DETROIT – The prospect that Ford Motor Co. will announce huge job and production cuts this week overshadowed the usual festive atmosphere as automakers showed off their wares at the North American International Auto Show, which opened on Sunday.
The focus is usually on sheet metal and a blitz of new models of cars and trucks at the Detroit show, the auto industry's premier annual event.
But a banner headline, splashed across the front page of Sunday's editions of The Detroit News and the Free Press, set the stage for this year's more somber gathering.
"Angst Crashes Auto Party,'' said the headline, referring to an imminent restructuring announcement from Ford and the struggles of all three Detroit automakers for profitability in a weakened U.S. economy.
"Right now we are in the middle of a painful but necessary transformation of our company,'' Ford Chief Executive William Clay Ford Jr. told a crowd of employees and journalists at the unveiling of a new Ford GT-40 prototype sports car on Sunday. ''We've made some progress already but we're not finished. We will be making more announcements later this week.''
U.S. auto sales last year reached the near-record highs set in 2000, especially after the Sept. 11 attacks when Detroit's Big Three introduced interest-free loans and other incentives to shore up consumer sentiment and demand for new vehicles after the suicide plane attacks in New York and Washington.
But deep discounts have eroded profit margins for U.S. automakers. And they face an ever more guarded outlook as their Asian and European rivals, many of whom enjoy reputations for better product quality and design, gain momentum in their relentless assault on the U.S. market.
Highlighting the intensifying competition for U.S. automakers, a panel of automotive journalists named Nissan Motor Co.'s new Altima sedan the ``North American Car of the Year'' at the opening of the show in Detroit's cavernous Cobo Hall convention center Sunday.
It was the first time a Japanese car had won the award and came as the Accord, from Japan's Honda Motor Co., broke the long reign of Toyota Motor Corp.'s Camry as America's best-selling car.
In another sign of the times, and a grim reminder of the attacks of Sept. 11, sheriff's deputies patrolled the corridors around the auto show with bomb-sniffing dogs.
There were other awards, toasts and spin from industry executives about new ``concepts,'' or vehicle prototypes, amid the glitz and glitter that the auto show brings like a pageant ever year to a city almost synonymous with urban decay.
Tapping into the post-Sept. 11 wave of American nostalgia, General Motors Corp. rolled out a retro-styled Chevrolet Bel Air concept convertible. And the Chrysler side of DaimlerChrysler AG introduced the Pacifica, a hybrid station wagon-sport utility vehicle it believes could be as successful as its PT Cruiser or the original minivan.
But for Ford, and industry insiders, celebrations of new vehicles took a back seat to the massive restructuring plan it will unveil on Friday in a meeting with Wall Street analysts at the company's Dearborn, Michigan, headquarters.
``There's no doubt about it,'' said Ford spokesman Jim Bright. ``The coming news does unfortunately cast a shadow over anything here.''
Details of the plan, which many industry analysts expect to include massive job cuts and the possible idling of some assembly plants, have not been made public.
But it comes as Ford, struggling with its worst financial crisis in nearly a decade, has said it expects to post a fourth-quarter operating loss, stemming in part from a jump in bad loans and customer credit problems, of about $900 million. The automaker, which ousted its hard-knuckled former chief executive, Jacques Nasser, in October, posted a combined total of $1.4 billion in losses in the second and third quarters of 2001 and axed 5,000 salaried jobs through voluntary early retirements last summer, followed by the lay-off of more than 600 mostly hourly workers in December.
Only a year ago, Ford was widely regarded as the best-managed of Detroit's Big Three. But its recent troubles include the Firestone tire crisis, declining revenues and a string of high-profile quality problems.
``While we are addressing our cost structure, we are keeping an incredibly sharp focus on producing great cars and trucks. Quality and value will return as (our) hallmarks,'' Ford said.
Detroit has been awash with rumors that Ford will close some of its 21 North American assembly plants as part of efforts to bring costs into line with its lower market share.
There is a moratorium on plant closings in Ford's contract with the powerful United Auto Workers union, which could stage a crippling strike if factories were shut down without its consent. But UAW sources said Ford's chairman and new chief executive, family scion Bill Ford, won a virtual assurance of labor peace at a meeting with union leaders in Cincinnati late last year.
This time a year ago, the focus of the show was on DaimlerChrysler as it prepared to announce a turnaround plan for its loss-making Chrysler unit.
Underscoring the slow pace of turnarounds when it comes to the giants of the automotive industry, Chrysler President Dieter Zetsche told reporters on Sunday that the company will post a 2001 loss at the smaller end of its forecasts, of between $2 billion and $2.5 billion. He also warned that U.S. market conditions would not allow him to guarantee that the automaker would reach its break-even goal this year.