Ford Reports Its Best-Ever Quarter in North America

story first appeared on usatoday.com

Ford reported a third-quarter net income of $1.6 billion, driven by its best-ever quarter in North America.

Pretax profits of $2.3 billion in North America more than made up for a $468 million pretax loss in Europe, but the drag left the net results down 1% from the quarter a year ago.

Revenue was $32.1 billion for the quarter, down 3% from a year ago, and operating profit was $2.2 billion.

While Ford remains very dependent on North America, the company said it reported a profit in Asia and Africa, and remained in the black in South America.

Ford this month had said its losses in Europe this year could exceed $1.5 billion -- up from a $1 billion forecast that surprised analysts in July. Some of the additional loss is related to costs to its plan also announced this month to shutter three operations in the U.K. and Belgium, starting next year. Ford is cutting 5,700 jobs in addition to offering 500 salaried buyouts.

It could take automakers years to right themselves in financially troubled Europe, and the costs will be staggering. Art Wheaton, auto expert at Cornell University's Industrial and Labor Relations School thinks it will cost Ford $1 billion to close those plants.

Wheaton says because of tough actions sooner instead of later, Ford will come out on top in Europe.

The U.K. plants close next year, and Ford plans to shut Belgium in 2014.

The earnings per share of 40 cents beat Wall Street expectations of 30 cents, and surpassed 34 cents a year ago.

The company narrowed its guidance for U.S. auto sales this year to 14.7 million. Until now, Ford gave a range of 14.5 million to 15 million.

As expected, the results were stronger than the second quarter when Ford reported a 57% drop in earnings of $1.04 billion with losses in Europe that reached $404 million. Pretax earnings were $1.8 billion.

South America saw modest operating income of $9 million, below a year ago.

In Asia-Pacific and Africa where Ford is investing heavily to get a bigger foothold in the market, especially China, the automaker had a $45 million pretax profit compared with a $43 million loss a year ago.

Ford's shift to smaller cars should get credit for much of Ford's success, says Jesse Toprak, senior analyst at TrueCar.com. He says North American sales indicate improved profitability for the company.

On Monday, Chrysler reported a third-quarter profit of $381 million, up 80% from a year ago.

General Motors is scheduled to report its earnings Wednesday.

Task Force: Michigan Ready for Plug-In Vehicles

The Detroit News

Members of the Michigan Plug-in Electric Vehicle Preparedness Task Force said today that Michigan is ready for the first plug-ins to roll off assembly lines this fall.

Members of the task force, which formed earlier this year and includes representatives from the automakers, state, utilities, nonprofits and environmental groups, as well as electrical inspectors and contractors, said that work jointly accomplished behind the scenes should make it easy for Michigan residents to drive and charge their plug-ins.

Special plug-in charging rates have been set for Consumers Energy and Detroit Edison customers, and there are utility incentive programs to help defray the cost of a charging station and installation.

Automakers also are helping with charging stations. Ford Motor Co., for example, will provide free home charging stations and installation for the first 5,000 customers who buy the plug-in Ford Transit Connect, said Charles Gray, chief engineer of hybrid programs for Ford.

At the state level, the House of Representatives is considering a bill that would provide those who pay the Michigan Business Tax and install a public charging station a MBT credit of up to 30 percent of the cost and installation.

And modifications to the state building code to allow home charging stations to be installed on a separately metered circuit are before the Joint Committee on Administrative Rules, said Michigan Public Service Commission Chairman Orjiakor Isiogu.

"The goal is to have the code amended and effective before (plug-ins are) commercially available," he said.

Ford Motor Offers Buyout Incentives To Production Workers

Associated Press

Ford Motor Co. has offered buyout or retirement incentive packages to all of its 41,000 U.S. hourly workers as it tries to further reduce its factory work force.

Ford, the healthiest of Detroit's three automakers and the only one to avoid government aid and bankruptcy protection, still has more workers than it needs to produce cars and trucks at current sales levels, said company spokesman Mark Truby.

He would not say how many workers Ford expects to take the packages, which include cash payments and other incentives such as vouchers to buy cars and short-term health insurance coverage.

"We're just going to try to right-size our manned capacity and align it with demand," Truby said.

Ford currently has 634 blue-collar workers on layoff in the U.S.



Under the terms of a new contract with the United Auto Workers union, the employees get most of their pay for a year depending on seniority, and a portion of their wages for another year before they are removed from the company payroll.

In the past, laid-off workers went into the "jobs bank" and were paid indefinitely even if their factory had been shut down. But the union agreed to scrap the jobs bank earlier this year when all three Detroit automakers ran into financial troubles.

The buyout package, offered to workers with at least a year of service, includes $50,000 cash and the choice of a $25,000 voucher to buy a vehicle or $20,000 more in cash. The deal also includes basic health care coverage for six months, Ford said. Retirement-eligible workers can take the buyout but must wait up to 18 months before retiring.

The retirement package includes $40,000 for skilled trades workers and $20,000 for nonskilled employees. To be eligible, workers have to have either 30 or more years of service, be age 55 or older with 10 or more years of work, or they can be 65 with at least one year of service, the company said.

Earlier this year, only 1,000 workers took similar packages, the company said in July.

Ford started 2009 with 89,000 employees in North America but reduced that number to 80,200 as of Sept. 30 through attrition, buyouts and layoffs.

