Ford Motor Co. (NYSE: F) is submitting its plan to Congress, and interestingly enough it does not sound as dire as some might have guessed based upon the auto company’s prior presentations. Ford has said it is asking for $9 billion in bridge financing, but hopes it does not need to access that. CEO Alan Mulally has said that he will only take a $1 salary if he accesses government funds. The company is also selling its corporate aircraft and will cancel management bonuses in 2009.
The turnaround plan calls for $14 billion in investments in the US foradvanced technology and products and will aim for a full batteryelectric vehicle sedan in 2011 and a full battery electric commercialvehicle in 2010. As expected, it is considering a possible sale ofVolvo, which has been in the works for sometime if you look back at Ford’s comments.
The company does see weak sales in 2009 to 2010 and recovery in 2011,and it plans to be back at break-even or profitability by 2011. Aspart of cost cuts it will continue to cut its dealer and supplierbase. The company is also engaged in further UAW talks to reduce itslabor costs. It is suspending 401/K matching, dependent scholarships,tuition assistance, and is cutting retiree life insurance.
The company wants to double production of hybrid vehiclesand is aiming for a 14% fuel economy improvement in 2009, 26% in 2012models, and 36% in 2015 models. For its Ford, Lincoln an Mercurymodels, it sees half of those models using advanced technology in 2010models and 75% of those in 2011 models with an ultimate goal of 90%using advanced tech in 2014.
What is interesting is that Ford has noted that it hopes it does nothave to take the loan and says it will be a backstop. It is alsoreferring to this as a loan rather than a bailout, and it is asking fora 10-year revolving line of credit. The company said it is looking tospeed up the approval process of an industrial loan company by the FDIC.
More importantly, it is saying it believes it has enough liquidity toweather the current downturn assuming that it is of limited duration.Ford is also noting that the bankruptcy of one of its competitors wouldadd pressure on its liquidity.
We will be keeping our eyes open for updates throughout the day. Fordis currently up 9.5% at $2.79 on more than 60 million shares in justover an hour since the open.
Jon C. Ogg
December 2, 2008
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