by management: $1.9B. The company forecasts a full-year structural cost reduction of over $4 billion.
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Thats pretty interesting. Cutting their costs so they do not have to take government money.
ReplyDeleteit would be nice if at least Ford could make it without (some) help from the government
ReplyDeleteI think the biggest problem (besides producing gaz guzzlers which are outdated) high labor costs. foreign competitors do produce at lower labor costs than american producers. I read an article on NYT that an assembly worker at GM or Ford earned more than a person with college degree - how is that possible? I am not saying that this is not possible however this is a good indicator that workers were paid above average levels.
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