Truby said the additional offer has nothing to do with the UAW membership rejecting a second round of contract concessions earlier this year. Workers at General Motors Co. and Chrysler Group LLC approved the concessions, so Ford is operating at a small cost disadvantage.

Ford sales were down 19 percent through November when compared with the same time last year. But the company has fared better than the U.S. auto market as a whole, which is down 24 percent for the year. GM and Chrysler sales are both off more than 30 percent.

In 2006, Ford had 75,000 unionized workers in the U.S., but since then it has closed 12 factories and reduced its work force with buyout and early retirement offers as part of a massive restructuring plan. The company plans to close four more factories by the end of 2011.

Ford Fusion: Motor Trend 2010 Car Of The Year

Vancouver Sun

Ford Motor Co’s Fusion mid-size sedan was named Motor Trend magazine’s 2010 "car of the year" on Tuesday, adding to the perception that changes to the No. 2 U.S. automaker’s vehicle lineup are gaining traction.

The Fusion was chosen best of 23 new or significantly upgraded vehicles and the full range of Fusion models impressed the judges, from the four-cylinder entry level vehicles to the all-wheel drive sport and hybrid versions, Motor Trend Editor Angus MacKenzie said.

"Ford has proven its resilience in these tough times by delivering to market a car with broad appeal to a broad range of customers," MacKenzie said.

The Fusion, which has become one of the top 10 selling vehicles in the United States, was redesigned for 2010. Ford launched the Fusion in 2006 and it set its previous annual sales peak in 2007.

"What a proof point, to be named car of the year by one of the most rigorous tests in the world," Ford Chief Executive Alan Mulally told reporters at Ford headquarters after MacKenzie announced the award.

Motor Trend tested the vehicles on acceleration, braking, handling, noise and responsiveness under various road and traffic conditions. It also considered design, fuel efficiency, safety and value.

Ford posted a nearly $1 billion third-quarter profit this month that surprised Wall Street analysts and is the only large U.S. automaker not to reorganize in bankruptcy with U.S. government support in 2009.

The automaker has said it expects to return to a solid profit in 2011 with a gradual recovery in the auto industry in the United States and key regions internationally.

U.S. auto sales peaked at nearly 17 million vehicles in 2005 and have been falling since. Ford expects 2009 U.S. auto industry sales of about 10.6 million units including medium and heavy trucks, or around 10.3 to 10.4 million light vehicles.

"We are cautiously optimistic that we are near the bottom right now," Mulally said of the U.S. auto market.

Ford’s shares reached a more than two-year high on Tuesday, a day after billionaire investor George Soros’ hedge fund disclosed taking a 7.3 million share stake in Ford during the third quarter.

U.S. 2009 sales of the Fusion were up 15 percent through October at 148,045 but trail Toyota Motor Corp’s Camry and Honda Motor Co Ltd’s Accord in the mid-size sedan segment, one of the key areas in the U.S. market.

Dearborn, Michigan-based Ford has looked to set itself apart from U.S. rivals General Motors Co and Chrysler Group LLC, which reorganized under government-funded bankruptcies this year, and increasingly uses Toyota and Honda as benchmark competitors.

Sales of the Fusion have helped keep Ford’s U.S. sales declines for 2009 slower than the overall drop in the industry. Through October, Ford’s U.S. sales are down 20.4 percent for the year, while the industry is down 26 percent.

Ford shares were up 15 cents, or 1.7 percent, to $8.86 in Tuesday afternoon trading on the New York Stock Exchange. Earlier on Tuesday, the stock reached $9, a more than two-year high that is also a nearly 29 percent increase since Ford posted its third quarter profit in early November.

Asian Autos, Ford Top Consumer Reports Lists

from the Wall Street Journal

 Ford Motor Co. has weathered the car industry's downturn better than many competitors. Now some analysts think the company has turned the corner so far it could report break-even results for its core North American operations or even an overall profit when it releases third-quarter earnings Nov. 2.

At the heart of Ford's relative success has been its ability to minimize its year-over-year sales declines while taking advantage of its competitors' weakness and grabbing market share.

According to CNW Marketing Research, Ford gained more than five percentage points of U.S. retail market share in the third quarter compared with the same period of 2008, while Detroit rivals General Motors Co. and Chrysler Group LLC lost ground.

"The Ford story is that they have taken advantage of the fact that they were sole domestic brand not to take a government bailout and not to file for bankruptcy," said Efraim Levy, an auto-industry stock analyst at Standard & Poor's. "But those benefits will fade in 2010 as the weaker competitors distance themselves from the bankruptcy filings and start to introduce some fresh product."

In the past week, several Wall Street analysts expressed optimism that Ford's North American operations could break even in the third quarter—a significant achievement after several years of steep losses—though they still expect the company to post a loss for its operations overall. One analyst, J.P. Morgan's Himanshu Patel, even forecast a quarterly profit overall at Ford.

"Obviously, I'm very pleased with the progress that we're making all around the world, and our market share is going up in every major market," Ford Executive Chairman William Clay Ford Jr. told reporters last week. "And our products are being very well received." He declined to discuss earnings, citing the quiet period before their release.

