Several media have suggested that the reason that Ford (F) wants to sell its Jaguar and Rover businesses is not simply to streamline the company and off-load underperforming divisions. The company may be raising cash to create a new benefits pool for the UAW. The fund, called a voluntary employees beneficiary association, would be funded by the car companies to move health-care liabilities to an operation run by the UAW, according to The Wall Street Journal.
Does Ford really need to raise money this way to off-load the employees liability? Maybe not. The company had $49 billion in cash and marketable securities at the end of the last quarter. That was down from $50 billion at the end of the previous quarter.
Even if Ford’s restructuring will cost the company $17 billion over the next two years as the WSJ estimates, that leaves Ford with over $30 billion in cash. Moving the union liabilities off the balance sheet would improve it by $26 billion. In other word’s Ford probably has the cash on hand to fund the transfer, and, if not, it could raise the money in light of its improved balance sheet.
The question with Ford’s cash is not the UAW fund. It is whether the company can begin to reverse its loss of market share in North America. If not, balance sheet transfers will not do it much good.
Douglas A. McIntyre can be reached at [email protected].
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