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Ford’s earnings are now under intense scrutiny as the company reports fourth quarter losses of approximately $5.9 million dollars; a record breaking loss constituting the deepest slump in the company’s 105 year history.
Ford is the second largest U.S. based automaker. Already its largest competitors, Chrysler and General Motors, applied and succeeded in obtaining low-interest loans from the federal government which allowed them to remain in business. Yet, Ford refuses to bow before market pressures and request government loans; a move which would inevitably open the company to government involvement.
According to the Wall Street Journal, Ford will instead be taking some drastic measures to avoid requesting bailout money including the elimination of over 1,200 jobs in the Ford Motor Credit branch of the company and applying for over $10 billion from its credit lines.
Low sales, provoked by a weak global economy, have already forced Ford and its competitors to cut jobs, stall construction plant operations, and boost incentives to drive up sales. In the past year Ford was also obligated to sell its Jaguar, Land Rover as well as Mazda branches and is speculated to be taking offers for its Volvo brand.
Still, despite Ford’s earnings, optimism exists amongst the company’s ranks. “Ford and the entire auto industry faced an extraordinary slowdown in all major global markets in the fourth quarter that clearly had an impact on our results,” Ford’s chief executive, Alan R. Mulally, said in a statement published by the New York Times. “We continued to take the decisive actions necessary to lower production to match the lower worldwide demand and reduce costs, which we expect will allow us to significantly reduce negative operating cash flow in 2009 and position Ford for growth when the economy rebounds.”
By: Alberto Ramos Cordero
Posted January 29th, 2009 by Alberto
