Ford Motor Co. reveals its Jaguar Cars restructuring plan as weak sales, a suspect product mix and an increasingly competitive luxury-vehicle segment have led the British brand into a sea of red ink.
Jaguar lost $360 million in the second quarter, inspiring Ford's earlier announcement of intentions to restructure the British luxury unit, one of four brands operating in Ford's Premier Automotive Group.
The auto maker plans to close a plant, sell off its racing program, reduce its salaried workforce and introduce more diesels in the near future. It also plans to add a second aluminum-bodied car.
The biggest move will come in second-half 2005, when Jaguar will close its 53-year-old Browns Lane Assembly plant in Coventry, U.K. The action will cost 400 manufacturing jobs, as XJ and XK assembly moves to the more modern Castle Bromwich Assembly facility in Birmingham, U.K. Castle Bromwich likely will absorb the remaining 1,500 hourly workers currently employed at Browns Lane.
Ford expects the planned head-count reduction to result in a $450 million charge, with $375 million hitting the bottom line this year and the balance coming in 2005. An additional 750 salary and agency workers also will be cut from the rolls this year, says Ford Chief Financial Officer Don Leclair, who adds PAG should “approach breakeven in the fourth quarter,” before special charges.
Leclair promises more details this month when the company announces third-quarter results. Despite the bad news, he raises Ford's earnings guidance for the third quarter by $0.10 per share from a range of breakeven to $0.50 cents per share.
While Ford's bottom line may see immediate improvement, “a quick turnaround in Jaguar's business results is unlikely,” Mark Fields, executive vice president in charge of Ford of Europe and PAG brands, says. Some 15,000 units have been axed from Jaguar's 2004 production plan, most coming out of the fourth quarter. Ford also is firming up details to implement operational changes at the Land Rover plant in Solihull, U.K., Fields says.
Jaguar's labor unions — the Transport and General Workers Union and Amicus — are condemning Ford's decision.