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02 December 2008

Ford Unveils Plan to Congress

Ford unveiled its 33 page plan to survive the crisis to Congress calling for an investment of $14 billion with $9 billion being a bridge loan. Ford says it doesn't see that it will have a liquidity crisis in 2009 and expects to break even or make a profit by 2011.

Ford has reduced executive salaried employees wages by 40% and is cancelling bonuses. CEO Mulally agreed to work for $1 if Ford uses the loan from the government. The other CEO's have made the same promise.

It will also sell some of its corporate aircraft, reduce dealerships by 14% compared to 2005 levels, cut capital expenditures, explore balance sheet restructuring and raise equity capital.

Ford is in talks with the UAW to identify ways to cut expenses. Despite these cost cutting measures, Ford does not see an end to the crisis in the near term. It did not mention any new reductions in plants or capcity eliminations, but has made a committment to speed up hybrid and electric models of cars.

Ford shares rose on the news of the plan, in fact all auto shares are rising. The other companies, GM and Chrysler have not reportedly turned in their plans yet, but plan to by the deadline of 5:00PM. Although GM's plan is not known in detail, it is said to include the sale of corporate jets and the halting of corporate jet use.

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