Ford, GM Paint Dreary Picture for 1991 : Autos: The nation’s two biggest industrial companies, apparently headed for massive losses, will lay off workers and cut production.


U.S. car and truck sales in 1991 will probably decline about 5% from this year’s weak levels, even without war in the Middle East, top executives at Ford Motor Co. and General Motors Corp. said Wednesday.

In year-end forecasts, the nation’s two biggest industrial companies--both of which appear headed for massive losses in the current quarter--painted a dreary picture for early next year and told of general retrenchment.

GM, which has imposed steep fourth-quarter production cuts as vehicle sales have fallen precipitously, said it will reduce the pace of its assembly lines at many plants in the first quarter of 1991 and lay off more workers.

Ford said it will prepare a new round of early retirement offers to trim its white-collar work force and warned that its $3 annual stock dividend is at risk in today’s economy, especially with the threat of war in the Middle East. It also said some less-important new product introductions could be cut.


But both firms said in separate news briefings that they expect to return to profitability in the U.S. car and truck business as next year unfolds, and they predicted an improving economy in the second half of 1991.

“That’s our plan, Saddam Hussein permitting,” said Philip E. Benton, president of Ford, underscoring the uncertainty that surrounds the economy as long as the Iraqi leader remains at a standoff with U.S. forces in the Middle East.

The price of Ford stock tumbled $1.125 to $26.50 a share on the New York Stock Exchange after Benton signaled that Ford’s dividend might be under review. Some analysts have predicted a cut in the dividend.

“You can’t sit here . . . with a market as soft as it is and the possibility of war in the Middle East and say the dividend is secure,” Benton said.

GM Chairman Robert C. Stempel dodged the dividend issue but offered no assurances that GM’s payout would escape unscathed.

A steep fall in car and truck orders from dealers triggered dramatic cuts in production at Ford and GM last month and dried up revenues. The poor sales, the high cost of rebates, the sale of a higher mix of less-profitable vehicles and continued heavy spending on new product development have unleashed a river of red ink.

Benton and Stempel all but conceded major losses in the current quarter, as have been expected. Analysts have estimated GM’s loss as high as $600 million and Ford’s in the $400-million to $500-million range. With Chrysler Corp. expected to post a smaller loss, the Big Three U.S. firms would be in the red together for the first time since 1981.

“All of us want Jan. 1 to come as soon as possible,” Stempel said.


In the third quarter, GM managed only slim operating profits while taking a $2-billion loss to cover the costs of closing up to nine assembly plants. Ford posted a 78% plunge in July-September earnings and was profitable only because of its finance subsidiary.

Stempel said profitability in the first quarter is “too close to call.” Even if the Middle East crisis were resolved in January, the tax and budget crisis of October lingers in the public mind, undercutting consumer confidence, he said.

“It will still take awhile for this country to get back on its feet,” Stempel said.

On other matters:


* GM said it will announce plans today to proceed with construction of a previously reported car assembly plant in Eisenach, Germany. At $670 million, it will be GM’s biggest investment to date behind the former Iron Curtain. The plant will build 150,000 cars a year.

* Ford and GM said they won’t follow Chrysler’s lead in halting the public reporting of car sales every 10 days. The two firms said they sympathize with Chrysler’s reasoning--that the process makes sales of Japanese cars look better than they are--but that a halt in the practice would cause other problems.

* GM said it hasn’t decided whether to follow Ford’s lead in halting rebates to customers and giving the money instead to dealers to use as they want in closing deals.

* Ford said it has no intention of selling its San Francisco-based First Nationwide financial subsidiary, describing the unit’s financial troubles as part of an industrywide crisis.