Ford continues to benefit from stronger prices for both its new and used cars that should boost results at its wholly owned financing arm, Ford Motor Credit. The trend could help the company reverse large losses accounted for in 2008 at the unit based on anticipated declines in the value of its leased vehicles.

Another positive sign could come in a report expected to be released soon by auto guide Kelly Blue Book. Two Ford vehicles will appear on the list of 2010 model-year vehicles projected to retain the greatest amount of their original retail price after five years of ownership, said a person familiar with the matter. Last year, no Ford car or truck held a spot on the 2009 model-year list.

Ford also is expected to perform well in the influential annual auto-reliability survey by Consumer Reports, due out Tuesday.

In the second quarter, the car maker reported a profit of $2.3 billion, though that came mainly from gains it recorded as part of efforts to restructure its debt. Excluding the gains, Ford would have reported a loss of $424 million, still narrower than a comparable loss of $1.03 billion a year earlier and much better than analysts had expected. The company has lost more than $30 billion since 2006.

The improved results have helped build Chief Executive Alan Mulally's image as a turnaround leader. But Ford still carries a massive debt after borrowed $23.5 billion in 2006 to fund its restructuring. Many on Wall Street are waiting to see how Ford will cut its debt load.

Despite an improved outlook, Ford hasn't revised its profitability forecast, stating the company won't break even or make money until 2011.

A person familiar with the matter at Ford said that even if encouraging signs continue to emerge, Ford may stay conservative about how quickly it can return to sustained moneymaking.

After Clunkers, Ford Sales Still A Bright Spot

Story from Detroit Free Press

Ford Motor Co. — whose 5% sales decline in September outperformed the industry’s 23% plummet — picked up 3 percentage points of market share last month, the 11th straight month Ford captured more showroom customers.

“This was an extremely volatile three-month period,” said Ken Czubay, Ford’s top U.S. sales chief. “It really put Ford to the test. We believe Ford passed.”

Ford was one of the few bright spots during September, as the expected hangover from the federal cash-for-clunkers sales boon, which depleted car and truck inventories nationwide, was far worse than many expected.

Several automakers reported an increase in shopping traffic during the last part of the month that gave them hope that a recovery, however slight, would be more evident in October. But that wasn’t very evident in the bottom line.

While Hyundai Motor Co. managed to post a standout 27% sales gain in September, sales were off for most major automakers last month. General Motors Co. was down 45%, while Chrysler Group LLC fell 42.1%.

September’s performance looked even worse considering that last September — when Lehman Brothers filed for bankruptcy and kicked off a global financial crisis — was the worst sales month in 15 years.

October, automakers said, would be the true bellwether for the state of the industry and the economic recovery.
Sept. sales are 2nd-worst month of 2009

“September was a pretty difficult month from Day One right on through to the end of the month,” said Mark LaNeve, vice president of U.S. sales for GM.

The sales rate in September declined to 9.22 million — the lowest rate since February, according to Autodata Corp. The selling rate is what the sales would total for the year if demand remained constant, adjusted for seasonal factors.

Automakers said sales of new cars and trucks dropped severely in early September after federal funding for the government’s cash-for clunkers program expired.

The buying spree that the program created began in late July and continued through late August. It was so successful that it depleted inventory at dealerships across the country and pulled ahead some buyers who normally would have waited until fall.

That left dealerships with a 29-day supply of cars and trucks at the end of August — the lowest since at least 1975, according to WardsAuto.com.

GM’s pain was spread across the board. Sales of its top-selling Chevrolet Silverado pickup dropped 61.5%. Its key post-bankruptcy brands all disappointed. Sales fell 53% for GMC, 41% for Chevy and 33% for Buick. Only Cadillac beat the industry, with a 9% decline.

GM’s soon-to-be-castoff Saturn brand posted an 84% plummet.

“I’d say September underperformed expectations,” LaNeve said.
Automakers: We still see recovery

While LaNeve characterized the pace of sales throughout September as lousy, both Ford and Toyota Motor Corp. said the pace of sales increased during the month and all three said they expect the sales rate to rise this year.

"We definitely see the economy improving,” said Mike DiGiovanni, GM’s executive director of global market and industry analysis. “It’s going to be a bumpy road, but we are on the way to a recovery.”

Toyota, a major beneficiary of this summer’s cash-for-clunkers program, saw its September sales fall 13%.

“The truth is, we could have sold more cars if we had them” in September, said Don Esmond, senior vice president of Toyota’s U.S. division. “We saw a positive improvement week after week in showroom traffic.”

Chrysler said it struggled with inventory issues in September both because of cash-for-clunkers and because it stopped production entirely from May 1 through June 28 while it went through bankruptcy reorganization.

Bill Golling, who owns a Chrysler-Jeep-Dodge dealership in Bloomfield Hills, said he had a lot of minivans in September, but very few small cars, which hampered sales.

“The inventory situation should be better as October goes along,” Golling said.

Ford Motor Expanding Asian Presence

As Posted to the Wall Street Journal

Ford Motor Co. is making a major push this week in Asia -- long a weak link in its global operations -- as part of an ambitious strategy started three years ago by Chief Executive Alan Mulally.

In India on Wednesday, Mr. Mulally unveiled a new low-cost small car specifically developed for Asia that will be built at a newly expanded Indian plant. The vehicle, called the Figo (pronounced fee-go), will be sold in India and exported to other countries in the Asia-Pacific region.

