TCC'S DAILY EDITION: Nov. 1, 2002
Fiat SpA will pump $2.47 billion into the struggling Fiat Auto group as required by Italian law. According to that law, any company that owes more than one-third of its net assets must be recapitalized. Fiat SpA will effect the transfer by canceling some of Fiat Auto’s debt to the parent company, according to Reuters. GM, which owns 20 percent of Fiat Auto, is not party to the arrangement. Fiat lost $335 million in the third quarter, and has said it will cut 8100 jobs to stanch losses — a move extremely unpopular in Italy and with the country’s government.
GM Loses $804 Mil In Q3 by Joseph Szczesny (10/21/2002)
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DAILY IN DEPTH: FORD CUTTING $11.2 BILLION IN COSTS
Ford Motor Co. executives said Thursday they were targeting $11.2 billion in savings from their global product purchasing over the next two years. That figure represents about 15 percent of Ford's total global annual purchasing of $75 billion for the parts and materials needed to build the automaker's cars and trucks.
Ford Group Vice President David Thursfield and Ford North America chief Jim Padilla briefed reporters about the cost-cutting goals as part of a full-court press the automaker is putting on to convince the press and Wall Street that it is making progress. Stock and credit agency analysts have been beating up Ford in recent weeks for not moving fast enough to cut costs.
Thursfield said he would be "disappointed" if the company did not get those savings through several new cost-cutting techniques. These include working closely with suppliers to eliminate waste, intensified parts sharing and adjusting the content in some vehicles, he said. Among changes: 25 different brake calipers and rotors in 2002 will be cut to 11 by 2007; 26 front seat architectures this year will shrink to four in 2010; 31 radio variations will come down to 14 by 2007. The executives also said they are striving for 64 percent component commonality among its vehicles, and 56 percent carryover content from one generation to the next.
Padilla said Ford North America would be profitable for 2002, and that he expected the unit to "maintain a very positive position next year." Ford North America lost $50 million in the third quarter, earned $45 million in the second quarter and lost $430 million in the first quarter for a total loss so far of $435 million. If Ford North America makes enough to make up for that loss in the fourth quarter, it would be quite a turnaround.
Ford is in the midst of a multi-year turnaround effort after last year's loss of $5.45 billion. Savings on product development costs are a key part of the bid to return the world's number-two automaker to profitability. —Jim Burt
Ford Loses in Q3, Too by Joseph Szczesny (10/21/2002)
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MAZDA BOOSTING FORECASTS
Ford affiliate Mazda, meanwhile, says it is raising estimates for profits it will report on Nov. 12 as well as those for the second half of the Japanese fiscal year, which ends Mar. 31, 2003. Mazda says it now expects to book about $45 million in profit for the period that ended Sept. 30, Reuters reports, more than double what it expected. For the second half of the fiscal year it’s expecting about $150 million in profit, up by about $30 million. Officials also told the news service they expect a slight boost in sales volumes.