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Ford To Congress: “We Don’t Need No Stinkin’ Packages”

Posted in auto industry, Detroit, Ford, General, Newsworthy, Politics by Suzanne Denbow | December 3rd, 2008 | 1 Response |

Ford CEO Alan Mullaly testifying before the Senate Banking, Housing and Urban Affairs hearing on the automotive industry bailout on Capitol Hill in Washington, Tuesday, Nov. 18, 2008. (AP Photo/Manuel Balce Ceneta)

Yesterday, as the first round of Senate hearings intended to determine the future of the auto industry launched, word broke that Ford was breaking ranks with its Detroit brethren. According to reports that surfaced late in the afternoon, rather than continue prostrating before lawmakers on Capitol Hill in a desperate plea for federal funding, Ford Motor Company CEO Alan Mulally chose to leave his dignity intact. After presenting his case before Congress, outlining Ford’s plan for the future, Mulally then revealed that while a $9 billion emergency aid package would provide a significant (and welcome) safety net for the admittedly ailing automaker, Ford can certainly survive without it.

As per the details of the plan outlined yesterday, Mulally expects Ford to break even (or at least post a pretax profit) by as early as 2011 – without any federal assistance. Should Congress chose to grant domestic automakers the requested $25 billion in emergency loans, however, Mulally did propose that $9 billion be reserved for Ford as a “stand-by” line of credit. The $9 billion would serve solely as an emergency reserve, though, and barring any unforeseen circumstances, Mulally doesn’t expect Ford to tap into the source. “Everything about our capital structure we’ll continue to work,” Mullaly said. “We don’t want to take on any more debt.”

Thus prepared to weather the economic storm without the benefit of Uncle Sam’s umbrella, Mulally’s plan for Ford’s extends beyond the immediate liquidation of their assets. Although Ford will continue to forge ahead with plans to sell off their Swedish subsidiary, Volvo, and reduce stake in Mazda by 20%, the long-term plan for generating a positive cash flow calls for focusing the majority of their efforts in-house. By the end of 2008, Ford intends to reduce its dealer network an additional 14%, leaving the final count at just 3,790 domestic dealerships. To address perhaps their biggest obstacle, the UAW, Mulally has confirmed that heavy negotiations are already well underway “with the objective to further reduce its cost structure and eliminate the remaining labor cost gap that exists between Ford and the (foreign automaker) transplants.”

With the assets they plan to gain from the aggressive budget-trimming maneuvers, Ford’s preliminary plan ambitiously calls for investing upwards of $14 billion into new green technology. Dispersed equally through the internal engineering departments as well as outside R&D partners, Mullaly is confident Ford’s aggressive plan will yield tangible results in as little as 2 years. Projected Mulally confidently, “We think we’re going to be able to get through this and get back to profitability and be a very viable company in 2011.”

Sources: Associated Press & Detroit Free Press

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  1. Jason says:

    Ford management has lost it. If they took $9 billion now they could have paid off money that they have already borrowed and save on interest.