On Friday, Ford will announce plans to open its third assembly plant in China, according to people familiar with the matter.

The two moves will significantly increase Ford's production capacity in the fastest growing region in the global auto industry, and will give the company a new car that is priced and sized for a large swath of buyers across Asia.

"Alan fully recognizes that we had to be strong in all three areas of the world if Ford Motor Co. was going to be a cohesive, integrated and successful company," said John Parker, executive vice president of Ford's Asia-Pacific operations.

The new small car -- Figo is colloquial Italian for "cool" -- is due to be launched in 2010. It was developed as part of a $500 million investment in India announced January 2008. Part of the investment doubled capacity at a plant near Chennai to more than 200,000 cars a year.

The tiny four-door hatchback with cat-eye headlamps gives Ford an entry into an increasingly important segment of the Asian market.

The vehicle is expected to sell for under $10,000, within reach of many people in India's growing middle class.

Ford believes the Figo will appeal to customers who want more than a bare-bones vehicle, such as the $2,000 Nano developed by Indian auto maker Tata Motors.

For Ford, which sold only about 30,000 vehicles in India last year, the Figo "will be quite crucial for further growth," said Asish Mathew Jose, market analyst for Segment Y, an automotive research company in Goa, India.

In China, which is expected to pass the U.S. as the largest auto market this year, Ford has two plants that together can produce about 447,000 cars a year. The company is expected to announce a third plant with partner Chonqing Changan Automobile Co., bringing total capacity to more than 600,000 vehicles a year.

Ford still faces many challenges in Asia, however. Even with the new capacity it still trails key competitors in China.

Toyota Motor Corp. can make 800,000 vehicles a year, and expects to lift that to more than one million in a few years, a Toyota spokesman said. General Motors Co., which got an earlier start in China than Ford, has partnerships and joint ventures that give it total capacity of 1.29 million vehicles a year, including small commercial vans.

The Ford name isn't uniformly known in India or China, and its dealer networks are still developing. In China, Ford has 216 full-service dealers, compared to Toyota's more than 500 and GM's more than 800. Ford accounts for about 2% of car sales in the Asia-Pacific market.

Shoring up Ford's Asian operations has been a critical goal for Mr. Mulally, a former Boeing Co. executive with substantial experience in the region. But since arriving at Ford in 2006, Mr. Mulally has had to focus on keeping its U.S. operations afloat.

He is credited with having taken quick action to put the company in a much stronger position than rivals GM and Chrysler Group LLC, both of which went through bankruptcy and took government bailouts.

At the same time, however, Mr. Mulally also dispatched executives to find out what was holding up growth in Asia. They found an organization that wasn't focused enough on the region's two giant markets, China and India.

In China, Ford has lagged behind GM, Toyota, Volkswagen AG and other Western auto makers. According to J.D. Power & Associates, Ford is the No. 12 auto brand in China in terms of sales.

The company has been slowed in part because its partner is located in Chonqing, in the less developed western provinces. There, Ford hasn't always been able to find suppliers for certain components, forcing it to use more expensive imported parts, Ford officials said. That hurts the profits, they said.

GM and VW, in contrast, have plants near Shanghai, an area teeming with auto suppliers and consumers with cash to spend.

In India, Ford struggled early on with models that proved too expensive for Indian consumers. Now, the Fiesta subcompact is its top seller, and a model called the Endeavor is the country's top-selling sport-utility vehicle.

In 2008, even as Ford's problems worsened in North America, the company mapped out a plan to invest $2 billion to become more competitive in Asia. It started work on the Figo and recently, Ford said it would move its Asian headquarters from Thailand to Shanghai.

Ford is now working to consolidate manufacturing in four regions. It also seeks a more cohesive regional approach instead of country-by-country operations, and is working to enhance the Ford brand.

"We concluded that we wanted to focus on the Ford brand because this is what you were going to have to do if you wanted to create a Ford powerhouse around the world," Mr. Mulally said in an interview.

While committed to building products in the markets in which they are sold, Mr. Mulally said he wouldn't rule out making Fords in Asia for the U.S. market. When GM recently considered a similar move it caused an uproar at the United Auto Workers union.

No Bull: Mulally Plans For A New Taurus Rising

Story from the Wall Street Journal

Ford Motor Co. is launching a revamped Taurus this summer, a big bet by Chief Executive Alan Mulally that he can revive an ailing model that once defined the American family sedan.

In late 2006, Mr. Mulally took Ford's helm in part because of his respect for the onetime success of the Taurus. But Mr. Mulally was shocked, he said, that the company had decided to pull the plug on the brand by the time he arrived, and he quickly reversed the move.

"I have a personal interest in this car," Mr. Mulally said in an interview. He added that he had been impressed with the Taurus product-development team when he met its members while working at Boeing Co. in the 1980s. "It was the flagship then, and it's the flagship now."

The revamped Taurus is set to go on sale in August. On the outside is a sleeker, more muscular design, while on the inside it offers an array of technological options, from cruise control that adapts to traffic to a collision warning system to a voice-activated entertainment setup.

"It's a proof-point of the new Ford," Mr. Mulally said. Ford will spend hundreds of millions of dollars on the new Taurus, from its design to marketing and ads, said a person familiar with the matter.

