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Monday, January 29, 2007

Tough Times Ahead for Ford, General Motors and Chrysler

Americans may be proud of their auto industry but their top companies face a very bad prospect. Actually, more than the companies, the workers and their families are worried for an uncertain future. So, the workers of Ford, General Motors and Chrysler are now worried about the future of their jobs.

Post-gazette.com wrote:

Detroit's Big Three automakers spent last year shedding tens of thousands of workers , overhauling their marketing and shaking up their managements. Now , it's becoming clear that even more-drastic action may be needed to turn them around.

Thursday, Ford Motor Co. announced losses of $5.8 billion for the fourth quarter and $12.7 billion for all of 2006, the deepest deficit in the 103-year history of the nation's No. 2 automaker. Also expected to report losses for the year are General Motors Corp., which Thursday said it will delay announcing its fourth-quarter financial results, and DaimlerChrysler AG's Chrysler Group. That would make 2006 the first year since 1991 that all three companies were in the red.

For all their efforts last year, the three U.S. auto makers continue to labor under heavy cost burdens, including hefty obligations to their union workers. But their real challenge is how to stop burning cash in futile efforts to manage decline. They can no longer rely on the cost-cutting and sales-boosting strategies of the past, such as squeezing parts suppliers for discounts, pressuring dealers to accept excess inventory and demanding higher prices from consumers.

Today they face suppliers who are less likely to give in to their demands, consumers who want less costly and less profitable but more-fuel-efficient vehicles, and auto dealers who are less dependent on a single Detroit brand. At the same time, foreign rivals are stealing away market share.

So, the future looks only bleak for the top car makers. May be they should relocate their factories in Asia and Africa.

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