Today, Ford published its third quarter financial reports, revealing a total net loss of $129 million, or 6 cents a share, for the past three months. Gross, Ford North America posted an operating loss of $2.9 billion and as of 12:21pm today, the price of one share of Ford stock was officially listed as $1.91.
As of September 30, 2008, Ford has a reported $18.9 billion in cash reserves, $10.7 billion in committed credit lines (both secured and unsecured), and is steadily losing about $2.6 billion a month. Extending one of their own a courageous vote of confidence, industry analysts at the Detroit Free Press estimate that if Ford continues at its current rate, they’ve only got enough cash to keep afloat for the next seven months. By their approximation, the Blue Oval will walk the Green Mile by April 2009.
During this morning’s budget meeting Ford CEO Alan Mulally acknowledged that the numbers are discouraging, but he maintained that Ford is still resolved to survive the brutal beatings. To date, Ford’s attempts to clot the bleeding have included the sale or closure of seven production facilities as well as a continuous volley of layoffs. In the wake of their newest losses, however, Mulally’s plan for Ford calls for an even more aggressive tightening of the budget. Accordingly: two additional plants will be scheduled for closure in 2009 and 2010, successively, and in addition to the 55,000-odd casualties the payroll has already suffered, Ford will further be reducing their workforce by another 10%.
Intended primarily as a temporary solution to the much larger problem, Ford’s plan for the long-term relies heavily on the success of the “Global Ford” program. Although integration of the North American and European lineup isn’t expected to be fully achieved until 2013, a significant reduction in structural costs as well as drastic revision of production fundamentals leads Mulally to expect to see a break in the budget by as early as 2009. Interestingly enough, Ford’s individual “bailout” plan makes no mention of federal aid, but instead focuses on an extensive in-house overhaul. Lifted directly from the slides Mulally used during this morning’s presentation:
To support new product investments and offset continued industry weakness, Ford is implementing actions to improve Automotive cash by a total of $14 billion to $17 billion through 2010.
The actions include:
Reducing North American salaried personnel-related costs by an additional 10 percent by the end of January 2009, through personnel reductions, attrition and other actions. The reductions are in addition to personnel-related cost actions already taken in Ford North America and under way in Ford of Europe, Ford Asia Pacific and Africa, and Volvo.
Further reduction of U.S. hourly employees by approximately 2,600 as a result of the most recent round of targeted buyouts – bringing Ford’s total U.S. hourly reductions through buyouts in 2008 to approximately 7,000.
Eliminating merit pay increases for North America salaried employees in 2009.
Eliminating performance bonuses for global salaried employees, including the Annual Incentive Compensation Plan for the 2008 performance year.
Suspending matching funds for U.S. salaried employees participating in Ford’s Savings and Stock Investment Plan, effective Jan. 1, 2009.
Reducing annual capital spending to between $5 billion and $5.5 billion – enabled by efficiencies in Ford’s global product development system and reduced spending in declining product segments.
Reducing engineering, manufacturing, IT and advertising costs through greater global efficiencies.
Reducing inventories globally and achieving other working capital improvements.
Return of capital from Ford Credit to Ford Motor Company consistent with Ford Credit’s plan for a smaller balance sheet and a focus on core Ford brands.
Continuing to develop incremental sources of Automotive funding, including divesting of non-core operations and assets, and implementing equity-for-debt swaps.
Noticeably absent among the prerogatives: the Wagoner approach, also known as “sniveling before Congress.”
Source: Detroit Free Press & Ford Motor Co.