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Recalls impede road to recovery at Ford

The slipping automaker, promising a turnaround, issues a recall affecting 1.2-million trucks Thursday.

By ASSOCIATED PRESS
Published August 4, 2006

DETROIT - Amid setbacks including the expansion of a major recall Thursday and restating its second-quarter losses to about twice the original amount, Ford Motor Co. is trying to speed up its North American turnaround.

Hence the hiring of a former Wall Street merger and acquisitions whiz as a strategic adviser, cementing the idea that everything is on the table as the nation's No. 2 automaker battles sluggish sales, rising costs and ferocious competition from Asian rivals.

On Tuesday, industry figures for July showed that for the first time, Ford sold fewer vehicles than Toyota Motor Corp. in the United States, underscoring its woes.

On Thursday, Ford recalled 1.2-million trucks, sport utility vehicles and vans amid concerns about potential engine fires. The news, which builds upon one of the largest recalls in U.S. history, came a day after Ford said that its second-quarter loss more than doubled from what it previously reported because of higher-than-expected pension costs. And Ford said that its luxury division will not be profitable this year.

Ford said the new recall covers 1998 Ford Explorers and Mercury Mountaineers, 1994 through 2002 F-250 to F-550 Super Duty pickups, 2000 through 2002 Ford Excursions, 1994-1996 Econoline vans and 1996-2002 E-450 vans. Letters to owners explaining the recall will be mailed next week.

Ford shares closed down 10 cents, or 1.4 percent, to $6.86 Thursday on the New York Stock Exchange after closing up 38 cents, or 5.8 percent, Wednesday.

Last month, Ford pledged to speed up and possibly deepen its North American turnaround plan. And analysts say the hiring of Kenneth Leet to advise Bill Ford, the automaker's chairman and chief executive, increases the possibility that the company may try to sell some operations as part of its restructuring.

"Everything has to be in play, whether it's job cuts or plant closings or alliances or partnerships or sale of assets," said auto analyst David Cole. "You really can't avoid looking at every element."

Ford says it has no plans to sell any of its brands or invest in a new alliance. Crosstown rival General Motors Corp. is studying a possible alliance with Nissan Motor Co. and Renault SA.

But in an e-mail to employees this week and comments last month, Bill Ford made it clear that the company is keeping its options open.

Ford hasn't said how he would accelerate the turnaround effort, but expects to detail efforts by mid September.

[Last modified August 4, 2006, 00:58:39]