Ford Announces $129M Loss, 10 Percent American Salaried Job Cuts

DEARBORN, Mich. — Ford Motor Co. said Friday it lost $129 million in the third quarter as the struggling automaker burned through $7.7 billion in cash and set plans for more job cuts.

Ford said it will eliminate about 2,260 more white-collar employees in North America as it battles continued weak demand, the credit crisis and the worst economic downturn in decades.

"While Ford has been dramatically affected by the difficult business environment, we remain absolutely convinced that we have the right plan and are taking the right actions to weather this difficult period and emerge as a lean, globally integrated company poised for long-term profitable growth," Alan Mulally, president and chief executive, told industry analysts during a teleconference.

Ford said it lost 6 cents per share for the quarter, compared with a loss of $380 million, or 19 cents per share, a year ago.

The company posted a pretax loss of $2.7 billion from continuing operations. But it was offset partly by a $2 billion gain as the company shifted retiree health care liabilities to a trust run by the United Auto Workers.

Ford's global automotive operations had a pretax loss of $2.9 billion for the quarter, compared with a pretax loss of $362 million a year earlier.

Sales fell 22 percent to $32.1 billion from $41.1 billion due to lower volume and the sale of Jaguar and Land Rover.

Excluding special items, Ford lost $1.31 per share, worse than Wall Street expected. Analysts surveyed by Thomson Reuters predicted a loss of 94 cents per share on sales of $28 billion.

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Dearborn-based Ford reported its worst three-month performance ever in the second quarter, when it lost nearly $8.7 billion.

The cash burn _ in which a company spends more money than it takes in _ was far higher than the $2.1 billion Ford used up in the second quarter.

Ford said the cash burn primarily reflected pretax automotive losses, changes in working capital and payments to its credit arm to reduce interest rates for buyers. It was exacerbated by sales drops and production cuts of 500,000 fewer vehicles from second-quarter levels, resulting in $3 billion less in incoming cash for the quarter.

Chief Financial Officer Lewis Booth would not say if he expects the cash burn rate will continue at the present levels, but said he was confident the company can make it through 2009.

"With our present assumptions, we are comfortable with our liquidity position," Booth told reporters Friday morning. "I think it goes without saying, forecasting the future at the moment is extremely difficult. Trying to find out just exactly what is happening with the consumer is really tough."

Industry analysts say that if the economy doesn't improve, Ford could run out of money sometime after 2010.

The company reported having $18.9 billion in cash on hand on Sept. 30, down from $26.6 billion at the end of the second quarter.

U.S. automakers have approached the U.S. government for low-interest loans as they try to weather the global economic slowdown. Ford is also among automakers that are talking with the European Commission for a low-interest loan of 40 billion euros, or about $51 billion. It also is talking to other governments.

Ford said it will cut North American production in the fourth quarter by 40,000 units more than what was announced in September, primarily with shift reductions and temporary plant shutdowns. In September the company announced a fourth-quarter production cut of 171,000 units over the fourth quarter of last year, mainly in trucks.

The salaried cuts, Ford said, equate to about 10 percent of its North American salaried work force of 22,600. It will reduce the work force primarily through personnel reductions and attrition, Mulally said.

It also said it has no plans to offer more buyout or early retirement packages to blue-collar workers.

The automaker started the year with 89,000 employees in North America but reduced that number to 80,200 as of Sept. 30 through attrition, hirings, buyouts and layoffs.

In a further effort to cut costs, Ford said it will eliminate merit pay increases in 2009 for salaried workers in North America, along with performance bonuses for salaried employees worldwide. It also will suspend matching contributions for U.S. salaried employees who take part in the company's savings and stock investment program.

Ford also announced that some of its vehicle programs will be deferred, although the company described the moves as minor timing changes.

Ford said it lost $2.6 billion pretax in North America, compared with a loss of $1 billion in the year-ago period.

It recorded a pretax profit of $480 million in South America, compared with $386 million last year. In Europe, the company made $69 million, a sharp drop from the $293 million in the year-ago period.

Ford's Asia-Pacific operations made $4 million, down from $30 million a year ago, while it lost $1 million on its interest in Mazda, compared with a profit of $14 million in the third quarter of last year.

Volvo lost $458 million, wider than the $167 million loss last year. Ford Motor Credit Co. had a pretax profit of $161 million, far lower than the $546 million in the same quarter last year.

In morning trading Friday, Ford shares rose 3 cents to $2.01.

