Ford's bumpy road to a record loss

Excluding special items, such as buyouts for employees and plant closures, Ford posted an operating loss of $2.8 billion. In 2005, Ford posted an operating profit of $1.9 billion.

Ford has said it does not expect a profit until 2009. Meantime, the company is trying to revamp its product lineup under a team of new designers and a new global product development chief.

The company is trying to bring to market a new group of passenger cars and crossover SUVs to cover for falling sales of its truck-based SUVs and pickups, which for several years had been providing virtually all of Ford's operating profit from vehicle sales. High labor costs and the need to discount heavily have long made Ford's passenger cars, like the Ford Focus and Ford Five Hundred, an unprofitable business. "Making our passenger-car business profitable on its own without being supported by truck sales is a necessity and priority," Mark Field, Ford president of the Americas, said in an interview this month.

Some refreshing news
Ford has been encouraged by successful sales of the Ford Fusion sedan, as well as higher-than-expected sales for the Lincoln Zephyr. Ford's new Edge crossover, launched a few months ago, has been well received by the auto press, but it's too early to tell if the public will scoop it up in sufficient numbers without sales incentives.

Despite longtime criticism that Ford should shutter its Lincoln and/or Mercury brands to concentrate on rebuilding the Ford brand and concentrating on its European luxury cars, the company has decided to fund a future product plan for both. Ford says that 70% of its products will be new or significantly refreshed by 2008 and all of them by 2010.

The yearend earnings report was not without some good news. Ford is out to cut operating costs by $5 billion by 2008. Mulally, a former executive at Boeing, said that the more he learns about Ford's global operations, the more opportunities he sees to overshoot that target.

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