Ford Submits Business Plan to US Congress

[Kitdy]

From Jalopnik, from the horse's mouth:

FORD MOTOR COMPANY SUBMITS BUSINESS PLAN TO CONGRESS; PROFIT TARGET, ELECTRIC CAR STRATEGY AMONG NEW DETAILS

* Based on current business planning assumptions, Ford expects both its overall and its North American Automotive business pre-tax results to be breakeven or profitable in 2011

* Ford provided initial details of an accelerated vehicle electrification plan for a family of hybrids, plug-in hybrids and battery electric vehicles. The plan includes a Ford full battery electric vehicle (BEV) in a van-type vehicle for commercial fleet use in 2010 and a BEV sedan in 2011

* Ford’s plan calls for an investment of approximately $14 billion in the U.S. on advanced technologies and products to improve fuel efficiency during the next seven years

* Ford said it will sell its corporate aircraft as part of its overall cash improvement plan

DEARBORN, Mich., Dec. 2. 2008 – Ford Motor Company this morning submitted to Congress its comprehensive business plan, which details the company’s plan to return to profitability and outlines a request for potential access to a temporary bridge loan in case the current economic crisis worsens or there is a bankruptcy of a major competitor.

In the plan, Ford said the transformation of its North American automotive business will continue to accelerate through aggressive restructuring actions and the introduction of more high-quality, safe and fuel-efficient vehicles – including a broader range of hybrid-electric vehicles and the introduction of advanced plug-in hybrids and full electric vehicles.

Ford is asking for access to up to $9 billion in bridge financing, but reiterated that it hopes to complete its transformation without accessing the loan should Congress agree to make the funds available.

Despite the serious global economic downturn, Ford said it does not anticipate a liquidity crisis in 2009 – barring a bankruptcy by one of its domestic competitors or a more severe economic downturn that would further cripple automotive sales and create additional cash challenges.

“For Ford, government loans would serve as a critical backstop or safeguard against worsening conditions, as we drive transformational change in our company,” said Ford President and CEO Alan Mulally, who will testify before Congress this week.

In the plan submitted to Congress, Ford reiterated that its One Ford transformation plan remains fully in place, anchored by four key priorities:

* Aggressively restructure to operate profitably at the current demand and changing model mix;
* Accelerate development of new products our customers want and value;
* Finance our plan and improve our balance sheet; and
* Work together effectively as one team, leveraging our global assets.

“Ford is committed to building a sustainable future for the benefit of all Americans,” Mulally said. “We believe Ford is on the right path to achieve this vision.

“We appreciate the valid concerns raised by Congress about the future viability of the industry,” he added. “We hope that our submission today helps instill confidence in Ford’s commitment to change, including our accountability and shared sacrifice during this difficult economic period.”

Ford’s submission to Congress included new details about Ford’s future plans and forecasts, including:

