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Ford Could Be Out of Cash Next Year if Spending Not Curtailed


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If Ford doesn't engage in some serious cost cutting, it could be out of cash sometime in 2009, according to the U.K.'s AutoCar. Ford currently has cash reserves of $18.9 billion, which AutoCar project is enough to support the automaker for only seven months if it continues spending money at the current rate.

While Ford's posted loss of $129 million for the third quarter of '08 is far less than the $380 million it posted for third-quarter 2007, the company's operating costs soared to $7.7 billion during the third quarter of '08.

Ford plans cash conservation measures that include massive cuts in its labor force. They will do away with all bonuses and slash engineering and advertising costs in an attempt to reduce cash out by up to $5.5 billion. Ford has already canceled all U.K. advertising until the conclusion of '08.--Colin Mathews
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Comments (18)
  1. Blurb from Globe and Mail article about Ford, Nov 4:
    "So the subcompact Ford Fiesta is coming to Canada and the U.S. in 2010, as planned. More small cars, including the European Focus and very likely the Kuga small SUV and possibly even the Ka microcar joint venture with Fiat are also on the way.
    The trick for Ford will be to make money on these small cars. That won't be easy. But Toyota and Honda somehow make money selling small cars, so there has to be a way. "
    This is a mantra that I am hearing repeatedly ..about them having to find a way to make money on these small cars.
    As a consumer, this makes the hairs stand up on the back of my neck. I'm curious if they 'make money' on small cars that are manufactured in Mexico. This just sounds ominous to me, like they are signaling to foreign competitors that they all need to jack up car prices at the low end.
    I just feel like if the domestics don't have a viable business plan to manufacture small vehicles in the United States without having to rely on government subsidies, collusion with or pressure on foreign companies to raise prices, then they are not worth saving.
    Foreign companies assemble vehicles here and source parts as well, and they apparently do so at a profit.
     
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  2. Love the pictures you're choosing to help illustrate the financial condition of the Big3. How about a photo gallery with the headlines as captions?
     
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  3. Some of the proposals by worthless former Chrysler and other Big 3 managers sicken me.
    The most outrageous one is to have "The Government", ie, YOU AND ME, the TAXPAYERS, subsidize ONLY the Domestic POS cars sold to the tune of $3,000 per car.
    If they ONLY subsidized 35 MPG and above efficient cars, this would have SOME merit, but as it is, to subsidize fat-assed giant domestic only 10-15 mpg SUVS and TRUCKS is nothing short of OUTRAGEOUS.
     
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  4. I could see SOME merit in providing tax credits for some small cars. If you are going to provide a credit for electric or hybrids, why not also have a credit for small block/turbocharged direct inject/diesel cars, but they would need to get extraordinary mileage. Say near 40 mpg CITY rating not highway. Otherwise, they will start using these techniques to improve performance and not economy. They always try to find a way to subvert these programs.
     
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  5. Where did you hear that one Ed? That's terrible.
    All these large companies are blackmailing the taxpayer. They're saying, "We can't stay in business if you don't give us billions and we're so big if we go under, you're all going to loose your jobs." Do anti-trust laws need to be expanded to say not only monopolies have to be broken up but really large companies are a threat to economic stability and have to be broken up also? I'm scaring myself with that idea.
     
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  6. Tom L:
    I read it this morning, probably in Automotive news. it was a formal letter a retired Chrysler CEO or Chair, Hal Sperling, I believe, and another such type, wrote.
    It is terrible, even if they extend it to "transplants" Honda Civics and Toyota Corollas. And what about made in Mexico Ford FOcus, Fusion etc, and Made in Korea Chevy Aveos (=Daewoos)?
     
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  7. "November 11th, 2008 - 10:48 am
    I could see SOME merit in providing tax credits for some small cars. If you are going to provide a credit for electric or hybrids, why not also have a credit for small block/turbocharged direct inject/diesel cars, but they would need to get extraordinary mileage. Say near 40 mpg CITY rating not highway. "
    I agree with the targeted group, but the problem is that the big 3 can sell few such models NOW. But if gas prices stay below $2 due to the world recession for 2 years, such incentives for small cars may be necessary.. but not big 3 only, many of which are built in Mexico or Korea.
     