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On the Net:

Ford Motor Co.: http://www.ford.com

Comments

[partyofone]

The American auto industry has refused to look at long term trends in terms of oil supplies and global warming and has insisted on short term gains from building and marketing huge gas guzzlers.

Now once again, the executives, directors and investors who benefited want the taxpayer to subsidze their recovery.

What types of profits and executive bonuses did auto executives pay over the last decade? If they agreed to pesions and health care for retirees, why weren't they building the reserves to pay for them? With babyboomers retiring, is a federal bailout setting precedent for mega billions down the lline?

Once again the concern here is not the workers, it is the irresponsible executives and shareholders who have not been responsible and want someone to protect them from the losses they have created.

American automakers have dinausors and the climate is changing. Sending billions of tax dollrs to feed them when they refuse to evolve is RIDICULOUS.

[TP2]

It is time to let GM, Ford and Chrysler all go out of business. Have we ever in the entire history of corporations seen such poor strategic planning? For over 30 years the executives of these firms, these "titans of industry" should have foreseen and been prepared for the end of cheap oil. They were warned over and over again and these idiots did nothing but build bigger and bigger gas guzzlers. It is shameful. Now they want $50 billion. These jokers deserve to be collecting unemployment. They should not receive a penny of tax payer money. We should take the $50 billion and hire all the auto workers. Retrain them in building hydrogen fuel cell vehicles and then build new factories to produce the cars of the future. There might be some automobile executives who are worth keeping but I venture to guess their numbers are few and far between.

[CologneCitizen]

It's the quality. Look at Japan and Germany for examples. Consumers are not stupid. And in times likes these, quality matters even more.

[CologneCitizen]

Up to the seventies, American automakers made some pretty good cars. They ate a lot of gas,but that could be changed today. The basic quality was just better than today. Obviously the executives of these US car makers are incompetent. There are enough examples of how it is possible to make cars with good quality and make money at the same time. Look at Japan or Germany as well. To go to the government and cry for help is crazy.

Flying in the USA is a drag too. Your airlines suck because they are not able to provide even a minimum of passenger comfort and passenger care. Will they be next in line to cry for help when they get broke? Americans used to know how to run a business and make profits. Why has this disappeared ?

[MuchMadness]

Deregulation tempted the airlines into a price war. The result was lower fares but lousy service. Customers were willing to accept that trade off. Now air travel is no fun at all.

[Howard123]

A bailout of the auto industry presents an unprecedented opportunity to improve the environment, reduce our reliance on oil, create jobs,and to insure the long-term economy and health of the auto industry.The terms of the bailout can require and reward meeting mileage and emission requirements, alternative fuel requirement,s use of U.S. workers, and long-term R&D. Funding the bailout can come in part from oil industry profits. Part of the bailout can eventually be repaid out of auto industry profits down the road. Bailout money can be given only for production of a limited number of car models to reduce costs.

Those more expert than I can design this, but it must be viewed as an opportunity.

[rosiebond007]

The American car manufacturers must have been ASLEEP these past five years while the Prius and similar have been flying off the lots. They still arrogantly insisted on building gas guzzling trucks, SUV's, Hummers and the like - so they have no one to blame but themselves. LET THEM SINK .... OR SWIM ....There once was an 'ELECTRIC CAR' - retool and set that car rolling. I bet the tool and die stuff is hidden away from the oilmen somewhere - GET IT OUT AND GO FOR IT.
Made in America is what counts. Our very own industry - get people working - what a concept !

[iambusto]

fire all management
close all brands except top 3.
cut labor costs by 50% at least.
close at least 40% of plants.

then we will talk.

oh and wipe out all shareholder equity and give govt. control.

[Erdgeist]

The problem with GM and Ford, not to mention Chrysler, is management. In fact, they have always been the problem. Having people who are shortsighted, greedy, and essentially psychopathic is like, in the past, hiring a one legged guy by the name of Ahab to captain your whaling ship.

[MuchMadness]

The Fusion and Focus are decent cars, but Ford builds them in Mexico. Why should Americans pledge taxpayer money to prop up an industry that just wants to build big, ugly, gas guzzling vehicles and will only build fuel efficient vehicles in foreign lands?

If the government is going to bail these companies out, the government should call the shots. Compel these companies to get a clue, straighten up, and fly right.

The American automakers always find ways to give the CEOs big bucks, but the companies don't seem to give a hoot about Americans who have enough common sense to refuse to spend 30K on big, ugly vehicles.

[MuchMadness]

A correction: The Focus is made in the U.S. ( but Ford does very little to market it). The Fusion is made in Mexico.

