Motown is singing the blues.
Ford Motor Co. said Friday it lost $129 million in the third quarter as the struggling automaker burned through $7.7 billion in cash and set plans for more job cuts.
Meanwhile, General Motors Corp. says it lost $2.5 billion in the third quarter. The situation is so dire that GM said today it might run out of money by the end of the year.
So GM's proposed merger with the equally-troubled Chrysler is off, reports CBS News correspondent Cynthia Bowers. Its sole focus: its own survival.
"We have no plans whatsoever to consider anything but to continue to run the business," said GM Chairman and CEO Rick Wagoner.
The automaker said its cash burn for the quarter accelerated to $6.9 billion due to a severe U.S. auto sales slump. The company on Friday reported a net loss of $4.45 per share during the quarter, compared with a record-setting loss of $42.5 billion, or $75.12 per share, a year ago.
About 3,600 GM workers will be laid off indefinitely beginning early next year as the automaker slows down production at 10 of its assembly plants.
And Ford says it will cut its white collar work force by 10 percent - 2,200 people.
This is on top of the 48,000 jobs the Big Three automakers have already shed so far this year.
The crisis is exacerbated by the worst car market in 15 years. No automaker is immune, but compared to last October sales are down at Ford 30%, at Chrysler down 34 percent, and at GM 45 percent.
With a state unemployment rate near nine percent, those who still have jobs at nearby plants wonder which shift could be their last.
"I just can't even think about it," one worker said.
What's next could be a nightmare. One job lost inside the plant jeopardizes as many as a dozen outside, jobs like Nick Fetahu's.
Just outside Detroit at Little Joe's Diner, which he manages, Fetahu has one eye on his kitchen, the other on the automakers for whom his customers work.
"Everyday you come in to work you're afraid, is anybody gonna come in today or not?" Fetahu said.
"I'm very scared," Fetahu told CBS News. "This year, 2008, was probably the worst year I've seen."
Not Quite Money To Burn
Ford said it will cut North American production in the fourth quarter by 40,000 units more than what was announced in September, primarily with shift reductions and temporary plant shutdowns. In September the company announced a fourth-quarter production cut of 171,000 units over the fourth quarter of last year, mainly in trucks.
The salaried cuts, Ford said, equate to about 10 percent of its North American salaried work force of 22,600. It will reduce the work force primarily through personnel reductions and attrition, Mulally said.
It also said it has no plans to offer more buyout or early retirement packages to blue-collar workers.
The automaker started the year with 89,000 employees in North America but reduced that number to 80,200 as of Sept. 30 through attrition, hirings, buyouts and layoffs.
In a further effort to cut costs, Ford said it will eliminate merit pay increases in 2009 for salaried workers in North America, along with performance bonuses for salaried employees worldwide. It also will suspend matching contributions for U.S. salaried employees who take part in the company's savings and stock investment program.
Ford also announced that some of its vehicle programs will be deferred, although the company described the moves as minor timing changes.
Ford said it lost $2.6 billion pretax in North America, compared with a loss of $1 billion in the year-ago period.
It recorded a pretax profit of $480 million in South America, compared with $386 million last year. In Europe, the company made $69 million, a sharp drop from the $293 million in the year-ago period.
Ford's Asia-Pacific operations made $4 million, down from $30 million a year ago, while it lost $1 million on its interest in Mazda, compared with a profit of $14 million in the third quarter of last year.
Volvo lost $458 million, wider than the $167 million loss last year. Ford Motor Credit Co. had a pretax profit of $161 million, far lower than the $546 million in the same quarter last year.
"While Ford has been dramatically affected by the difficult business environment, we remain absolutely convinced that we have the right plan and are taking the right actions to weather this difficult period and emerge as a lean, globally integrated company poised for long-term profitable growth," Alan Mulally, president and chief executive, told industry analysts during a teleconference.
Ford said it lost 6 cents per share for the quarter, compared with a loss of $380 million, or 19 cents per share, a year ago.
The company posted a pretax loss of $2.7 billion from continuing operations. But it was offset partly by a $2 billion gain as the company shifted retiree health care liabilities to a trust run by the United Auto Workers.
Ford's global automotive operations had a pretax loss of $2.9 billion for the quarter, compared with a pretax loss of $362 million a year earlier.
Sales fell 22 percent to $32.1 billion from $41.1 billion due to lower volume and the sale of Jaguar and Land Rover.
Excluding special items, Ford lost $1.31 per share, worse than Wall Street expected. Analysts surveyed by Thomson Reuters predicted a loss of 94 cents per share on sales of $28 billion.
Dearborn-based Ford reported its worst three-month performance ever in the second quarter, when it lost nearly $8.7 billion.
The cash burn - in which a company spends more money than it takes in - was far higher than the $2.1 billion Ford used up in the second quarter.
Ford said the cash burn primarily reflected pretax automotive losses, changes in working capital and payments to its credit arm to reduce interest rates for buyers. It was exacerbated by sales drops and production cuts of 500,000 fewer vehicles from second-quarter levels, resulting in $3 billion less in incoming cash for the quarter.
Chief Financial Officer Lewis Booth would not say if he expects the cash burn rate will continue at the present levels, but said he was confident the company can make it through 2009.
"With our present assumptions, we are comfortable with our liquidity position," Booth told reporters Friday morning. "I think it goes without saying, forecasting the future at the moment is extremely difficult. Trying to find out just exactly what is happening with the consumer is really tough."
Industry analysts say that if the economy doesn't improve, Ford could run out of money sometime after 2010.
The company reported having $18.9 billion in cash on hand on Sept. 30, down from $26.6 billion at the end of the second quarter.
U.S. automakers have approached the U.S. government for low-interest loans as they try to weather the global economic slowdown. Ford is also among automakers that are talking with the European Commission for a low-interest loan of 40 billion euros, or about $51 billion. It also is talking to other governments.
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