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  8. If gas stays around $2 a gallon with the country in a recession Ford GM and Chrysler are just going to have to offer flying cars. I don't see how else they can survive.
     
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  9. ?????
    $2 is LOW, consumers will buy far more Big 3 guzzlers at $2 than if it goes back at $4.50, which I doubt, given the world recession, the next 2 years or so.
    And if the Dems have anything to do with it, of course the Big 3 will survive, at your and mine expense! And it is not the first time they did so. At least if we were able to buy their SHARES dirt-cheap today, we might make a killing when they recover, like with Chrysler in 1980.
    And the arrogant GM CEO refuses to resign along with his incompetent fellow managers, as a condition to the bailout!
     
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  10. (The flying cars was a joke)
    But if the recession stays along with cheap gas car sales are going to sit at historically low levels. There are already way too many gas guzzling vehicles out there. People won't be able to get cheap credit and won't have the confidence that their jobs are stable to buy a new car.
    The GOP wouldn't let the Big3 go under either. The temporary impact to the economy would be so great that it would be political suicide. Without new, revolutionary technology and the demand for it I don't see them recovering. They'll continue to shrink and loose market share until the day comes that they can go under without plunging the country into a depression. When that day comes and they go begging for another bailout guess what's going to happen.
     
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  11. Again, cheap gas FAVORS, as it always did, the Big 3 and automakers in general. $4 gas does not. and if cheap gas Stays 2 years, it can only help the recession GO AWAY as people willbe able to spend their $ on OTHER products made here and not sent it over to OPEC!
     
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  12. I think they should let Chrysler go under. They should be bought by Gordon Gecko and dismantled for scrap. Oops that's already happening.
    People are not buying cars. I'm shocked at how people have been financing their lifestyles, using home equity loans to buy big SUV's ! No wonder we are going down the tubes, people have been living beyond their means for years and the END of that kind of consumption is going to be jarring for the economy. We can't get into a situation where the government is now going to finance peoples extravagance.
    You have to pay your own way.
     
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  13. As far as gas prices go, i think there should be a mandatory warning sticker on all new large vehicles..like the surgeon general's warning. NOTE: The price of gasoline is volatile.
    It will probably cost you hundreds of dollars to fill the tank of this vehicle in the future. Don't come whining to your congressman about this in the future. You have been warned !
    Why ? because people are idiots
     
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  14. The boom of the 90's had more to the equation than cheap gas. You also had cheap credit that enabled people to buy high-profit vehicles and growing incomes that allowed people to rationalize purchases (I'll be tight now but next year I'll have an easier time affording these payments). Cheap gas may be back and the Fed may push cheap credit into the marketplace but 2 years is to short a time for consumer confidence to come back. People are going to take that money they save on gas and put it in a rainy day fund.
     
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  15. I fully agree with Jack's points, but even though I have always been an optimist, I don't see it happening. It will not be "sink or swim" for the incompetent onetime big 3. We the taxpayers will have to bail them out again, and it will hurt the deficit, the debt, the US $, and our pocketbooks as well.
     
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  16. I don't expect consumers to be as crazy as to go back to buying $40,000 and $50,000 full size SUVs with 15 MPG or less, if gas stays at $2 (and it will stay low for a while, given the demand).
    But I expect them to buy crossovers like the Obese GM and Ford offerings, 4,500-5,000 lbs heavy, and getting barely 18 MPG average, which is still terrible.
    I also expect people to drive more miles than they would if gas stayed at $4.25 or so peak it reached in July.
    I could easily afford those prices for several reasons (one being I do not have a long commute), but still I enjoyed filling the 3/4 empty 22.5 gallon tank of my "740il" with the recommended midgrade for only $35, vs $75 last summer.
     
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  17. Even with gas passing below 2 dollars per gallon, i am still trying to continue with my conservation regime. It was nice to fill the tank for 26 dollars again (Corolla). Enjoy it while it lasts.
     
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  18. I also have to agree with Jacks comments, here in South Africa our petrol prices having been coming down nicely and its a relief not have to be worried when you go fill up. I really can't see Ford closing down they one of the bigger manufacturers of cars.
     
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