DEARBORN, Mich., Nov. 7, 2008
Ford, GM Report Massive Losses
GM Loses $2.5B, Ford Loses $129M In 3Q; Both Automakers Announce Major Job Cuts, Cash Burns
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Big 3 In Big Trouble
Over 48,000 jobs have been scrapped by General Motors, Ford and Chrysler, as Detroit automakers face massive financial turmoil due to an unstable economy. Cynthia Bowers reports.
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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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See all 94 CommentsSince the sixties, these companies designed the very worst vehicles, undeterred by Volkswagen or Toyota dominating the good car market. The committee-designed American products were inferior in every way. These corporations would not, could not learn from their competition. They should NOT be rescued. If they cannot clean their own house, they should fold. Dinosaurs!
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Posted by DaVicar1 at 12:10 PM : Nov 07, 2008
Thanks for continuing to display your ignorance, it''s an amusing part of the day for most of us. Just more of the SOS.
WE DID NOT GET FORD OR ANY OTHER AUTO MANUFACTURER TO GIVE A CARE WHEN AMERICA WAS LOOSING THEIR HOMES AND LIVELY HOOD WHY SHOULD AMERICA NOW LEND A BAIL OUT FOR FORD OR ANY OTHER AUTO MANUFACTURE.
DO YOU REALIZE THEY MADE A MASSIVE PROFIT JUST OF THE SALE OF A SINGLE VEHICLE THAT DID NOT EVEN COST THE $35K STICKER SHOCK WHEN IT ONLY COST LESS THAN $5000 %u2264 TO GET THE MATERIALS USED TO PUT IT TOGETHER IF THAT
Posted by ms1-1-1 at 12:25 PM : Nov 07, 2008
Are you serious, the profit is generally made on the back end of the vehicle. Unions and the expectations that have pushed on the manufacturers have caused the profits to erode to where you have to make money on the back end of a product. Yes there quality sucks when compared to some other manufacturers, but don''t think VW is better for reliability. I as well as many friends have owned many and would not own another one. Yes the quality of hte materials is there, but *** they are not reliable.
1. Until the early 90s, American cars were considered lower in quality to the Japanese and the Europeans. In the last 10-15 years, that has changed. If you read reports such as J.D. Power%u2019s and Associates, you will find that American cars now average better build quality then 90% of the European cars and are virtually on par with the Japanese (last year Ford was reported as %u201Cequal%u201D to Toyota in quality.) Unfortunately, it apparently takes a long time to overcome %u201Creputation%u201D.
2. Foreign car companies have always had a free and open market in the United States in which to sell their wares. This is NOT TRUE in most of the rest of the world. For example, I lived in Japan for ten years where CRIPPLING tariffs were placed on all %u201Cforeign%u201D cars, forcing the Japanese to buy Japanese. How %u201Ccrippling?%u201D Try 100% of the car%u2019s retail price. BTW, the Japanese government actively lobbies our congress to keep U.S. tariffs low. Seem fair?????
3. As a final note, of the last four American cars I bought (A Dodge Ram, Ford f-150, Pontiac Sunfire, and Pontiac Solstice), the only car that had to go back to the dealership for anything other than an oil change was the Dodge. It had a leak in the power steering that was fixed under warranty. BTW, my Solstice BLEW THE DOORS OFF a Porsche 911 today.
Running scared...ROFL!!!
Posted by POTUS_Obama at 12:35 PM : Nov 07, 2008
Why do you people have to make fun of names like that?
Are you in the 6th grade?
1. Until the early 90s, American cars were considered lower in quality to the Japanese and the Europeans. In the last 10-15 years, that has changed. If you read reports such as J.D. Power%u2019s and Associates, ---
oil change was the Dodge. It had a leak in the power steering that was fixed under warranty. BTW, my Solstice BLEW THE DOORS OFF a Porsche 911 today.
Posted by stillwatersg at 12:41 PM : Nov 07, 2008"
I agree to some of your points. Add to this lobbying, their central bank keeps Japanese Yen artificially low by 10 - 15% against dollar. Better not to speak about Chinese currency. It is a mistake on big 3 autos to support current administration for long while and ask for cheap loans to new administration. They should have known better.
I would like to mentions that if it was a democratic president asking a GOP congress about what could have happened ? Just think over. It takes 2 to 4 years to come to some stable economy & more than 8 years to get some improvements in economy. Really gloomy. We have to eat what we cook.
Its all a paper lose anyway.
Let these CEO''s and the like give back some of what they stole.
If they would design cars the public wants and if their labor force would manufacture a quality product they would not be in this predicament. We buy Toyotas, Nissans, and Hondas because they are competiviely priced quality products that give value for the cost paid.