* Based on current business planning assumptions – including U.S. industry sales for 2009, 2010 and 2011 of 12.5 million units, 14.5 million units and 15.5 million units, respectively – Ford expects both its overall and its North American automotive business pre-tax results to be breakeven or profitable in 2011, excluding any special items.
* As part of a continuing focus on building the Ford brand, the company said it is exploring strategic options for Volvo Car Corporation, including the possible sale of the Sweden-based premium automaker. The strategic review is in line with a broad range of actions Ford is taking to strengthen its balance sheet and ensure it has the resources to fund its plan. Since 2007, Ford has sold Aston Martin, Jaguar, Land Rover and the majority of its stake in Mazda.
* Ford’s plan calls for an investment of approximately $14 billion in the U.S. on advanced technologies and products to improve fuel efficiency during the next seven years.
* Half of the Ford, Lincoln and Mercury light-duty nameplates by 2010 will qualify as “Advanced Technology Vehicles” under the U.S. Energy Independence and Security Act – increasing to 75 percent in 2011 and more than 90 percent in 2014. Ford said it has included these projects in its application to the Department of Energy for loans under that Act and hopes to receive $5 billion in direct loans by 2011 to support Ford’s investment in advanced technologies and products.
* From its largest light duty trucks to its smallest cars, Ford will improve the fuel economy of its fleet an average of 14 percent for 2009 models, 26 percent for 2012 models and 36 percent for 2015 models – compared with the fuel economy of its 2005 fleet. Overall, Ford expects to achieve cumulative gasoline fuel savings from advanced technology vehicles of 16 billion gallons from 2005 to 2015.
* Next month at the North American International Auto Show in Detroit, Ford will discuss in detail the company’s accelerated vehicle electrification plan, which includes bringing to market by 2012 a family of hybrids, plug-in hybrids and battery electric vehicles. The work will include partnering with battery and powertrain systems suppliers to deliver a full battery electric vehicle (BEV) in a van-type vehicle for commercial fleet use in 2010 and a BEV sedan in 2011. Ford said it will develop these vehicles in a manner that enables it to reduce costs and ultimately make BEVs more affordable for consumers.
* The 2007 UAW-Ford negotiations resulted in significant progress being made in reducing the company’s total labor cost. Given the present economic crisis and its impact upon the automotive industry, however, Ford is presently engaged in discussions with the UAW with the objective to further reduce its cost structure and eliminate the remaining labor cost gap that exists between Ford and the transplants.
* As previously was announced, Ford plans two additional plant closures this quarter and four additional plant closures between 2009 and 2011. The company also has announced its intent to close or sell what will be four remaining ACH plants. The company said it will continue to aggressively match manufacturing capacity to real demand.
* Ford will continue to work to reduce its dealer and supplier base to increase efficiency and promote mutual profitability. By year end, Ford estimates it will have 3,790 U.S. dealers, a reduction of 606 dealers overall – or 14 percent from year-end 2005 – including a reduction of 16 percent in large markets. In addition, Ford has been able to reduce the number of production suppliers eligible for major sourcing from 3,400 in 2004 to approximately 1,600 today, a reduction of 53 percent. Ford eventually plans to further reduce the number of suppliers eligible for major sourcing to 750.
* Ford also confirmed today that it has decided to sell its five corporate aircraft. In addition, Ford CEO Mulally announced that, should Ford need to access funds from a potential government bridge loan, he would work for a salary of $1 a year – as a sign of his confidence in the company’s transformation plan and future.

Ford also reiterated that it is canceling all bonuses to be paid in 2009 for all management employees worldwide and foregoing bonuses for all employees in North America. The company also will not pay merit increases for North America salaried employees in 2009.

Ford said it is moving fully ahead with plans it announced this summer to leverage the company’s global product strengths and bring more smaller, fuel-efficient vehicles to the U.S. The plan includes delivering best-in-class or among the best fuel economy with every new vehicle introduced. Ford also is introducing industry-leading, fuel-saving EcoBoost engines and doubling the number and volume of hybrid vehicles.

This product acceleration will result in a balanced product portfolio with a complete family of small, medium and large cars, utilities and trucks. Ford said it is increasing its investment in cars and crossovers from approximately 60 percent in 2007 to 80 percent of its total product investment in 2010.

“Ford has a comprehensive transformation plan that will ensure our future viability – as evidenced by our profitability in the first quarter of 2008,” Mulally said. “While we clearly still have much more work to do, I am more convinced than ever that we have the right plan that will create a viable Ford going forward and position us for profitable growth.”

This does all sound good but is it just a bunch of crap? Ford seems in better position than GM or Chrysler at this point so maybe things will be good for them. I hope so.

[wwgkd]

But they're asking for over half of the 25 billion that they were talking about giving to all three companies.

[Kitdy]

No, they are asking for 9 billion:

Ford is asking for access to up to $9 billion in bridge financing, but reiterated that it hopes to complete its transformation without accessing the loan should Congress agree to make the funds available.

The 14 billion is what they want to invest as I read it. 9 billion seems a bit much I guess considering Ford appears to be the best off. Mind you, Ford is the second largest of the three by a large margin as I recall.

[wwgkd]

Ahhh, right, I misread that. I could see that, then.

[scottie300z]

But they're asking for over half of the 25 billion that they were talking about giving to all three companies.

Is it an all three bail out or none at all?

[wwgkd]

Is it an all three bail out or none at all?

Now they seem to be looking at individual. But what I was refering to was that if the total they were trying to scrape up was 25 billion, and each asks for 14 billion, then we have yet another problem.

On the plus side the UAW finally seems to be willing to make concessions.