But analysts say it's highly unlikely the Taurus will be as big a hit as the original version, which once was the most successful Ford car and at its peak sold more than 400,000 copies a year.

Analysts say the new Taurus is too expensive to attract a mass market, especially in the current economic climate. Prices start at $25,995 but can top $40,000 for a loaded version. That's more than the large-car segment's leader, the Chevrolet Impala from General Motors Corp. Others about the same size include Toyota Motor Corp.'s Avalon and the Chrysler 300 from Chrysler Group LLC.

With memories of high gas prices still in consumers' minds, this also could be a tough time to persuade U.S. buyers to purchase a large, heavy sedan.

And Ford must convince customers that the revamped Taurus isn't the same vehicle as the bland sedan once encountered at airport rental lots.

"I think Ford is chasing the original Taurus fans with this car, all of which are much older than when that car was at its peak," said Karl Brauer, editor in chief at Edmunds.com, an auto-sales Web site. "The new model seems more like a Ford Town Car targeted at 45-plus drivers rather than a high-volume family sedan."

When Taurus debuted in December 1985, there was nothing like it from a U.S. maker. Building on Ford's recent success with aerodynamic design in Europe, the Taurus made slick styling available at an affordable price.

"This was an American sedan that felt European," said John Wolknowicz, a former product planner at Ford who now is an automotive analyst at IHS Global Insight, a forecasting firm.

In 1996, faced with redesigning the Taurus, Ford product planners hung a big sign -- "Beat Camry" -- in their studios and engineering spaces, targeting Toyota's hugely successful sedan. But Mr. Wolknowicz said the strategy meant the cost of the restyled Taurus "escalated to the moon," putting it out of the reach of many.

The 1996 Taurus used Ford's blue oval logo as a motif, replicating it in the shape of the rear window, interior controls and exterior design. But critics panned the look -- Mr. Mulally called it "a football" -- as did many customers. Families also gravitated to sport-utility vehicles.

Ford's branding further muddied the matter. In 2004, Ford came out with what was supposed to be Taurus's replacement but called it the Five Hundred. The company kept selling the old-style Taurus as well, marketing it only to rental and corporate fleets. A few years later, under Mr. Mulally, Ford reverted to the Taurus name for the Five Hundred.

The new Taurus could be aided by the fact that its main competitors, the Impala and Chrysler 300, are aging and their parents are financially strapped.

While some analysts forecast up to 120,000 Taurus sales a year, Jim Farley, Ford's global vice president of sales and marketing, said the company expects only an increase from the outgoing model, which had sales of 52,667 in 2008.

"We have humble expectations," Mr. Farley said.

Tesla, Ford, Nissan To Get $8B Federal Loan For Green-Car Development

Story from Mercury News


DEARBORN, Mich. — The Energy Department said today it would lend $5.9 billion to Ford Motor and provide about $2.1 billion in loans to Nissan Motor and Tesla Motors, making the three automakers the first beneficiaries of a $25 billion fund to develop fuel-efficient vehicles.

Energy Secretary Steven Chu announced the loan recipients at Ford's Research and Innovation Center in Dearborn.

Tesla, based in San Carlos, would get $465 million in loans to build electric vehicles and electric drive powertrains in California. The company will use $365 million for production engineering and the assembly of the Model S sedan, an all-electric vehicle that is expected to travel up to 300 miles per charge and go on sale in 2011. It will use $100 million for a powertrain manufacturing plant expected to employ 650 workers.

Tesla CEO Elon Musk said the automaker would use the loan "precisely the way that Congress intended — as the capital needed to build sustainable transport.

The loans to Ford will help the company upgrade factories in five Midwest states to produce 13 fuel-efficient vehicles.

Nissan was receiving $1.6 billion to retool its plant in Smyrna, Tenn., to build advanced vehicles and build a battery manufacturing facility.

The loans were designed to help auto manufacturers meet new fuel-efficiency standards of at least 35 mpg by 2020, a 40 percent increase over current standards.

"These loans will help the auto industry meet and even exceed the president's tough fuel standards," Chu said. "This is part of President Obama's commitment to a new energy strategy for America. ... This means the most fuel-efficient cars in the world must be made right here in America."

Dozens of auto companies, suppliers and battery makers have sought a total of $38 billion from the loan program, which was created last year to provide low-interest loans to car companies and suppliers retool their facilities to develop green vehicles and components such as advanced batteries.

Ford had been seeking about $5 billion in loans by 2011 and a total of $11 billion from the program to invest $14 billion in advanced technologies over the next seven years. The company said it will transform plants in Illinois, Kentucky, Michigan, Missouri, and Ohio.

Ford CEO Alan Mulally said in an interview with The Associated Press that the department approved the company's entire proposal through 2011 and it would help Ford meet the new fuel efficiency standards.

"This is a tremendous development," Mulally said.

He said the loans would help Ford further its strategy to build a wide range of fuel-efficient cars.

"We want to be in every market segment in the U.S.," Mulally said. "Every year forever we want to continue to improve fuel efficiency."

Ford expects to begin repaying the loans in 2012, with an interest rate based on the current U.S. Treasury rate hovering between 3 and 4 percent, said Ford spokesman Mike Moran.

