Do we really want to have this debate again? You know, the one where Detroit’s defenders claim that federal “loans” are loans not bailout bucks? I guess so. After all, the MSM has been all about Ford being the only domestic not to receive a federal bailout. And now we hear that The Blue Oval Boys have landed a $5.9 billion dollar retooling loan from the Department of Energy. As expected. “Our business plan assumed about the amount we got,” FoMoCo CEO Alan Mulally told Reuters. “It’s very consistent with our plan.” Automotive News [sub] reports that Ford. Wants. More.
Mulally said Ford could be in line for more funding from the Energy Department program. The agency has $17 billion in additional funding for loans to auto companies and congressional allies of the auto industry are backing efforts to allocate another $25 billion.
A greenhouse emissions bill pending in Congress would double that amount to $50 billion. [Story coming.] Ford’s original total request was $11 billion.
Let’s review: Under the terms of the loans, Ford can use the $5.1 billion to pay for up to 80 percent of the cost of retooling an American plant to build vehicles that are at least 25 percent more efficient than the ones that were previous assembled at the facility. We’re talking about a 25-year loan. The interest rate: four percent. That particular piece of taxpayer generosity saves Ford a projected $100 million per $1 billion borrowed (compared with normal market rates, which they probably couldn’t get). Oh, and the DOE can make that a zero percent interest deal for the first three years, if need be.
Need be. Whether you view this DOE loan as a hand-out or a hand, one thing’s clear: Ford’s burning cash. Unless the market recovers, they are in no better shape financially (product’s a different story) than GM or Chrysler. Worse, actually, as they don’t get to wipe the slate clean.