Ford, GM Report Massive Losses

GM Loses $2.5B, Ford Loses $129M In 3Q; Both Automakers Announce Major Job Cuts, Cash Burns

(CBS/AP)  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.

[noloyalisti]

These companies are EXACTLY the reason corporations should be HEAVILY regulated and should wield NO political power. Big corporations are the PROBLEM not the solution unless they are HEAVILY regulated. That goes for weapons, oil, insurance and health care. Time to nationalize for the good of the people (instead of the CEOs and politicians).

[incog-nito]

myself buy American. Today we say rember 9-11, I rember the cry REMBER PEARL HARBOR!!!curbs33

Posted by curbs33 at 08:10 PM : Nov 09, 2008

Buy American? Are you kidding? "American" companies are the ones responsible for outsourcing and moving jobs to other countries. They''re the ones pushing for "free trade" agreements, basically forcing the American worker to "compete" against those in other countries making a tiny fraction of their pay, working under little to no labor laws or regulations. Guess which side has been winning?

[bozworth4]

jobs with little or no healthcare, firing of employees who are injured at work, and relying on temporary workers that earn half the wages of a permanent employee.[37]
Posted by usadvisor101

Kinda sounds like Wal-Mart. But do not fear the UNIONS will keep the fire employees. Wonder how much of a car price is labor? Anybody???

[curbs33]

This took longer to happen than I thought. this started when the auto market was flooded with cars for alot less money,from Third World Countrys. The Goverment shoul have made it harder to sell at this lower price. I myself buy American. Today we say rember 9-11, I rember the cry REMBER PEARL HARBOR!!!curbs33

[KLHILL]

Let em fold, building Hummers as gas was soaring, just for profits. The exec''s have millions as the workers on the floor will suffer from greedy management

[wardoglrs]

This is not the way a Republic works and as long as there are plenty of ill informed voters you will never get your country back.
The constitution does not give the elected prez the authority to choose his VP as an example of amendments passed by the house. Are money is by law to be only Gold & Silver not phony FRN''s or worthless
Paper money with no value.

America blew it by putting in a Neo Con again and again you will be disappointment. Bush is a fine example of what really is most of what the hill has to offer

[exfed4]

These arrogant car executives are on a par with the loser bankers. The writing was on the wall a long time ago and they ignored it. Let them all go belly up. The Japanese can more than hold their own and they make a better product. Death to American automakers.

[aubfmet]

If the auto makers want a bailout, the union workers must be ready for a pay cut. Put it in writing. Also the designers must be ready to make some fuel efficient cars. If you don''t want to, you don''t have to but the competition will.

[payasyougo]

Did the "rich" quit buying cars?

[incog-nito]

Some people think "free trade", like "free market", is a cure-all to all economic woes. Here''s how free is supposed to work ideally: I sell you something you don''t make or can''t make very cheaply, and vice-versa, and we''re both better off as a result.

Nowadays free trade actually works like this: I (China) sell you what you don''t make, and I (China) also sell you what you used to make but don''t anymore because I make it much more cheaply. I (China) keep getting richer and more powerful while you (the U.S.) keep getting poorer.

[downtowner97]

Remember those animal crackers with the pink and white frosting and the little multicolored sprinkles? That company, "Mother''s Cookies" went broke. Why didn''t the government give Mother''s a billion dollars to come up with a les fattening cookie?

I just don''t understand why the big three car companies, mismanaged for generations, count more than other companies.

If the government gave each of us our share of the debt these companies incurred, we could put a really nice down payment on a Toyota or Honda made right here in America that we''d actually want to DRIVE.

[hypnotoad72]

BAGHDAD %u2014 Two Iraqi insurgent groups called on President-elect Barack Obama to withdraw U.S. troops from Iraq and abandon the war on terror, an Internet monitoring service reported Friday

Gee, cant thay wait a couple more months.....

Posted by hillaryin016 at 03:28 AM : Nov 08, 2008
---

Well, it was said time and again the surge had worked. If it worked and things are so much better, why continue to keep them there? Can''t have it both ways. (Forgive me for replying to your smarm with some of my own.)

[hypnotoad72]

Posted by republic76 at 04:16 AM : Nov 08, 2008

You make a point, but CEOs making 400x the amount of their workers, offshoring, and trashing their companies hasn''t helped either...

It''s not as one-sided as you want it to be in your happy little dream world.

And, yes, unions do go too far too. Unfortunately, they were needed because of gruesome corporate practices. Thank unions for your 40 hour work week, vacations, et cetera. (Indeed, at one time Republicans were pro-union; Eisenhower as I recall being worker-friendly too. The 1950s weren''t bad despite some things...)

