Two of Detroit's automakers are well on their way to becoming wards of the federal government, but Ford Motor Co. has no intention of joining its rivals anytime soon.
"Nothing has changed about our plan," Ford CEO Alan Mulally told me Wednesday, one day after General Motors Corp. and Chrysler LLC submitted requests for a combined $21.6 billion in new federal loans and credit lines. "Our plan is not to access government money. Right now, with everything I see, we have sufficient liquidity to continue our transformation of Ford.
"We haven't changed our plan," he added. "It's broad enough and robust enough to handle all these changes. We're not coming back every couple of months with a new plan like everyone else is."
For now, anyway. Plans change because conditions change, as Detroit's auto execs, congressional leaders and two presidents have learned painfully the past few months. The two events most feared by Ford -- an "uncontrolled" bankruptcy of GM or several major suppliers and, second, a significantly worse economy -- still loom as possibilities the Dearborn automaker cannot ignore.
That members of President Barack Obama's auto team already are talking privately with key industry players, less than 24 hours after GM and Chrysler forwarded their latest requests to the administration, underscores Detroit's place on the White House agenda and diminishes (for now) the likelihood of the kind of uncontrolled bankruptcy feared by Ford.
Yet other problems are emerging, the evaporation of Ford's overseas earnings among them. Even as Mulally finished the sales of Aston Martin, Jaguar and Land Rover, drew down Ford's stake in Mazda, peddled Volvo for a second time and restructured Blue Oval operations and product lines at home, Ford's units in Europe, South America and Asia Pacific were posting profits back in Dearborn.
Not now. Only South America posted pre-tax profits the final three months of last year. The globalizing recession, punctuated most by accelerating weakness in Europe, increases the likelihood that Ford's foreign profits will disappear for much of this year.
In the United States, January car and truck sales were weak, February is shaping up to be weaker still and the Federal Reserve predicted Wednesday that the U.S. economy could contract as much as 1.3 percent this year, a harbinger of continued tough times for both Detroit's automakers and their foreign rivals.
GM's request Tuesday for another $16.6 billion in loans and credit lines -- for a total of $30 billion since Christmas -- signals the kind of industry weakening and bankruptcy fears that could force Ford to change course and seek a federal lifeline, too. Not yet, Mulally insists.
Instead, the Dearborn automaker drew down its $10.1 billion credit line to bolster its total liquidity, now standing at $24 billion despite burning $19.5 billion in all of last year. That's an astonishing number that shows just how much capital these companies can consume -- and how quickly -- when times are tough.
To the consternation of GM and Chrysler, Ford led the way in crafting modifications to its 2007 contract with the United Auto Workers. The concessions are intended to bring Detroit's labor costs in line with foreign-owned competitors operating with nonunion labor in the United States, a requirement of the first set of federal bridge loans.
"While Ford drew its revolver," wrote Eric Selle of JPMorgan Chase, "Ford doesn't expect to incur additional government debt. Most of Ford's cash burn" in the second half of last year "was due to working capital outflows that should subside as production stabilizes, while GM should continue to experience this outflow into 2009."
The bottom line: Amid bleak outlooks for the entire industry, the latest federal submissions by GM and Chrysler depict two companies whose prospects look worse today than they did two days ago. Ford's look pretty much the same -- seriously challenged, but no closer to asking for federal bridge loans than last week or the week before.
Whether and how that might change depends as much on Ford's cross-town rivals, the UAW and Team Obama's ability to muscle a solution outside of bankruptcy court as it does on Mulally, his team, Ford's cash hoard and its improving product line.
For years, conventional wisdom held that Detroit's automakers were indistinguishable. That's less true today than it's been in a long time.
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