US CAR firms have started to submit plans demanded by Congress as the chief executives of Ford, General Motors and Chrysler debated with politicians over a $25 billion (€19.6 billion) bailout the industry says it needs to survive.
Under fire for fighting fuel standards for years, the Detroit-based firms are expected to present plans that call for them to build more fuel-efficient cars, cap executive compensation and restructure their agreements with the unions.
Ford became the first to release its plan: seeking $9 billion (€7 billion) in loans, cancelling global executive bonuses and all US bonuses for 2009, proposing to cut the number of dealers and initiating plans for electric cars. Its chief executive, Alan Mulally, has said he will cut his wages to just $1. He also drove to the Washington meeting, after the three executives were ridiculed for flying to the previous meeting in their private jets.
Ford also said in a submission to Congress that it expects to break even or return to profitability, on a pre-tax basis, by 2011. The carmaker earlier this year abandoned its target of returning to profitability by 2009.
In spite of the current slump in sales, Ford said in a statement that it does not expect to run out of cash in 2009, "barring a bankruptcy by one of its domestic competitors or a more severe economic downturn . . ."
Ford's financial position is relatively less precarious than GM and Chrysler, thanks to a $23.5 billion (€18.48 billion) loan negotiated two years ago. Its cash reserves stood at $18.9 billion (€14.9 billion) on September 30th, down $7.7 billion (€6 billion) from three months earlier.
Alan Mulally, chief executive, expressed the hope that the restructuring plan "helps instill confidence in Ford's commitment to change."
The company said it was asking for access to up to $9 billion (€7 billion) of the emergency loans, but that it hoped to complete its restructuring without needing the funds.
- FT Service