Cuts By Toyota (TM) And Ford (F) Signal Pessimism About 2010.

Ford (NYSE:F) said it would offer buyouts to its 41,000 US factory workers. The terms are generous and give the rank-and-file large lump sum payments and vouchers for Ford vehicles. Ford explained that its number of blue-collar employees was still too great for its reduced production capacity.

Toyota (NYSE:TM) said it needed to bring down costs more within a few hours of the Ford news

The largest Japanese car manufacturer said it would chop auto parts procurement expenses by 30% over the next three years. Toyota appears to be putting pressure on suppliers to bring down what they charge the company.

The two pieces of news taken together are a clear sign that large car companies do not expect any meaningful increases in sales over the next few years, at least not in Europe, Japan, and the US, which have been the centers of car sales activities.

The announcements also mean more lost jobs in the auto and auto supply sectors. Governments pressing to improve employment in developed nations can do little to combat the huge jobs losses that come with major restructuring efforts in industries which used to be large employers.

The car business is not going to get any better in 2010. That is, at least, what the car companies are saying indirectly.

Douglas A. McIntyre