As for Toyota; 10 years ago I had one -- went in for a tune-up, went out with a broken windshield washer container that was perilously close to hitting a main belt. (read "sabotage".) Maybe the mechanic didn''t like my countenance... or maybe it was poorly fitted in the first place (not likely; they don''t build liquid-containing devices out of cheap origami paper). Needless to say, Forget Toyota if that''s how their representatives act.

[guest173]

I don''t feel sorry for them, these companies aren''t innovative like Toyota, who has shown they work a lot harder to make reliable products and also looking to offer affordable alternatives like the Prius. Ford and GM want to keep making the same old thing without remembering cars are linked to gas, which is an added cost. After what happened with the gas prices, they need to remember that their product is vulnerable and they shouldn''t put all their eggs in one basket. Toyota is a great example of diversifying and smart working. Yes, Ford and GM maybe can get some loans, but they should have to present a business plan to the loan officers of how they expect to change the situation that put them in that place of near bankruptcy.

[txgrouch2007]

I''''ve only owned American model cars, Fords, Chevys, Buicks, Plymouths, and I''''d buy a new car now, except ... I''''d buy a new car tomorrow as the money is in the bank.
Posted by ludvig1 at 09:09 PM : Nov 07, 2008

Do you SERIOUSLY expect me to believe ANY of that???

First off, if you spent your whole life driving only American made cars YOU WOULD HAVE BEEN KILLED IN AN ACCIDENT caused by a defective vehicle by now.

I used to drive American made. Until my Chevy truck d@*n near killed me TWICE. And the dealer refused to repair my BRAND NEW WARANTEED VEHICLE that tried to kill me twice because it was a "known defect."

I said, OK good you know it''s a defect so fix it. Then he said again, we don''t fix known defects. And I was like, what, you only fix defects you DON''T know about???

About the time neither one of us was sure which one of us was going to punch the other one in the face first, I left and traded it in on a Toyota.

My Toyota truck hasn''t tried to kill me once. Now I have two of them.

And that''s why I don''t believe a word you wrote.

[incog-nito]

It appears that the American payer will be once again forking out money to bail out big business. Make no mistake, GM and Ford WILL get what they ask for. It''s the lesser of two evils. On the one hand we don''t really have the money to give them, and so this will add to the national debt. On the other hand the U.S. simply cannot afford to have one of its biggest industries wiped out. The question is what will they do with the money? Use it to change and improve the way they do business such as making reliable, fuel efficient, affordable electric or hybrid cars that will help regular folks reduce their own expense, which in turn helps the economy as a whole. Or pay off their debt and then it''s back to business as usual. I fear the latter.

[tiktin]

Ford, Chrysler and General Motors now want $75 billion dollars of our tax money or else they say they will go broke by the end of the year. Hey, why not $75 trillion? Roll the presses! Bail everybody out! Come and get yours! They''re giving the stuff away! Can''t you just smell that new money smell? Budget? Deficit? What''s that? That is so twentieth century. Only tiresome old people worry about things like that. Wake up! Get with it! It''s a brave new world where money grows on trees!

[ludvig1-2009]

I''ve only owned American model cars, Fords, Chevys, Buicks, Plymouths, and I''d buy a new car now, except for one thing. California has a law that says when you buy a new car, the sales tax has to go to the community you live in, not the community you buy the car in. The town I live in just voted in a tax to put more cops on the street. My doctor told me to go out and get some exercise. The cops have on more than 4 occassions acted like I was a criminal when I went out for a walk or a bike ride. I have no desire to pay the cop tax to put more of those idiots on the street. If California changed the law and let my sales tax go to the community I buy it, I''d buy a new car tomorrow as the money is in the bank.

[erniepf]

Hey, txgrouch2007: It''s almost 2009. Maybe your two years of complaining about Dems has finally fried your brain.

Regardless of your tiny views on suppressing the global economy, it''s happening. And if you want to keep blaming the Dems for everything that ails you, you may want to think about moving to Alaska.

I hear the economy up there is perfect.

[toolmangler-2009]

W
e need to start learning what our new lifestyle will be after a few years of Democrats running our country.
Seems like some famous Democrats have already sampled Cisco at some point...
Posted by txgrouch2007 at 08:28 PM : Nov 07, 2008



thats our trouble now, too many drunks and alcoholics in government already. they were minding the ''Jug'' not the store. Leave the cork in the bottle and help people instead of backstabbing and negativity. This kind of commentary speaks volumes and it isn''t pretty.