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Ford says PAG will make money in '06

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DETROIT -- All of Ford Motor Co.'s overseas automotive operations will make money in 2006, including the struggling Premier Automotive Group, CEO Bill Ford says.

But he wouldn't predict when the company's most important unit, the troubled North American automotive business, would return to profitability. That unit lost $1.4 billion during the first nine months of 2005.

While not saying North America's losses would continue in 2006, Bill Ford acknowledged that business will be difficult as Ford Motor takes significant restructuring steps next year.

"The tougher actions we'll have to take could impact the short-term performance but are the right things to do for the long term," Bill Ford said in an interview with Automotive News. "But the rest of the Ford automotive world I expect to be profitable throughout next year."

Forward plan

Ford Motor will forecast 2006 earnings targets for the individual businesses in January. That is also when the company plans to announce a restructuring plan internally dubbed the "Way Forward."

The plan will result in several plant closings and thousands of job cuts. Mark Fields, new president of the Americas and chief architect of the plan, told employees in a Nov. 18 e-mail that Ford Motor would cut about 4,000 North American salaried jobs early next year.

Though Bill Ford expects PAG, Ford Motor's collection of luxury brands, to make money in 2006, Jaguar continues to struggle. "We still have not figured out how to make the business equation yet for Jaguar a compelling one," Bill Ford said. "It's better than it was. But the infrastructure was put into Jag for growth aspirations that, in retrospect, were just out of line."

In 2004, Jaguar abandoned a goal to increase annual global volume to 200,000 vehicles. Ford closed Jaguar's historic Browns Lane plant in England this year.

Joe Greenwell, then Jaguar-Land Rover CEO, said in May at the Automotive News Europe Congress that he doesn't expect Jaguar to break even before 2007. Ford Motor produced 118,000 Jaguar-branded cars in 2004. Greenwell, who now is vice president of government affairs for PAG and Ford of Europe, said 2005 volume would be substantially less.

Tough 2005

PAG turned a profit in 2003. Dragged down largely by the red ink at Jaguar, PAG lost $740 million before taxes in 2004. And despite earlier forecasts for a money-making 2005, a full-year profit seems unlikely this year, too.

PAG lost $146 million before taxes through the first nine months of 2005. Ford Motor promises the unit will make money during the fourth quarter, but executives won't say whether the gain will be enough to erase those earlier losses. Executives do admit that PAG will fall short of its 2005 goal of at least $300 million in pretax profits.


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