Bailout Watch 419: Ford Losing Luxury of Time

In the autoblogosphere, Ford gets brownie points for not sidling up the federal bailout buffet. This despite the fact that FoMoCo CEO Alan Mulally sat shoulder-to-shoulder with GM CEO Rick Wagoner and Chrysler CEO Bob Nardelli at the pre-trough-snuffling congressional hearings. This despite the fact Big Al has lined-up a line of credit just in case he has to roll up one of those million dollar bills Ford pays him. Unfortunately, out there in the real world, consumers hear “Detroit Bailout,” not “Chrysler and GM Bailout.” Which is, coincidentally enough, fair enough. Ford is in deep shit. MSNBC ran the numbers; they’re bad enough for Uncle Sam to hide the checkbook. As if. If only. OK, here we go. . .

Looking over Ford’s financial statements, reason for confidence is hard to find. Income from Ford’s financing arm, historically a rare bright spot on Ford’s deteriorating balance sheet, swung to a $300 million loss. Inventory is up by $2 billion, and the plummeting value of used cars cost its leasing business $2.1 billion. Ford lost $2.46 per share solely in the last quarter—more than its entire current market capitalization. This year’s forecast anticipates the worst sales in decades, and Ford’s 40 percent revenue decline in January suggests that even its current-year prediction may be overly optimistic. Most serious of all is the $21.2 billion in cash the company chewed through last year. If the company keeps spending at that rate—though it insists it won’t—Ford will face a liquidity problem before the end of the year…

Having triple the cushion of GM, however, doesn’t give Mulally much padding. By the end of the fourth quarter, Ford was down to $13.4 billion in cash on hand, an amount that would have brought Ford near its minimum capital requirements by the end of this quarter. To fill the gap, Ford has exhausted its remaining credit lines. (It withdrew the money now, the company said “due to concerns about the stability of the capital markets”—possibly a reference to the several hundred million dollars in guaranteed credit it lost last year when Lehman Bros. went under.

Brrrrr. That was some cold shower. Uh-oh. Here comes the stinky cologne: MSBC’s Jeff Howitz wants Ford to hit-up the taxpayer sooner rather than later.

Seeking more from Washington than a line of credit would be a blow to Ford’s pride. But given the new administration’s preoccupation with halting job loss at all costs, it’s hard to imagine a better time to bargain.

In 2006, Mulally recognized the chance to borrow cheap money when he saw it. If he’s serious about repairing Ford, it’s time to join GM and Chrysler in Washington—and give up on the idea that Ford is in “a different place.”

Pride goeth before a bailout? Someone should tell Wagoner and Nardelli.