"If it were at market rates it would be in the double digits," he said. "That's a huge thing for us."

Ford can draw from the loan for work done to retool its plants going back to late last year, Moran said. The plants must build cars that improve fuel efficiency by 25 percent.

General Motors Corp. and Chrysler Group LLC have received billions of dollars in federal loans to restructure their companies through government-led filings for bankruptcy protection, but Ford avoided seeking emergency aid by mortgaging all of its assets in 2006 to borrow about $25 billion.

Mulally said the loans Ford would receive from the Energy Department were part of a government-industry partnership and "had nothing to do with the emergency loans to keep General Motors and Chrysler in business."

Ford has said it intends to bring several battery-electric vehicles to market. The automaker has discussed plans to produce a battery-electric vehicle van in 2010 for commercial use, a small battery-electric sedan developed with Magna International by 2011 and a plug-in hybrid vehicle by 2012.

General Motors has requested $10.3 billion in loans from the energy program, while Chrysler has asked for $6 billion in loans. Energy officials have said the loans could only go to "financially viable" companies, preventing GM and Chrysler to qualify for the first round of the loans.

Elizabeth Lowery, GM's vice president of environment, energy and safety policy, said GM still must pass the Energy Department's financial viability test before it can receive loan funding and the company hoped to get the money shortly after it emerges from Chapter 11 bankruptcy protection.

Chu said the Energy Department has started discussing details of the loans with Chrysler and has begun reviewing the "technical side" of the loan requirements with GM.

Nissan said the $1.6 billion loan would be used to modify its Smyrna, Tenn., plant to produce zero-emissions vehicles and lithium-ion battery packs to power them. The Japanese company has previously outlined plans to develop an all-electric car with 100 miles of pure battery range for release in late 2010.

"This loan is an investment in America. It will help us put high-quality, affordable zero-emissions vehicles on our roads," said Dominique Thormann, Nissan North America's senior vice president for administration and finance.

Ford Truck Plant Giving State Economy A Boost

Story from the Oakland Press

Ford Motor Co. is giving southeastern Michigan’s economy a $550 million shot in the arm as it moves forward with plans to build small vehicles and electric cars at an assembly plant in western Wayne County.

The automaker said Wednesday it will launch within the next year production of the all-new Ford Focus along with a battery-electric version of the Focus at the Wayne plant.

“The transformation of Michigan Assembly Plant embodies the larger transformation under way at Ford,” said Ford chief executive officer Alan Mulally.

“This is about investing in modern, efficient and flexible American manufacturing. It is about fuel economy and the electrification of vehicles.

“It is about leveraging our expertise and vehicle platforms around the world and partnering with the UAW to deliver best-in-class global small cars,” Mulally said.

The retooling of Michigan Assembly, one of the world’s most profitable auto plants during the SUV boom of the late 1990s, is based on Ford’s plan to use the company’s global assets to bring six world-class small cars to the North American market by the end of 2012, Ford officials said.

Ford is converting three truck and SUV plants to car plants — Michigan Assembly, Cuautitlan Assembly in Mexico and an assembly plant in Louisville, Ky., which will be converted to produce small vans and other vehicles from Ford’s global Focus platform beginning in 2011.

The Cuautitlan plant will be used for building the subcompact Ford Fiesta, which Ford also plans to sell in the U.S.

“We’re changing from a company focused mainly on trucks and SUVs to a company with a balanced product lineup that includes even more high-quality, fuelefficient small cars, hybrids and all-electric vehicles,” said Mark Fields, Ford’s president of The Americas.

“As customers move to more fuel-efficient vehicles, we’ll be there with more of the products they really want,” Fields said.

The zero-emission battery-electric Focus vehicle, which is being developed in partnership with Magna International, features a high-voltage electric motor powered by a high capacity lithium ion battery pack and charged by plugging in to a 110-volt or 220-volt outlet.

Ford also plans to use its new agreement with the United Auto Workers to reduce job classifications and minimize the union work rules in the retooled factory.

Joe Hinrichs, group vice president for global manufacturing and labor affairs, said the new practices will enable the plant to operate at a high level of productivity while producing best-inclass quality products in a safe work environment.

“The UAW is a key partner in enabling us to build these worldclass vehicles competitively in the United States,” Hinrichs said.

“This agreement will allow the workforce to build on their quality commitment while improving productivity at the plant.”

The state of Michigan, Wayne County and the city of Wayne contributed more than $160 million in tax credits and grants to support Ford’s expansion opportunities.

“Ford is investing in both the future of the American auto industry and the state of Michigan by bringing together world-class products, advanced technology applications and strong partnerships with the UAW to build the next generation of vehicles that will help end our nation’s dependence on foreign oil,” Gov. Jennifer Granholm said.

“In these challenging economic times, we applaud and appreciate Ford's commitment to Michigan and to our talented workforce,” she said.

Ford Fears Rivals' Revamps

As Posted to The Wall Street Journal

Having declined federal loans, Ford Motor Co. has been watching the car industry's bailout drama from the sidelines. But now, company officials worry that a bankruptcy filing by a cross-town rival could severely disrupt Ford's operations.

A bankruptcy reorganization by either General Motors Corp. or Chrysler LLC -- as suggested by President Barack Obama this week -- could damage the networks of suppliers and dealers shared by Detroit's three auto makers, throwing uncertainty into Ford's parts deliveries and its retail operation.

