Ford Motor Co. today announced a $2.5 billion cutback in capital spending over the next four years along with an across-the-board rebate plan to counter slumping sales.
Ford Chairman Philip Caldwell told stockholders at the company's annual meeting that the spending cutback won't involve drastic reductions in the number of available models. Ford had planned to spend $20 billion in capital outlays through the end of 1984, company officials said.
The cuts will be "nothing drastic like sacking a whole car line," Caldwell said, but might eliminate a number of vehicle options. "We want to get more bang for the buck," Caldwell said.
The company already has closed assembly plants in Los Angeles and plans to shut down one in New Jersey. It has announced cutbacks of 6,100 salaried employes and $1.5 billion in operating costs.
To revive sick sales as well as the company's ailing dealers, Ford will begin its second rebate plan this year with payouts ranging from $100 to $500 on all Ford and Mercury cars. During the first quarter this year, however, the company lost almost a half billion dollars on North American sales while it was conducting another rebate promotion.
Caldwell said sales the rest of the year won't be much brighter and "it certainly won't come as a surprise to tell you that at least in the near time greater losses can be anticipated." Sales may recover next year, he added. The new rebate come on the heels of a Ford price increase.
"We're in a trough," Caldwell said after the stockholders meeting. "We need to get some action. We need to get some activitiy."
Ford sales dropped 43 percent during a 10-day selling period last month and then 29 percent during the first four months this year.
This week a group of auto dealers predicted that as many as 25 percent of them may go out of business because of slow sales. Calling the dealers the "heart and soul of small business," Caldwell said the dealers "need some traffic and we're dedicated to doing something about it. That's why we put the cars on sale."
Caldwell denied that he was pressured by dealers to begin the rebates. "We both need the volume," he said.
But the dealers said in a special bulletin this week that showroom traffic is high. They need easier credit for potential purchasers and for themselves to finance inventory they can't sell, they said.
During the last rebate program held between Feb. 11 and March 22, Ford's market share increased 1 1/2 percentage points, and "never had less than a 50 percent increase" in car sales during the rebate period, a company spokesman said.
Caldwell also noted that imports now control 28 percent of the American car market and that the Japanese have 21 percent.
"The Administration should make a strong statement to the Japanese to encourage in the very near term their coming into this country if they intend to compete into this country," Caldwell said.
He also said he plans to give President Carter several proposals next week on improving the auto industry, addressing "the import-car issue, taxes and government regulations, and probably in that order."
Few stockholders criticized the company's performance during the three-hour meeting, although some questioned the company's $35.4 million expenditure for the legal fees and $1.2 million for executive expense accounts last year.
Another stockholder questioned the company's payment of $23,000 a month for the next two years to William O. Bourke, former vice-president in charge of operations, who recently retired. Bourke headed the company's domestic division that lost about $1 billion last year, according to Wall Street analysts.
Caldwell said that Bourke had made substantial contributions to the company and that his retirement sun is appropriate. Also during the meeting, stockholders approved a new stock option plan for employes and defeated three shareholder proposals.