The government should not get involved in business. Let the free enterprise system work. If these companies go under, there is someone out there who can come to the front and produce a quality American product.
Does anybody bail you out when you screw up?
Management and Union Leaders are to blame.
You get what you pay for corporate idiots!
Just memorize the true Definition of Capitalism for the past 240 years:
Privatize Profit and Socialize Losses.
Just memorize the true Definition of Capitalism for the past 240 years:
Privatize Profit and Socialize Losses.
This means you do not need CEOs, CFOs, CIOs, etc.. with professional degrees from Top Ivy Universities. A 6th grader can run any Corporation. If the Corporation fails due to a mistake/bad decision ..........Socialism is there to bail them out.
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No doubt about it. There were some REALLY poor business decisions. That is what happens when union contracts prevent a company from adapting to changing markets. But not to worry, Obama is going to save us all.
Posted by mbourn2 at 01:51 PM : Nov 07, 2008
That is not true. Toyota, Honda, and Nissan all deal with the same unions. It is the culture of GM and Ford to try to distroy unions and suppliers. They are failed management at its worst. They will cry like babies to the American people and we will guess what get to save them like the banks. All the while the rich will be getting their bonuses and the little guy will be getting the shaft.
We need to break them up to tiny little companies so that if they fail too bad.
We need to break them up to tiny little companies so that if they fail too bad.
Posted by antoniof123 at 01:58 PM : Nov 07, 2008
Honda & Toyota are NOT unionized, hence the $1,200 less they have in costs per car.
Why do you make things up?
Now, Brown makes $70,000 a year -- more than twice the average manufacturing wage in the area.
In case you want to see why unions have such a hard time with Toyota here is the address.
http://www.npr.org/templates/story/story.php?storyId=5062797
According a Wall Street Journal article reprinted in the Star-Telegram, "on average, GM pays $81.18 an hour in wages and benefits to U.S. hourly workers, including pension and retiree medical costs."
... According to that same article, "Harbour Consulting President Ron Harbour estimates Toyota''s total hourly U.S. labor costs, with benefits, at about $35 an hour." That''s right, GM''s average labor costs are 130% higher than that of the US operations of its Japanese rival. That translates into a $1,000/vehicle average labor-cost advantage enjoyed by Toyota.
Did you READ your own cut/paste? Toyota is NON-UNION.
sheesh
But the voters of this country are welfare or warfare minded. Welcomed to the age of Nazi America
But the voters of this country are welfare or warfare minded. Welcomed to the age of Nazi America
Posted by WarDogLRS at 02:16 PM : Nov 07, 2008
What about the thousands of suppliers employing millions of people? Are they worth bailing out?
Foreign car manufacturers do not pay Health Care Costs which average about $1500.00 per car wholesale sticker here in America because foreign countries have UNIVERSAL HEALTH CARE.
Do you like our Free Market (PROFIT) Health Care industry?
Foreign car manufacturers do not pay Health Care Costs which average about $1500.00 per car wholesale sticker here in America because foreign countries have UNIVERSAL HEALTH CARE.
Our Free Market (PROFIT) Health Care system is a joke around the world. It prices itself out of it own market every year.
Foreign car manufacturers do not pay Health Care Costs which average about $1500.00 per car wholesale sticker here in America because foreign countries have UNIVERSAL HEALTH CARE.
Do you like our Free Market (PROFIT) Health Care industry?
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Who do you think pays the taxes that pay for the UNIVERSAL HEALTH CARE? Don''t forget that the top 50% of earners pay just over 97% of the taxes.
I am very happy that the top 50% of earners pay just over 97% of the taxes.
Health Care is NOT FREE anywhere in the world.
Either our Private Corporations pay for it for the employees or the Government pays for it thru Revenues (taxes).
The FACT for the past 30 years is that our Free Market (PROFIT) based Health Care system is pricing itself out of the market while other countries do not have this problem.
America must make that critical decision whether they want private enterprise to pay for health car of the government via UNIVERSAL HEALTH CARE.
Do you like our Free Market (PROFIT) Health Care industry?
Posted by lovegetpeace at 02:20 PM : Nov 07, 2008
We''re talking about foreign plants HERE, Professor. The vast majority of Honda & Toyota cars sold in the U.S. are made in the U.S.
I am very happy that the top 50% of earners pay over 97% of the taxes.
Nobody said Health Care is FREE anywhere in the world.
Either our Private Corporations pay for it for the employees or the Government pays for it thru Revenues (taxes).