Moreover, Ford officials are concerned that bankruptcy could allow GM or Chrysler to restructure more fundamentally and exact deeper concessions from unions and bondholders. That could leave a rival in better competitive shape than Ford, unless Ford can gain the same concessions.

Ford, which is trying to engineer a turnaround on its own, has already reached agreements with its union to reduce wages and restructure retiree health care costs. It also offered bondholders a deal to shed some debt. The company has said the steps will put it in a better position than competitors to ride out the recession.

Ford expects to report another deep slide in car and truck sales of at least 40% when March figures are disclosed by auto makers Wednesday. But George Pipas, Ford's sales analyst, said the company also expects to post its largest retail market share for a single month in more than two years.

The auto-supply industry serves multiple car manufacturers but operates on thin profit margins that could evaporate if one of the auto makers stopped paying for components under bankruptcy or went out of business.

"The collapse of one of our competitors would have a severe impact on Ford and our transformation plan, because the domestic auto industry is highly interdependent," Ford Chief Executive Alan Mulally warned late last year in testimony before the U.S. Senate. "It would also have devastating ripple effects across the entire U.S. economy."

Even without a bankruptcy, some Ford officials fear that the uncertainty surrounding the car makers over the next few months could keep shoppers from considering a vehicle from a domestic maker.

"I think the Obama announcement is a near-term depressant on auto sales and the economy," said one Ford official Tuesday. "It introduces uncertainty and confusion among most consumers. And it's the uncertainty that's driving consumers into the cave."

To reassure jittery customers, Ford on Tuesday introduced a plan that will cover car payments for up to a year if a customer loses his or her job. Under the program, , Ford also is offering 0% financing on some vehicles. The job-protection program started at Hyundai Motor Co. and was quickly matched Tuesday by GM.

To be sure, Ford has been able to move much further and faster in trimming costs and debt than its two domestic competitors, which are propped up by $17.4 billion in U.S. loans approved in December. And it also has started to see some promising sales trends, with more consumers gravitating from the other car makers toward Ford's vehicles.

"I think it's more important that in the last 60 days, we've gotten more consideration for our new products." Ford sales chief Jim Farley said in an interview Tuesday, downplaying the potential impact of a GM or Chrysler bankruptcy on his company. "There's concrete research around this."

He cited CNW Marketing research that shows in the first two months of the year, 19% of consumers who had planned to buy a GM car instead bought a Ford, Lincoln or Mercury. And some 15% of people who set out to buy a Chrysler or Dodge in January instead switched to one of Ford's brands.

Ford has also been able to continue to invest in new products. A person familiar with the company's plan confirmed Tuesday that its Chicago assembly plant has been selected to produce a new version of the Explorer sport-utility vehicle for 2011, which will lead to the callback of hundreds of laid-off full-time workers.

Ford's healthier prospects were the principal reason the United Auto Workers union approached Ford months ago in the hopes of setting a floor that would be matched by agreements at GM and Chrysler, according to people involved in the talks.

Union members reopened their Ford contract to make concessions in cost-of-living increases, vacation, overtime and the so-called jobs bank, which paid laid-off workers. The union also agreed earlier this month to let Ford use stock instead of cash to fund up to half its future obligations to a retiree health-care fund.

Ford says those givebacks will reduce its average hourly labor cost, including benefits, to $55, putting the auto maker on a clearer path toward competitiveness with foreign makers that build vehicles in the U.S., which have total labor costs of about $49 an hour.

Ford estimates the savings to be as much as $375 million this year and $500 million or more in subsequent years.

Ford's finance arm doubled the size of one part of a planned debt buyback to $1 billion after seeing significant investor interest. Ford announced the buyback in early March in an effort to retire up to $10.4 billion in debt through a combination of cash and stock.

Ford on Wednesday will offer buyouts to all 42,000 of its U.S. hourly workers. But company officials expect a relatively low take rate because workers worry it may be difficult for them to find other jobs.

Company officials say they're confident that if the UAW or debt holders make new cost-cutting deals with GM and Chrysler, the Dearborn, Mich., company could return to the bargaining table to match the gains.

But a nagging concern remains: So far, GM, Chrysler and their stakeholders haven't budged in their negotiations, and the Obama administration has set a strict timetable for the two companies to reach agreements to qualify for further government aid.

To get those deals done, President Obama said, GM and Chrysler may have resort to a bankruptcy filing, which could result in much deeper cuts.

Ford Motor Offers Job-Loss Insurance

As Originally Posted at Bloomberg

Ford Motor Co., adjusting incentives as the U.S. recession deepens, said it will cover payments for as long as 12 months on new vehicles for buyers who lose their jobs.

The program will also offer no-interest financing through Ford Motor Credit Co., the Dearborn, Michigan-based automaker said today in a statement. The offers start today and run through June 1, covering Ford, Lincoln and Mercury autos.

“Consumers remain anxious about the economy and their own outlook for the future,” Ken Czubay, vice president of sales and marketing, said in the statement.

General Motors Corp. plans a similar program as both automakers struggle with a 39 percent decline in U.S. auto sales this year through February. GM will allow people who lose their jobs to return autos without penalty, people familiar with the matter said yesterday.