[AngryOhioan]

Suppose we take the auto execs claims that the total job losses would be 2.5 million from not bailing them out. The $25 billion so far promised is $10,000 per job. The execs say that is not enough and need at least $50 billion. That is $20,000 per job. GM alone has already lost $74 billion since 2004 and some think a bailout could approach $100 billion. $100 billion would be $40,000 per job. And that is assuming that 2.5 million is accurate and that all of those jobs would be saved by a bailout. For that kind of money aren't there other areas where we could save/create jobs that wouldn't need perpetual bailouts? Unless demand quickly rebounds, some sort of capacity reduction is inevitable. I don't have a problem with salvaging what can be saved, but sending good money after bad doesn't make sense.

[Tweet]

The auto industry has asked the government for $25 billion to retool to make fuel efficient cars. I.e., they want us to pay for what they should have done with their profits from when SUVS and trucks were hot.

The right answer? We will give you money if 1) you get rid of all the management people who brought you to this pass; 2) you start respecting the people who work for you financially; and 3) you change the names of your corporation and your cars, because nobody wants the junk you make. To guarantee that you do the above, we want over 50% of your voting stock. If you're not interested in this deal, we'll wait until you go under and then give the money to buy your plants at a nickel on the dollar to people who know how to run a socially conscious business.

And THEN they want another $25 billion to set up an employee health trust. The right answer: rather than giving you money for health insurance, why don't we take that $25 billion and seed single payer coverage, i.e., the kind of socialism that doesn't just get you off the hook for health care coverage your union contracts require of you, but offers the same coverage to tons of people who don't work for you. How many people could we cover with $25 billion. Bet it's a lot more than are on your payroll.
.

[biotechwoman]

Why save the US auto industry??? For decades this industry has sat back and not responded to global demands. They produce ugly cars that guzzle gas. They actively looked to get around regulations by claiming 4x4 vehicles as "light trucks."

For years car salesmen and dealers have made big bucks on the backs of their workers. While at the same time reducing health care and pension benefits. They have screwed the working class and now they want a government bail out. If this isn't socialism I don't know what is.

[VOTER]

Ford and all of the auto companies have failed because of poor leadership.
So before asking taxpayers to bail them out again and again, some corporate heads must
roll into the unemployment line but not before returning their bonuses.

The Government must demand Checks and Balances along with full payback to taxpayers.

If these corporations don't like governmental control, too bad.
The bailouts are to invigorate our faltering economy and preserve jobs of average
workers in this industry.

I was recently in Maine and a lobster fisherman told me something which surprised me.
First of all, I had no idea Maine's Lobster Industry is the most profitable in the world.
Nice.
Why?
The fisherman said, GOVERNMENT REGULATIONS!

[RRG64]

these companies don`t want government control they want hand outs.

we need to make sure all companies which are receiving bail out money are accountable to the American people.

bailoutsleuth.com

[VOTER]

We agree.

[davidwayneosedach]

Ford had abetter get in line for the bailout money before it's too late. And it's all gone.

[Artos]

I actually believe that the Corporations are loving this downturn. It has given them the greatest opportunity to rid themselves of Unions. Has anyone noticed that whenever the Companies are permanently laying off employees the stock market shares still go up. It's all about cutting costs to show "Profit". Personally I don't view having made money not by selling products but by hosing employees as legitimate profit, but it's why the Big Boy C.EO.s were getting all those bonuses. Yeah they sure do thrive on other peoples misery.

[iambusto]

when companies cut costs, investors become hopeful that the company might have some profits in the future. what part of that do you not understand?

[hypnotoad72]

Long term; who will be left to buy anything? Even a previous CEO of Ford mentioned that his products should be affordable by the people who built them... of course, that was Henry Ford and many think his idea of running a business is outdated, socialist, communist, whatthefrigever...

http://www.planetpapers.com/Assets/292.php

[djwfutbol]

Don't know what shares you are referring to that you think are going up. Ford is below $2 today. It started the year at $8. Maybe you need to get off your soapbox and look a little closer at what is truly going on. With problems like these, we need constructive criticism and good ideas not bombastic rhetoric. Feel free to pitch in.

[JScott]

Bring in the Australian Ford Falcon to the USA

[hypnotoad72]

Long term; who will be left to buy anything? Even a previous CEO of Ford mentioned that his products should be affordable by the people who built them... of course, that was Henry Ford and many think his idea of running a business is outdated, socialist, communist, whatever...

http://www.planetpapers.com/Assets/292.php