Up to 25 States Could Lose 3,000 Ford-Related Jobs
By MATTHEW DOLAN? From WSJ.com
The debate over the job loss attached to the potential failure of Detroit’s Big Three auto makers took another turn as an internal document from Ford Motor Co. showed thousands of workers in every state could be at risk.
The state-by-state tally detailed the number of workers directly employed by Ford, the number of auto parts suppliers who work with the company and the amount they spend to support their business. To demonstrate the far-reaching tentacles of the industry, Ford also outlined the number employed at its dealerships and the total amount of health care spending related to those who work for the nation’s second largest U.S.-based auto manufacturer.
According to the analysis obtained by The Wall Street Journal late Monday, 25 states could lose 3,000 Ford-related jobs or more if the auto maker were to disappear.
To be sure, the job loss would be felt most acutely in the nation’s Rust Belt. In Michigan, Dearborn-based Ford employs 38,380 auto workers and relies on 3,111 auto parts suppliers, according to the document. In Ohio, the numbers are also high, with 8,540 workers at Ford. But a state like Kentucky would also feel the pain, with 5,615 employees working directly for Ford. Thousands more employees who work for suppliers and dealers at Ford would only add to the potential job loss.
The tabulated data is part of a concerted and intense public relations effort before the chief executives at General Motors Corp., Ford and Chrysler LLC testify in front of Congress Tuesday in support of a proposal to extend $25 billion in low-interest loans to the ailing auto makers. After skepticism voiced by some U.S. representatives and senators from outside the states where Detroit’s Big Three reign, GM, Ford and Chrysler launched a broad media campaign to prove to a national audience that their survival is key to the nation’s economic health.
It was unclear late Monday whether the analysis compiled by Ford would be presented to members of the Senate Banking Committee, the first of two congressional committees to explore the crisis in the auto industry at hearings this week.
As part of the public relations blitz, Ford Chief Executive Alan Mulally is expected to make his case in half-dozen separate national television appearances Tuesday, according to those familiar with the matter.
After years of restructuring that has closed dozens of plants and shed thousands of workers, Detroit’s Big Three auto makers are now turning to governments around the world to fund a vast downsizing of their industry. The companies’ poor earnings posted earlier this month make it clear Ford and GM are running out of money to finance their Michigan-based businesses, with GM the sicker of the two. Less is known about Chrysler, which is privately held.
At Ford, the auto maker hopes to improve its cash position with or without additional governmental loans. It said it will boost its position by between $14 billion and $17 billion by the end of 2010, through a mix of job cuts, reduced benefits, lower capital spending, selling assets and new financing measures. GM also announced it would bump up its plan for $15 billion in liquidity initiatives outlined in July 2008 by another $5 billion of incremental actions.
More worrisome than the crippling, billion-dollar losses posted by GM and Ford earlier this month was the greater-than-expected cash burn at each company. Ford plowed through $7.7 billion, seeing its liquidity position plummet to $18.9 billion.
Ford said the cash outflow has been greater than anticipated, but Chief Financial Officer Lewis Booth told reporters earlier this month the company is “comfortable with its liquidity position.” The company expects the amount of cash burn in the fourth quarter to be less than the third quarter. GM on the other hand has said that it could run out of the funds it needs to operate the business as soon as the end of the year without a massive infusion of cash or a radical improvement in auto sales.
Critically, Ford also has available credit lines of $10.7 billion to supplement its gross cash of $18.9 billion at the end of the third quarter. Mr. Booth has said Ford doesn’t expect to tap the loan revolvers, noting that the company will continue to aggressively reduce costs and manage cash with discipline.
Ford is in a better position than its rivals in terms of liquidity in part owing to a decision in late 2006 by Mr. Mulally, who had just recently joined the company, to raise more $23 billion in debt using almost all the company’s assets as collateral. Despite those moves, Ford has registered $24 billion in net losses since the start of 2006, and its stock price has traded at multidecade lows in recent months.
All auto makers have been stung by a steep decline in demand from consumers grappling with mounting economic woes and reduced availability of credit in recent months. For much of the year, Ford and its peers were hurt primarily by the sharp decline in sales of trucks and sport-utility vehicles as fuel prices hit record highs. But just as fuel prices started receding, the financial crisis sent consumer confidence reeling, keeping potential buyers out of showrooms entirely.