The FACT is that for the past 30 years our Free Market (PROFIT) based Health Care system is pricing itself out of the market while other countries do not have this problem.
America must make that critical decision whether they want their Employers or the Government via UNIVERSAL HEALTH CARE to pay for Health Care.
USA is the ONLY COUNTRY IN THE WORLD with Free Market (PROFIT) Private based Health Care and its failing for all of us big time.
I WANT UNIVERSAL HEALTH CARE!
I WANT UNIVERSAL HEALTH CARE!
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That is why people flock to Canada for serious medical conditions??? The last time I checked when a world leader has a life threatening illness... they go to the Mayo Clinic in Rochester MN.
Americans also go South the border for cheap Health Care. For example, Braces in American average $3500.00 but in Tiguana Mexico, they average $800.00 per head.
Per Capita, America health care Costs is more than Twice the 2nd place country which is Sweden in Europe.
American''s Life Expectancy is #43 in the world. Canada, Cuba and Mexico and 40 other countries beat America. Check at the CIA Statistical website.
Posted by lovegetpeace at 02:41 PM : Nov 07, 2008
As a lifelong conservative I still think we''re doing great. We''re still ahead of Somalia, aren''t we?
Somalia is #128 on the CIA Statistical website. Do not worry.
Posted by lovegetpeace at 02:41 PM : Nov 07, 2008
That has more to do with Big Macs than the quality of health care. Face it, Americans don''t exactly live healthy lifestyles, as a whole.
In Summary, Americans have a VERY EXPENSIVE AND Extremely INEFFECTIVE AND Totally INEFFICIENT Free Market (PROFIT) Private based Health Care System because IT LACKS A HEART. The Profit (wallet) is more important than the Heart.
Posted by obiden08 at 02:46 PM : Nov 07, 2008
Careful removing the hook from your mouth....
incognito=gop_will_win???????
If so, sorry about lobbing that rock into the lake.
You have a GOOD point. Let me give you just 4 simple example of this lifestyles.
1) ToothPaste for cleaning your teeths: All that chemicals goes to our stomach and into our Liver. Nobody has studied if it causes Cancer.
2) Body Creams: All that chemicals goes thru our skin and into our Liver. Nobody has studied if it causes Cancer.
3) Makeup Products: All that chemicals goes thru our skin and into our Liver. Nobody has studied if it causes Cancer.
4) Perform/Lotions: All that chemicals goes thru our Skins and into our Liver. Nobody has studied if it causes Cancer.
Americans put Toxic/Poison into their bodies.
Please stop talking and writing to yourself. After this election, fact is that nobody and I mean absolutely nobody is listening to you folks.
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So.... if God forbid one of your children gets cancer.... you are packing up the car and heading to Mexico??
Baling out companies with taxpayer funds is getting out of hand anymore. CEO''s walk away with millions each and every time after they ran the companies into the ground.
It''s time we, as taxpayers, say the taxpayer no longer afford this. I understand it''s about jobs, but some fool runing the company should be held responsible from here on out. Enough is enough.
Posted by obiden08 at 02:50 PM : Nov 07, 2008
Good for you! Honda & Toyota treat their employees well--if they didn''t they wouldn''t be able to compete. The real advantage both those companies have over the Big 3 is that since they''ve only been in North America since the 80''s, they don''t have the legacy costs the Big 3 have to drag around. Think about the pension burden GM has with literally millions of people collecting benefits who don''t even work there anymore.
It much easier that driving south to Mexico. In America, we can go straight into the Emergency Room of any Hospital for FREE treatment if we have no Insurance.
This is the costly by-product of our Free Market (PROFIT) based Health Care system. They prices themselves every year and that in itself prices them out even more because the Pool is smaller and the ER is larger.
Posted by mbourn2 at 02:56 PM : Nov 07, 2008
I''m going to Tijuana for my heart transplant--I want the very best.
It much easier than driving south to Mexico. In America, we can go straight into the Emergency Room of any Hospital for FREE treatment if you have no Health Insurance.
This is the costly by-product of our Free Market (PROFIT) based Health Care system. They prices themselves out every year and that in itself prices them out even more the next year because the Payer Pool is Smaller and the ER Cost is Larger.
My 1st Car was a Pontiac and lasted 145,000 miles.
My 2nd Car was a Datsun/Nissan and lasted 285,000 miles.
My current 3rd car is Toyota and so far it got 185,000 miles on it.
Foreign cars are much easier on gas mileage.
I will never buy American Cars.
Emergency Rooms are FREE. So visit one and ask those waiting there.
One reason Hospitals are closing in record numbers is because of this fact.
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