Ford Motor Co. announced Friday that it would eliminate 1,150 jobs in England to streamline its Jaguar Cars Ltd. unit, where weak sales have failed to offset spending on new products and other parts of the business.
In a conference call, Ford also said Jaguar would get out of Formula One racing at year-end so the brand can focus on its core automotive business. The Formula One racing division is for sale, the company said.
"The actions we're taking today, while difficult, are absolutely necessary to set Jaguar back on the right path and ensure a strong and sustainable business for the future," said James J. Padilla, Ford's chief operating officer and chairman of its automotive operations.
On the New York Stock Exchange, shares of Ford rose 27 cents Friday to close at $14.22.
Ford, the nation's No. 2 automaker, behind General Motors Corp., raised its third-quarter earnings outlook by 10 cents per share to a range of 10 to 15 cents per share from continuing operations, excluding special items, compared with zero to 5 cents per share.
In England, Ford said it plans to halt operations at its Browns Lane Jaguar plant by the end of 2005 and consolidate operations of the luxury brand into its Castle Bromwich plant. Ford also said it will reduce Jaguar's remaining production plan for 2004 by 15,000 units.
"We have too much capacity, and that is our underlying structural problem," said Joseph Greenwell, chairman and chief executive of Jaguar and Land Rover.
Ford's Premier Automotive Group, which includes the Volvo, Jaguar, Land Rover and Aston Martin brands, reported a pretax loss of $362 million in the second quarter, after posting a profit of $166 million in the comparable period last year.
In particular, Ford officials said Jaguar's U.S. sales had been disappointing and that cost improvements at Jaguar and Land Rover had been slower than expected -- a situation the company pledged to correct. The weak U.S. dollar has also hurt profits.
For the first eight months of 2004, Jaguar's U.S. sales were off 11.5 percent, while Land Rover was down 15.4 percent, according to Autodata Corp. Ford's overall sales for the same period were off nearly 5 percent.
Sluggish U.S. sales of Jaguar's X-Type sedan, introduced a few years ago to compete in the competitive entry-level luxury car market, are one reason for the company's problems.
Sales through August were down 16 percent from a year ago, hurt by offerings in the same category from brands such as Cadillac, Infiniti, Lexus and Acura.
"That was a big strategic shift for Jaguar when they went downstream with the X-Type," said Mike Wall, an analyst with CSM Worldwide in Grand Rapids, Mich. "There were questions whether they could do it or not. The styling maintained some of the Jaguar cues, but I think people over here were looking at it and saying, 'There are so many other better products out there.' "