Ford and General Motors could run out of cash in 2009

[Wizzo]

It is no secret that the Ford Motor Co. is in a spot of financial difficulty, their latest quarter figures are in and they have an operating loss of $3 billion!! Ford has since announced that they will have to reduce staff and spending, in an effort to preserve what cash they have left.

Ford have said that they will now cut salaried employment costs by 10%, Ford will also reduce the compensation of its white collar workers, they will do this by eliminating bonuses, merit pay, as well as their retirement accounts. Ford have been doing all they can to stump up some extra cash, they have sold some of their brands, like Jaguar and Land Rover, and are also looking to off-load part of Mazda.

There is a general concern that some of America’s largest automakers, such as Ford And General Motors could run out of cash in 2009, if this happens it could plunge the U.S. economy in to further turmoil. Worrying times indeed.

[Steven Roy]

If they lost $3 billion how can anyone be eligible for a bonus.  That is like Vijay Mallya saying he is going to save money by not paying his drivers their points bonus this season.

[cosworth151]

Ford has larger cash reserves than GM, and is doing better outside of the US.

One of the largest expenses for the US car companies is employee health care. Since there is no health care system in this country, it's paid for by the employers. The auto industries contracts with their workers, going back over 50 years, guarantee health care for their retirees, too. Several years ago, a figure of $1200 per vehicle was accredited to health care costs. I'm sure it's gone up since then.

[Dare]

No need to worry the government bailed out the
banks!why not bail out the auto makers too.

Who's next the hospitals then the grocery stores.

Why give money to company's who have proven they
can't manage their money.

[Scott]

I'm not so sure...there seems to be little support to bail out the carmakers in Congress.  It may be time for them to get bought out by the Chinese, Japanese or the Germans.  Stock price is a bargain.

...of course if the Saudi's or someone from the middle east makes a bid, you can bet the U.S. will re-think their options.

[cosworth151]

The only opposition in Congress is from the Republicrooks. They want to be sure that all of that tax money goes to their cronies in the Wall St. banks to pay for more resort week-ends. Right now, Congress just has to get them enough to last until the Democrats take over in January.

[Wizzo]

General Motors, Ford and Chrysler have been asking lawmakers for a $34 billion bailout. One senator said “we’re looking at a death sentence.” Lawmakers for both parties have been putting the manufacturers under pressure, as they want them to consider a pre-negotiated bankruptcy, something that the automakers are not happy with.

The three U.S. manufacturers were contemplating a government-run restructuring, which would have much of the same results as bankruptcy. If the deal goes ahead, General Motors, Ford and Chrysler will see massive downsizing.

[cosworth151]

These are the same Senatorial Twits that hand the keys to the treasury to any Wall Street type that walks in and asks. It seems they only care about people who shower before they go to work, not the ones that shower when they get back home.

GM is looking at selling off Saab, sinking Saturn and Hummer, and reducing Pontiac to a niche brand. (Sorry, Claw_grrl).

GM and Chrysler say they need cash by years end. Ford says it can get through, but would like some loan guarantees if needed later next year.

[John S]

Sad to see the Giants of the Automotive world in such trouble and especially as they have not brought it on themselves but are victims like the rest of us of the greedy irresponsible dimwits in the banking sector.

 I just hope when they get the money they use it to advance their businesses and avoid the woes the British motor industry had with state assistance.

Here in Britain they spent the money on a continuation of the present production instead of using it to rationalise and develop relevant models, ok it was the 70's & 80's but the premise still holds true.

[SennaMan]

Sad to see the Giants of the Automotive world in such trouble and especially as they have not brought it on themselves but are victims like the rest of us of the greedy irresponsible dimwits in the banking sector.

 I just hope when they get the money they use it to advance their businesses and avoid the woes the British motor industry had with state assistance.

Here in Britain they spent the money on a continuation of the present production instead of using it to rationalise and develop relevant models, ok it was the 70's & 80's but the premise still holds true.

not exactly JS - the big three have been making the "wrong" models - i.e. out of step with a world needing to conserve energy - for at least a decade and now the economic crisis has caught them with their pants down.

your point about developing "relevant" models is well made and must be followed.

it is my view they should be allowed to fail as their "extravagant executive culture" is too entrenched for real efficiencies and gains to be made; new owners would hopefully be not so encumbered.

It would also give a very strong signal that the American tax-payer is not an easy target for any and all cash-strapped enterprises.

Giving this money away to the big companies is "socialism by stealth" and any so called socialism should be apportioned to ordinary Americans struggling with mortgage payments.

Let the bastards fail - the world needs to change from profligate methods of 'growth' to more reasoned and sustainable policies - because as long as this type is in power, nothing substantial will change.

[cosworth151]

When people jab the Big 3 for making "the wrong models," they overlook the truth of the matter. Most of those full size truck they build are, like mine and Dare's, work trucks. Sorry, but there's no way I'm going to get my tools, ladders, cable spools, ect. in a Honda Incest. When the money changers sank the credit market, both home and business construction stopped. One of the first cutbacks made in construction is new equipment. Therefore, truck sales plummet. Normally, my truck would have been replaced this past summer.

On top of that, when the credit dried up and unemployment skyrocketed (over 1/2 million job losses in the US in November alone) people stopped buying cars.

People are also overlooking that EVERY auto maker is making cutbacks. Look at Honda and Audi's racing programs. The thing is, almost every other country already subsidises their auto industry.

[Scott]

I have a bit of trouble with both your arguments (Cos & SM). 

First of all SM - Australia is not exactly the best example of automakers making sensible models - putting V8's into what in North America resembles a compact car or truck is not really paying attention to the world's health.  Plus the Aussie brands are subsidiary's of the big Three in North America, so don't think it won't affect Australia as much as anywhere (the cutbacks and potential bankruptcy, that is).  Why not put a small turbo or turbo diesel in them instead?

On the other hand Cos, perhaps the North American carmakers should look Down Under for an example of a sensible sized truck.  The 'Yute' is a fantastic compromise between car and truck and have a ton of aftermarket styling kits as well.  Put a cap over the truck bed and you can get a ton of cable spools and whatever you like in there - throw a rack on the roof and you have a place for your ladders and pipes and the rest.  And guess what?  You can actually park the darn things underground!  The El Camino was a lousy attempt at meeting that compromise, but the Australians have perfected it.

The other crack in the argument that most trucks in N.A. are for work is to simply look at the price of them.  These days trucks are at the same price level as luxury cars, while in the 70's they were often purchased by young men simply because they were entry level priced.  Then have a gander around next time on the freeway and count how many of the trucks are tool and equipment-free.  I think you'll find that most are not work trucks.

Whenever I'm back in Canada (a mirror of the U.S. as far as auto purchasing trends), I am struck by how many full size trucks there are, with or without tools.  Why have trucks only been getting bigger and higher?  Take yourself back to the 70's, and you must remember that pick-up's were a lot smaller.  Now they tower over everyone, and although they are wonderful to drive on the freeway (you can see over everyone else), they don't make practical sense. 

[Dare]

I agree with what you have to say Scotty,mostly.But
try and load ladders,walkboards.saw horses etc,plus
your tools and then materials then you'd see for some
full size trucks are a neccesity

[Scott]

Absolutely, and to balance that, there are also a lot of full size trucks out there that were purchased to pull boats and campers, and they need to be also. 

There are still WAY too many trucks whizzing past on the freeways with nothing but patio tiles in the bed for ballast. 

[Dare]

I got to admit it does irk me to see soccer moms or
dads driving around in suv's or worse yet Hummer's

And I do agree that while I need a full size pickup
Cos could get by with his Yugo and a trailer