Analysis By Jorn Madslien BBC News business reporter

Ford is preparing to cut 25-30,000 jobs, up to a quarter of its workforce, and close 14 factories as part of a six-year restructuring programme that sets out to rescue the troubled car maker.

Unionised workers in Michigan fear for the future

"We must make some dramatic restructuring of our cost structure," says chairman and chief executive Bill Ford, insisting that costs should be cut by $6bn (�3.4bn).

The main aim of the 'Way Forward' exercise - details of which were unveiled on Monday 23 January - will be to restore profitability at its US automotive operations.

"The automotive market in North America is rapidly becoming as crowded and fragmented as other global markets," Mr Ford says.

"Here on our home turf we must do more."

But that is easier said than done.

During 2005, Ford's North American vehicle operations suffered pre-tax losses of $1.6bn and its market share fell 5%.

Its share price has slumped as well, to about $7.5 from about $13.5 a year ago.

Foreign rivals

Simply put, the Blue Oval's problem is that American drivers prefer foreign cars.

Small is big in America Mark Fields, president of Ford's US operations Check Ford's share price Can Mr Fields rescue Ford?

Ten years ago, more than one in four cars sold in the US was made by Ford, which at the time was seen as a worthy rival to the world's largest car maker General Motors.

But Ford, like its US rivals, put almost all its energies into producing sports utility vehicles, or SUVs, while its cars tended to be, by American standards, dull affairs that aimed to have global appeal.

This mattered little in the US while drivers still wanted SUVs, but once demand for these large 'trucks' collapsed, Ford had little to offer their domestic audience.

"Domestic demand for SUVs fell sooner than anticipated," says Mr Ford.

Hence, last year, Ford's share of the US market was just 17.4%, its lowest level since the late 1920s.

The former Detroit powerhouse sold 824,000 fewer Fords in 2005 than it did in 2000, and if the group's other marques are counted, the gap between sales in 2000 and sales in 2005 widens to more than a million.

That means Ford's sales have slipped much further than its US rivals. GM sold 461,000 fewer cars and 'trucks' last year than it did in 2000, while Chrysler's sales drop was 218,000.

During the same period, sales at Japanese rivals Toyota, Nissan and Honda rose sharply. Last year, the three sold almost 1.3 million more vehicles than they did in 2000.

Weak home market

Motown's efforts to hit back have taken a predictable route.

At the Detroit motor show early this month, the 'Big Three' all unveiled retro-styled "American cars", littered with Stars and draped in Stripes.

But "Made in America" does little to win over drivers who are increasingly being wooed by European and Japanese marques, which are also produced in US factories - albeit further south where, according to Dana Johnson of Comerica Bank "work laws make it harder for unions to organise".

The American dream no longer appeals as it used to

At home in Michigan, where the United Auto Workers Union is strong and where the car industry accounts for 10% of the economy, there could be some mileage to be had from a "Made in Detroit" slogan, if only the state was not haemorrhaging jobs.

Ford's 25-30,000 job cuts are expected to be matched by GM, along with tens of thousands of supplier and support jobs.

None of this makes Michigan a growth market for those who are in the business of selling expensive cars, and there is little relief in the rest of the US, observes Merrill Lynch analyst John Murphy.

"Simply put, we expect it to get worse before it gets better," he says.

Modest ambitions

This is not to say that US car sales are all that weak.

This year, between 16.7 and 16.8 million cars are expected to be sold in the US, down slightly from 16.9 million in 2005 and from a 17.4 million spike in 2000, according to the Big Three's chief economists.

But the relatively modest overall slowdown is expected to hit Ford's bottom line harder than most, especially since there is no room for the troubled car maker to boost margins by raising its already tightly squeezed prices.

Ford has some hope of boosting earnings from new models, in particular from its forthcoming hybrid offering and from its crossover and medium-sized cars, which are becoming increasingly popular in line with rising oil prices.

"Small is big in America," according to Mark Fields, president of Ford's US operations.

Take Ford's upmarket Volvo subsidiary. The Swedish unit anticipates a 33% rise in global sales in the next four years, largely thanks to its new, small C30, which should help reverse its fortunes in the US where sales fell more than 11% last year.

Ford's Volvo subsidiary predicts smaller models will lift sales

But even if some of its new models do well, others have turned out to be expensive flops.

Volvo's sister marque Jaguar is a case in point. Ford used to say it wanted to sell 200,000 Jaguars a year after it paid �1.6bn for the marque in 1989. Jaguar's losses have since amounted to billions of pounds, and last year it sold fewer than 100,000 cars.

Hence, Ford's overall ambitions appear to remain modest. Ford chief executive Bill Ford recently said he merely hoped to "stabilise our market share this year".

Financial services to the rescue

The situation is not making it any easier for Ford to shift its $142bn debt mountain - as made clear by the influential credit ratings agencies Moody's and Standard & Poor's, which both pushed the group's rating further into junk territory this month, making debt servicing more expensive too.

But all is not lost. And this is why.

Ford has become a finance company that also happens to make cars, albeit at a loss of hundreds of dollars per vehicle.

In essence, there is the automotive leg and the finance leg, and thanks to these two parts the company's profit and loss account is largely balanced.

Ford's finance unit, Ford Credit, made net profits of $2.5bn during 2005, more than cancelling out the losses made by its North American automotive unit.

Which begs the question: if Ford Credit is the real reason why the company is still able to stand on its own two feet, why bother make any cars at all?

The answer, of course, is that if you were to take away the car sales Ford Credit would no longer have a business.