Monday 2nd February 2009

Ford Reports Worst Loss Ever

Ford has reported its biggest full-year loss.

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The manufacturer said its net loss for the fourth quarter of 2008 was $5.9bn (£4.1bn), and for the whole year, the loss amounted to a record $14.6bn. Virtually every carmaker is now struggling thanks to the global economic downturn and Ford's December US sales fell 32%. Meanwhile General Motors sales dropped 31% in the same month, compared to December 07. Ford reported a loss of $2.7bn in 2007 and $12.6bn in 2006 and has now reportedly been forced to cut 1,200 jobs in a bid to save money. In the fourth quarter of 2008, Ford's revenue fell to $29.2bn down from $45.5bn a year earlier. Ford said in a statement: 'Based on current planning assumptions it does not need a bridge loan from the US government, barring a significantly deeper economic downturn or a significant industry event, such as the bankruptcy of a major competitor that causes disruption to the company's supply base, dealers or creditors.' Ford chief executive Alan Mulally added: '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.'

[nickfrog]

Is it 4wd?

[BBS-LM]

Is it FWD?

[Ex Boy Racer]

There has been overproduction in the car industry for so long now that this is hardly news. For years, anyone in the business has seen that rationalisation was needed but the manufacturers didn't downsize, merge or adapt, so this was inevitable. The industry could make more cars than we needed even in the good times but they hid this by making money from loans, currency transactions etc. The government's bail out is pointless; the industry needs to reform in line with the real demand that's out there. Yes, that will mean the end of consumer power, but at least we'll keep a sound and healthy industry. IMHO of course

[Adrian W]

Maybe they should sell cars and not finance

[raharley]

this is news?

[wab172uk]

So in 3 years Ford have lost $29.9bn.

They don't need a loan from the Government, so who are they getting loans from? No bank/banks could surely justify lending Ford any more money in the current financial downturn.

[Fiatfan]

How much have Alan Mulally and the other directors got paid for this performance?

[Xaero]

The bigger they are...

[infradig]

Memo to senior US executives-Volvo,

Without causing alarm to local employees,please clear desk put your skis on e-bay and make your way to the roof of the main compound building for helicopter exfil.
Operation 'Last Desparate Off Load of Decent European Company' is imminent.(for warnings of what could happen see B'ham to Mumbai economy flight schedule)

[Warick Hunt]

When the big three US car makers recently went to the government with a begging bowl to bail them out they were asked who among then would be reviewing their massive salaries, private planes and huge bonuses. Of cource they all said they were happy with their current package. Mullaly pays himself $28M annually...

[cardigankid]

And they might as well get their worst results out now while they can blame the 'Global Financial Crisis'. Overpaid tossers.

[FNG]

Warick Hunt said:

When the big three US car makers recently went to the government with a begging bowl to bail them out they were asked who among then would be reviewing their massive salaries, private planes and huge bonuses. Of cource they all said they were happy with their current package. Mullaly pays himself $28M annually...

Mulally got $21m I am pretty sure (incl benefits / perks) which is certainly a lot of money. However if he saves the company from losing more billions he's more worthy of it than a worse CEO who's prepared to accept $1m. That's how board-level pay works.

And Ford haven't asked for a bailout. GM and Chrysler have been given about $14bn I believe.

Now for balance can you tell us how much the CEOs of GM and Chrysler earn?

[FNG]

cardigankid said:

And they might as well get their worst results out now while they can blame the 'Global Financial Crisis'. Overpaid tossers.

The main reason for the loss being so bad is that the automotive sector died on its arse after about August, and the fourth quarter in particular has been a shocker for all manufacturers.

You don't "get your worst results out now", the results are what they are. They reflect the trading position of the company in the market, not whether or not the board want to keep some money under the floorboards this particular quarter...

[chickensoup]

pistoheads said:

for the whole year, the loss amounted to a record $14.6bn. .........Ford ...has now reportedly been forced to cut 1,200 jobs in a bid to save money.

Must pay well

Edited by chickensoup on Monday 2nd February 16:49

[GreenV8S]

Ford said:

does not need a bridge loan ... barring ... a significant industry event, such as the bankruptcy of a major competitor

Are they saying that the loss of a major competitor would put them in a *worse* position? That's a bit unexpected.

[FNG]

GreenV8S said:

Ford said:

does not need a bridge loan ... barring ... a significant industry event, such as the bankruptcy of a major competitor

Are they saying that the loss of a major competitor would put them in a *worse* position? That's a bit unexpected.

Most Tier 1 suppliers deal with all the manufacturers. Ford, GM and Chrysler are particularly linked as they share a common location in that a massive amount of their manufacturing and supply base is in Detroit.

If one major company folded it would invitably affect the supply chain quite badly, particularly in the Michigan area - and when suppliers start going to the wall, that affects all the customers it supplies.

[FNG]

chickensoup said:

pistoheads said:

for the whole year, the loss amounted to a record $14.6bn. .........Ford ...has now reportedly been forced to cut 1,200 jobs in a bid to save money.

Must pay well

Edited by chickensoup on Monday 2nd February 16:49

There have been tens of thousands of layoffs in the couple of years as all the detroit manufacturers rebalance their production facilities, and there will be many more yet.

Those unfortunate 1200 are only the last of a long line.

[tonym911]

For me the interesting bit is the quote that Ford won't need a loan 'barring a significantly deeper economic downturn, or a significant industry event, such as the bankruptcy of a major competitor that causes disruption to the company's supply base, dealers or creditors.' In other words Ford cannot survive if the opposition goes under. The interlinking support/parts structure is the glue that keeps the car monsters alive – whether they are individual entities or consolidated into bigger lumps.
GM remains deeply mired with no viable product range to help them out in time. The merger of Fiat and Chrysler is by no means going to guarantee Chrysler's survival. If two of the big three go bust, the remaining one will be technically unable to operate under monopoly rules. So it will have to go too, or fragment in some commercially acceptable way. This 'red giant' scenario remains a real possibility.
It's not quite analagous, but it's certainly reminiscent of the understanding Bill Gates was forced to come to recently in regards to Apple. Effectively he had to help Apple survive in order to stop Microsoft becoming an untenable monopoly operation.

[tonym911]

The really shocking thing about all this is how short-termist the auto industry has become. In a matter of weeks, three monumental businesses have been brought to their knees. Diversification, or at least having the option to diversify, is almost a pre-requisite for survival in any business these days. This concept does not appear to have formed part of any auto maker's contingency plan – if they ever had a contingency plan. There seems little evidence of this, just a blind faith that people will keep on buying their products. It's been 'cars or nothing' – and it's looking increasingly like nothing. Who do you know is planning to buy a new car, not just in the next few months but in the next year, or even two years? Ironically, the companies have played a part in their own downfall by producing such good quality products that we can afford to hang on to what we've got until things brighten up. Nobody can criticise them for that, in fact we owe them a massive vote of thanks for the huge improvement in our motoring lives (principally talking safety and efficiency here) over even the last five years. But you do wonder just how many heads have been buried in the sand, and for how long.

[Zad]

Guess how much Ford Europe lost in 2008. Go on. What huge, immense, vast sum of money did Ford Europe totally squander last year?

Sorry folks, they didn't. Last year, Ford Europe made a profit of 1 Billion Dollah. http://www.autocar.co.uk/News/NewsArticle/AllCars/...

Seems like making a profit isn't news though. They did lose $261M in the last half if that is more news-worthy?