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ECONOMICS REPORT - General Motors and Ford Cut Jobs and Costs

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I'm Bob Doughty with the VOA Special English Economics Report.

General Motors, Ford and Chrysler are traditionally known as the "Big Three" carmakers in North America. But the industry has been going through a lot of changes.

Recently both G.M. and Ford have had their debt ratings cut. Agencies that advise investors on risk said that both companies depend too much on sales of big sports-utility vehicles. Higher fuel prices have cut into sales of S.U.V.'s.

G.M. and Ford have been criticized for not developing more hybrid vehicles. These use both electrical and gasoline power.

Ford and G.M. also face growing long-term costs connected with their retirement programs.

General Motors says it will cut twenty-five thousand jobs in North America in the next three years. G.M. announced a loss of more than one thousand million dollars in the first three months of this year.

Ford, too, has announced job and spending cuts. It plans to cut two thousand seven hundred jobs this year. Ford also said it would suspend payments into one of its employee retirement plans. And it plans to sell stock in its Hertz car-rental business to raise money.

Foreign competition has made its mark on the American auto industry.

In nineteen ninety-eight, Chrysler joined with Daimler-Benz to form DaimlerChrysler. Headquarters are in Michigan and Germany. But this third member of the Big Three is no longer listed as an American company.

And, last year, Toyota of Japan sold more cars than Ford to become the second largest car company in the world. General Motors is the largest. But industry observers are not sure how much longer that will be true.

As foreign carmakers have expanded in the United States, they have built factories here. Similarly, the Big Three have joined with foreign carmakers to sell cars all over the world. For example, Ford owns Volvo and Jaguar, among others. It also controls the Japanese carmaker Mazda.

G.M.'s holdings include Saab. General Motors has factories in thirty-two countries and sells cars in two hundred countries. G.M. has invested heavily in China. It has joint investments with the Shanghai Automotive Industry Corporation.

America's "Big Two," General Motors and Ford, must deal with some problems. But they remain the third and fourth largest companies in the country.

This VOA Special English Economics Report was written by Mario Ritter. Our reports are online at www.unsv.com. I'm Bob Doughty.

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