DEARBORN, MICH. - After the worst annual loss in its 105-year history, Ford Motor Co. still doesn't plan to seek government aid, but it's borrowing more money and hinting at further restructuring to brace for a tough 2009 and any surprises from the economy.
The second-largest U.S.-based automaker on Thursday reported a $14.6 billion net loss for 2008, beating the record of $12.6 billion set two years ago. Ford lost $5.9 billion in the fourth quarter, but more importantly, it spent $5.5 billion more than it took in, dropping its cash reserves to $13.4 billion at year's end.
The company, like other automakers, predicted a slow start to the year with a small recovery in the second half aided by government stimulus packages. But Ford is behaving as though it's expecting things to get worse. The company told lenders Thursday that it wants to borrow the remaining $10.1 billion of its secured credit line. The money is to arrive Tuesday, but Ford executives said they don't plan to use it for operating expenses.
"We took this action because of our concerns about the growing instability of the capital markets," Chief Executive Alan Mulally said during a conference call with reporters and industry analysts. "The worldwide economic slowdown, driven by tight credit markets and weak consumer confidence, has shaken the foundation of even the strongest companies in the automotive sector and other industries."
Ford said its financing arm would cut about 20 percent of its workforce, or 1,200 full-time and contract jobs, as it deals with a smaller U.S. market.
After cutting costs by $4.4 billion in 2008, the executives predicted $4 billion more in savings this year, with part of that coming from other restructuring efforts that Ford declined to specify.
To improve liquidity, Ford also took $2 billion set to go to a union-administered health care trust fund and converted it into a note payable at the end of 2009; as a result it has about $25.5 billion in liquidity available.
But if Ford continues to burn cash at the pace it did in the fourth quarter, it could reach $10 billion, the minimum required to operate the company, in about eight months.
