Ford Motor Co. Chairman and Chief Executive Bill Ford said Wednesday that bankruptcy isn’t an option for the nation’s No. 2 automaker, which is struggling to return its North American division to profitability.
Ford said the company has strong liquidity — with about $31 billion in cash — and that regions outside North America are performing well. Ford earned $2 billion last year, down 42 percent from a year earlier but still its third consecutive yearly profit.
Still, Ford’s North American division lost $1.6 billion last year, and the automaker’s debt rating has been slashed to below investment grade. Ford also is steadily losing U.S. market share. The company now has around 18 percent of the U.S. market, down from 26 percent a decade ago.
“We’re acutely aware of the state of our industry, of the state of a lot of the companies we do business with, and frankly, our own deteriorating ratings with the ratings agencies, and so we’re working very hard on the fundamentals of our business,” Ford said at an awards luncheon sponsored by the Automotive Industry Action Group. “We’ve got one big problem and it’s the U.S. auto business, and we’re going to fix that, and when we fix that this discussion will disappear.”
Ford said the company is moving ahead with its North American restructuring plan, which calls for cutting up to 30,000 jobs and closing 14 plants by 2012.
“The first thing we have to do is get honesty on the table, honesty about our competitive position, the strength or lack thereof of our products, the robustness or lack thereof of our processes, and really deal with each other with true honesty,” Ford said. “It doesn’t matter how good a plan you put together. If it’s not based on cold reality, if it’s not based on facts, it’s not going to succeed.”
General Motors Corp. also has said it’s not considering a Chapter 11 filing despite a $10.6 billion loss in 2005. GM also is in the midst of a restructuring and announced this week that it sold a 51 percent stake in its profitable finance division for $14 billion. Ford said he wouldn’t comment on GM’s situation, but said the challenges facing the U.S. auto industry are unprecedented.
“We’ve never had these kinds of winds buffeting us,” Ford said.