Ford cuts more white-collar jobs as it burns through cash
Ford Motor Co. moved to cut more white-collar jobs Friday as it consumed cash at an alarming rate.
Ford said it will slash 10 per cent of its North American salaried workforce costs by the end of January.
The company said the cuts will come through staff reductions and attrition. A full 10 per cent staff cut would mean the elimination of roughly 2,260 white-collar jobs.
The announcement came as the automaker posted a third-quarter loss of $129 million US.
The loss came in at six cents per share for the quarter, compared with a loss of $380 million, or 19 cents per share, a year ago.
Ford burns through $7.7B in 'gross cash'
More crucially, Ford's pretax loss from its continuing operations was $2.7 billion. This was offset partly by a $2-billion gain from the company shifting retiree health-care liabilities to a trust run by the United Auto Workers.
Factoring out special items, Ford lost $1.31 per share, worse than analysts had expected.
Ford reported that sales fell 22 per cent to $32.1 billion from $41.1 billion due to lower volume and the sale of its Jaguar and Land Rover holdings.
During the quarter, Ford burned through about $7.7 billion in "automotive gross cash," leaving it with about $18.9 billion at the end of the period.
Ford went through $2.1 billion in cash in the second quarter.
"If you look at how much cash they have, that means that they will basically be flat out of cash in about 7½ months," Alisa Priddle, a senior automotive reporter for the Detroit News, told CBC.
"When you're out of cash, that's when you start talking things like bankruptcy and Chapter 11 [court protection]," she said.
Ford's chief financial officer, Lewis Booth, said the company is "comfortable with our liquidity position."
"I think it goes without saying, forecasting the future at the moment is extremely difficult," Booth told reporters. "Trying to find out just exactly what is happening with the consumer is really tough."
The Dearborn, Mich.-based company announced several steps intended to boost its cash by between $14 billion and $17 billion through 2010.
- Eliminating merit-pay increases for North America salaried employees in 2009;
- Eliminating performance bonuses for global salaried employees;
- Suspending matching funds for U.S. salaried employees in Ford's savings and stock investment plan.
- Reducing annual capital spending to between $5 billion and $5.5 billion.
- Reducing engineering, manufacturing, information technology and advertising costs;
- Cutting inventories around the world.
Ford stock closed up four cents at $2.02 in New York trading.
Automotive consultant Dennis DesRosiers said a decline in the auto business hurts the entire Canadian economy.
"We know for a fact that in Canada one in seven jobs are dependent directly and indirectly on the auto sector. Those are the butcher, the baker, the candlestick-maker jobs. And that's pretty big."
On Thursday, the U.S. companies' CEOs travelled to Washington to make the case for federal aid for the industry.
Last week, the Automotive Parts Manufacturers Association asked the Canadian government for up to $1 billion in short-term loans.
With files from the Associated Press and the Canadian Press