Hyundai Motor Co. started offering payment-protection incentives in January.

Ford also said it will work through its dealers to provide support to local charities because of the recession, with details to be announced in April.

Pact To Bring Ford's Labor Costs More In Line With Toyota's

As Originally Posted to The Wall Street Journal

Ford Motor Co. expects to cut its hourly labor costs to the levels of Toyota Motor Corp. and other foreign rivals with U.S. plants in two years thanks to union contract changes ratified this week.

The concessions, which trim benefits, change work rules and eliminate some pay increases, could save Ford as much as $375 million this year and $500 million or more in subsequent years, company officials said Wednesday.

The new terms cover 42,000 Ford workers represented by the United Automobile Workers. The agreement intensifies pressure on General Motors Corp. and Chrysler LLC, which need labor concessions by month's end to meet the terms of emergency U.S. government loans. (For other auto news, please see page B3.)

GM will get many of the same concessions as Ford although some terms will be different, UAW Vice President Cal Rapson wrote union members in a March 9 letter. The letter, a copy of which was reviewed by Dow Jones Newswires, didn't provide specifics but Mr. Rapson said the "economic" elements will follow the pattern set by Ford.

GM and Chrysler, which together have borrowed $17.4 billion from the U.S. Treasury and seek as much as $21.6 billion more, remain at odds with the UAW over retiree health-care funding.

Although Ford hasn't sought government loans, it opened parallel talks with the UAW, bondholders and others to keep its costs competitive. Last week, Ford announced a plan to cut its debt by $10.4 billion by offering cash and stock for bonds and other debt.

Under the new UAW terms, Ford said it will pay compensation of about $55 a hour, including benefits, pensions and bonuses. That's down from about $60 and moves Ford closer to the estimated $48 an hour Toyota and other foreign auto makers pay employees at their U.S. plants, said Ford's group vice president of global manufacturing, Joe Hinrichs.

Over the next two years, Ford should lower the rate further as it is allowed to replace retiring workers with new hires costing about $30 an hour. The auto maker says it expects to bring its rate down to $50 by 2011.

As part of its UAW accord, Ford will make a new buyout offer to hourly workers on April 1. The offer will be worth less than previous programs because of the economy, Mr. Hinrichs said. Details will be released next month.

Meanwhile, members of the Canadian Auto Workers union have voted 87% in favor of a cost-cutting contract with GM, helping to qualify the struggling automaker for government aid.

UAW, Ford Reach Agreement

Original Story From Associated Press
As Posted at Forbes

The United Auto Workers Union says its members working for Ford Motor Co. have approved contract changes that include freezing wages and cutting other benefits in a move to aimed at helping the automaker remain competitive.

The approved agreement also ends the jobs bank program and lets Ford make payments in stock to a union-run trust for retiree health care.

The union says 59 percent of production workers and 58 percent of skilled-trades workers voted for the agreement.

Ford is not seeking government funding and is the first U.S. automaker to come to an agreement with the union.

Visteon's Risk for Bankruptcy Deepens

As Originally Posted in The Wall Street Journal

Visteon Corp.'s bankruptcy risk intensified Wednesday after the auto-parts maker posted a wider fourth-quarter loss and said it might violate its debt covenants as the economic downturn slams automotive companies.

The former Ford Motor Co. subsidiary said it is prepared to do whatever is necessary to shore up its capital base, including eliminating or selling "substantial assets or operations." Chief Executive Don Stebbins declined to provide more details and didn't take questions from analysts during the company's fourth-quarter conference call.

"We said we anticipated continued production weakness in the fourth quarter, however, the speed, the severity and the breadth of the change greatly exceeded our expectations," Mr. Stebbins said.

Auto-parts makers are struggling as vehicle makers cut production with sales tumbling to the lowest levels in decades.

Visteon's willingness to shed operations shows how dire the situation has now become for the company, which hasn't turned a profit since it was spun off in 2000.

Visteon, whose products include satellite radios, instrument displays and climate-control equipment, has already undertaken a massive restructuring in the past several years, including shrinking its work force and giving back some of its underperforming plants to Ford. At the end of 2008, its work force stood at 25,550, compared with 39,300 at the end of 2006.

Now it intends to cut 1,000 salaried workers -- up from an original target of 800 -- by the end of March and take other steps such as slashing pay, suspending 401(k) matches and looking for voluntary separations in its European operations.

Visteon, based in Van Buren Township, Mich., reported a fourth-quarter net loss of $328 million, or $2.53 a share, compared with a year-earlier net loss of $43 million, or 33 cents a share. The latest quarter included a $200 million write-down at its interiors business. Revenue slumped 42% to $1.65 billion.

For the year, Visteon's net loss widened to $663 million.

The company had cash of $1.18 billion at the end of 2008, compared with $1.76 billion a year earlier. It drew down $30 million in January under a credit agreement and has borrowed a total of $105 million.

Ford, which posted a $14.6 billion loss for 2008, said in January that it won't provide any special treatment for its former parts unit.

Visteon has continued to diversify away from Ford for the brunt of its sales. Ford accounted for nearly 30% of product sales in the quarter, while Hyundai Motor Co. and subsidiary Kia Motors Corp. made up 28%. Europe and the Asian-Pacific region each made up nearly 35% of product sales.