Ford Motor Co. on Dec. 2 provided Congress with a major reorganization plan and said it would restore profitability in 2011 if lawmakers approve up to $9 billion in emergency financing. Ford said the plan calls for cost savings with unionized workers and an investment of $14 billion over the next seven years to improve fuel efficiency through the development of new technologies and products.
The company also said that it would sell its five corporate jets and, if it accesses congressional aid, chief executive Alan Mulally would work for a salary of one dollar a year "as a sign of his confidence in the company's transformation plan and future."
Bonuses for all employees in North America and overseas managers will also be cancelled in 2009.
"Ford is asking for access to up to $9 billion in bridge financing, but reiterated that it hopes to complete its transformation without accessing the loan should Congress agree to make the funds available," the number-two automaker said in a statement ahead of a congressional hearing.
The automaker said that it does not anticipate it will run out of cash next year but needs access to the loan in case the economy worsens or General Motors or Chrysler goes bankrupt.
Ford had said on Dec. 1 it was looking at strategic options for its Sweden-based subsidiary Volvo Car, including the sale of the premium car manufacturer.
Additional savings could come from a reduction in the Ford dealer network. The company said that by the end of the year it will have 3,790 U.S. dealers, a reduction of 14% from the end of 2005.
Ford said it was "presently engaged in discussions" with the United Auto Workers "with the objective to further reduce its cost structure and eliminate the remaining labor cost gap that exists between Ford and the (foreign automaker) transplants."
"We appreciate the valid concerns raised by Congress about the future viability of the industry," Mulally said. "We hope that our submission today helps instill confidence in Ford's commitment to change, including our accountability and shared sacrifice during this difficult economic period."
The automaker also announced plans to accelerate the introduction of gas-electric hybrid and fully electric vehicles, including plans to bring an electric van-type commercial vehicle to market in 2010 and an electric sedan to market in 2011.
It will also improve the fuel economy of its total fleet of vehicles by 36% for 2015 models which it says will result in cumulative fuel savings of 16 billion gallons compared with its 2005 vehicles.
The shift towards smaller vehicles will also be accelerated and said its investment in cars and crossover sport utility vehicles will increase from 60% of its budget in 2007 to 80% of product investment in 2010.
Ford had previously predicted it would return to profitability in 2009 after instigating a massive restructuring plan which included the shuttering of scores of plants and the elimination of tens of thousands of jobs. It posted a profit in the first quarter of this year but was badly hit by the current economic slowdown and credit crunch which has prevented many customers from getting the loans they need to buy a new vehicle.
Copyright Agence France-Presse, 2008