[Matra et Alpine]

Looks good for Ford.
Not asking for the government to give them ANY of the 9B, only to guarantee it. So they clearly think they can get the money on the open market as and when needed.
Ensures the government can't apply too much pressure on their decisions

[wwgkd]

But they only think they can survive if the recession isn't too bad, meaning GM and Chrysler need to stay in it:

http://www.nytimes.com/2008/12/03/bu...03auto.html?hp

[baddabang]

That's tons of work to be completed. Three new vehicle lines in place and ready for purchase in 4 years? R&D is going to have it's hands full. I'm seriously thinking about stocking up on GM stock in hopes that an approved bailout with jump the price.

Speaking of an approved bailout. If the money comes from the government who gets it's money from the taxpayers, can every American expect an employee discount on new cars?

[Rockefella]

Speaking of an approved bailout. If the money comes from the government who gets it's money from the taxpayers, can every American expect an employee discount on new cars?

I would think so.

[scottie300z]

Now they seem to be looking at individual. But what I was refering to was that if the total they were trying to scrape up was 25 billion, and each asks for 14 billion, then we have yet another problem.

On the plus side the UAW finally seems to be willing to make concessions.

I gotcha. But if you think you are a stand out compared to the other two, why not? The problem would only be for those left out and if you think you're going to be in, well, no problem.

[digitalcraft]

The thing I don't understand is, shouldn't they already have been doing everything they thought would make them more profitable? Did someone tell them they should be trying to *not* be profitable?

I mean what the hell? They get in a bind and THEN come up with a plan to increase profit? What the hell have they been doing up til now????

[LTSmash]

The thing I don't understand is, shouldn't they already have been doing everything they thought would make them more profitable? Did someone tell them they should be trying to *not* be profitable?

I mean what the hell? They get in a bind and THEN come up with a plan to increase profit? What the hell have they been doing up til now????

For the past 3 decades almost, US motors companies have been in denial of their poor performance against the Japanese auto sector. Their cars have been overpriced due to unions and they their inability to make anything on four wheels that conserves gas has helped them get into this situation. Seriously, like the WSJ headline, they need a Buyout, Not a Bailout. If the US auto sector fell it would not be as drastic as if GS, MS, or JP fell. If those three fell off the world then life would be very tough for everyone.

We can't bail everyone out. We already lost BS and LB and saved AIG, ML, and Citi with an already large enough 700 bill bailout package. Capitalism lets the weak fall and the strong survive, that’s why BS went down first (they were "weak", or not "smart").

However, just like we can't let the entire financial sector go down, can we for the entire US auto industry?

[digitalcraft]

I've always said that yes we we need a bailout, but we need to bail out the people we actually talk about caring about: the workers. Why not take this money and help them with unemployment/retraining? The U.S. is a huge market, someone will be selling cars here still.

If the management of these companies can't do it, then someone else should: nature of the free market. If we prop up companies that do poorly, we're not letting the market does what it does best: reward the people for doing the correct thing.

[wwgkd]

For the past 3 decades almost, US motors companies have been in denial of their poor performance against the Japanese auto sector. Their cars have been overpriced due to unions and they their inability to make anything on four wheels that conserves gas has helped them get into this situation. Seriously, like the WSJ headline, they need a Buyout, Not a Bailout. If the US auto sector fell it would not be as drastic as if GS, MS, or JP fell. If those three fell off the world then life would be very tough for everyone.

We can't bail everyone out. We already lost BS and LB and saved AIG, ML, and Citi with an already large enough 700 bill bailout package. Capitalism lets the weak fall and the strong survive, that’s why BS went down first (they were "weak", or not "smart").

However, just like we can't let the entire financial sector go down, can we for the entire US auto industry?

To be fair, for a lot of years when they did make that were fuel effecient, they didn't sell. They were selling out of pickups and had cars sitting on the lots. I mean, 75% of vehicles sold in north america were pickups. The number 1 selling vehicle for however many years (until march, wasn't it?) was the F series. While Japan and other nations specialized in smaller vehicles, so the price of gas increase didn't hit them as hard and the big three had to scramble to change. Then the recession hit while they were finally showing signs of turning around. So, yeah they screwed up, but they weren't completely blind.

And no, we can't just let them go. Ford is in the best shape of the three and they can't survive without the other two. Without those three companies and the supporting jobs, we turn into a third world country and thw whole world is hit by a huge depression.