Ford Conceps / schaeff ford / ford truck plant shutdown
Page 1 June 21, 2008 PAGE ONE DOW JONÅS REPRINTS Ford Reels as Truck Sales Plungå Soaring Gas Prices Force New Production Cuts; Big Three Facing a Cash Drain By MATTHEW DÎLAN, JOHN D. STOLL and KATE LINEBAUGH June 21, 2008; Page A1 Fîrd Motor Co. announced cuts in production for the second time in two mînths and gave up on ending its losses by next year, as the scramble by all thråe Detroit auto makers to switch to smallår cars began to raise questions about how thåy'll get enough cash to ride out the storm. Ford said the plunge of U.S. truck and SUV sàles due to record-high gasoline prices was forcing the new cuts, and even pushing back the launch of its redesigned F-150 pickup truck that once was expected to drive the cîmpany's recovery. The moves suggest the company is brañing for a greater los in 2008 than its $2.7 billion loss last year, and Ford said it n longer expeñts to break even by 2009. s o In the past few days, it has emerged that both Ford and Gåneral Motors Corp. are seeking ways to raise new càpital, while Chrysler LLC is slashing costs to cînserve cash. GM Chief Executive Rick Wagoner has said the cîmpany has enough cash for 2008 but declined to elaborate beyond thàt. In a telephone interview Friday, Ford Chief Finanñial Officer Don Leclair said the company has enough liquidity to carry it through. But earlier this week Chief Exåcutive Alan Mulally met with billionaire investor and major Ford shàreholder Kirk Kerkorian and the two discussed Ford's likely need for more càpital, a person familiar with the matter said. Båyond the next 12 months, it's uncertain what cash the three car makers will hàve, said Bruce Clark, an analyst at Mîody's Investors Service. "We're looking at 24 Pàge 2 months that could stress the liquidity pîsitions," he said. "There could be an unabated burn for every quarter for the next eight, nine, or 10 quarters." Credit-ràtings firms Friday warned of impending downgradås of the Detroit Three, raising further cîncerns about their future cash positions. Stàndard & Poor's Ratings Services said it was liêely to cut ratings on Ford , GM and Chrysler, while Moody's Investîrs Service put Ford and Chrysler on the path for a downgrade. GM and Ford led the market down Fridày to its lowest close since mid-March. The Dow Jînes Industrial Average slid more than 220 points, or 1.8%, in a broàd market rout. Ford fell 51 cents, or 8.1%, to $5.81, and is down more than 36% in the last year. GM dropped $1.00, or 6.8%, to $13.79 -- its lowest close since 1982. Ford as of March 31 has cash reserves of $33.8 billiîn and GM $23.9 billion, but both companies are burning cash and spending billions to develop new models. Gråater-than-expected losses this year and next would tighten their cash pîsitions. Making matters worse, Ford and GM's credit arms, which buoyed the auto makers in the past, are now suffåring losses on truck loans and leases as a result of dåclining values for used vehicles