Bailout Watch 232: CS First Boston on FoMoCo Plan: "Not Much Here"

“There is very little in the way of new initiatives/efforts/changes to improve the cost structure or profitability of the company, in our view. Most of the document submitted to the Congress is an outline of the company’s existing ‘Plan’ and actions that either have already been taken or are slated to play out over the next couple of years (especially as it relates to new product development). Ford is now calling for its existing plan to deliver profitability of at or above breakeven by 2011 at both the corporate level and in North America. On a cash flow basis, the plan is to be breakeven or above on a Corporate basis by 2011 (no mention of North American cash flow). Ford’s base case US sales assumption for 2011 is 15.5 million total vehicle sales. Following are some things that we think are lacking in the plan:

1. A more aggressive plan to significantly and quickly shrink the dealer network.

2. Any concrete, further reductions to hourly wages, benefits, work rules – and especially the JOBS bank. Ford said that it is “presently engaged in discussions with the UAW with the objective to further reduce our cost structure and eliminate the remaining labor cost gap that exists between Ford and the transplants.” The company asked the incoming Congress and the Obama Administration to “establish a process to address in a comprehensive way the conditions that inhibit competitiveness of the domestic industry”, including, “creditors, dealers, the UAW, and suppliers.”

3. Any further near term balance sheet restructuring. Because Ford has significant liquidity, the company is in a more flexible position than GM, and therefore is able to submit a plan with less draconian actions to stem the significant cash burn it is experiencing at current volume levels. Indeed, the document submitted to Congress does not seem to acknowledge the profound rate of cash burn that Ford is currently dealing with.”

[thanks to you-know-who-you-are]


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  • Crackers Crackers on Dec 03, 2008
    "Ford’s base case US sales assumption for 2011 is 15.5 million total vehicle sales" They are far too optimistic and should be planning for no more than 12 million with contingencies for +/- 1 million.

  • Skor Skor on Dec 03, 2008

    Since I didn't see John Cleese or Eric Idle, I believe those really are classic Ford commercials (adverts?).

  • ScarecrowRepair The 1907 Panic had several causes of increased demand for money:[list][*]The semi-annual shift of money between farms and cities (to buy for planting and selling harvests)[/*][*]Britain and Germany borrowing for their naval arms race[/*][*]San Francisco reconstruction borrowing after the 1906 earthquake and fire[/*][/list]Two things made it worse:[list][*]Idiotic bans on branch banking, which prevented urban, rural, and other state branches from shifting funds to match demands. This same problem made the Great Depression far worse. Canada, which allowed branch banking, had no bank failures; the US had 9000 failures.[/*][*]Idiotic reserve requirements left over from the Civil War which prevented banks from loaning money; they eventually started honoring IOUs illegally and started the recovery.[/*][/list]Been a while since I read up on it, so I may have some of the details wrong. But it was an amazing clusterfart which could have been avoided or at least tamed sooner if states and the feds hadn't been so ham handed.
  • FreedMike Maybe this explains all the “Idiots wrecking exotic cars” YouTube videos.
  • FreedMike Good article! And I salute the author for not using the classic “Lucas - prince of darkness” trope, well earned as it may be. We all know the rap on BL cars, but on the flip side, they’re apparently pretty easy to work on (at least that’s the impression I’ve picked up). On the other hand, check the panel fits on the driver’s and passenger’s doors. Clearly, BL wasn’t much concerned with things like structural integrity when it chopped the roof off a car designed as a coupe.
  • Mongo312 Had an 89SE, 92SE and an 03SE all with stick. The 03 took almost 3 months to find because there were so few produced with a manual transmission and dealers didn't want to give them up. Ended up buying one from a dealership in San Antonio and having it shipped here to St Louis.
  • Bullnuke About 15 years before the TR-8 my brother-in-law put a 301 Chevy small block in a TR-3A. Needed a U-joint in the steering to clear the headers, a modified '59 Pontiac radiator, and a drive shaft that was basically two U-joints end-to-end. It was a scream to drive, basically a small block Chevy with 3-deuces on wheels. 142mph in the quarter - we learned that the original wire wheels were a no-go on this thing at the drags...
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