Ford Has a Better Idea (Updated)

Ford Motor Company has announced its survival plan:

WASHINGTON – Ford Motor Co. is asking Congress for a $9 billion “stand-by line of credit” to stabilize its business, but says it doesn’t expect to tap it.

Unless one of Detroit’s other Big Three auto companies goes bust, Ford expects to have enough money to make it through next year, it said in a plan that projected the firm will break even or turn a pretax profit in 2011.

Detroit’s automakers, making a second bid for $25 billion in funding, are presenting Congress with plans Tuesday to restructure their ailing companies and provide assurances that the funding will help them survive and thrive.

General Motors Corp., Ford and Chrysler LLC said they would refinance their companies’ debt, cut executive pay, seek concessions from workers and find other ways of reviving their staggering companies.

I believe that Ford is the first of the Big 3 to make its plans public.

Ford is in somewhat better financial shape than either GM or Chrysler. For one thing it’s not as highly leveraged. The UAW has suggested it was willing to do its part, too:

Alan Reuther, the UAW’s legislative director, declined to say on Monday what kinds of concessions the union might take but said “we realize that all stakeholders need to come to the table to do what’s necessary to ensure the viability of the companies. We’re prepared to do our part.”

The UAW leaders subsequently disclosed plans for the Wednesday meeting, where they will discuss the possibility of restructuring a multibillion-dollar union-administered health care fund so that the automakers can delay payments, according to a person familiar with the matter.

They also plan to discuss eliminating the jobs bank.

It’s hard for me to see how the Detroit automakers can cobble together a workable survival plan that will take them farther than the spring without what amounts to a complete reordering of their relationships with the UAW.

IMO the very best thing that the federal government could do to save GM, Ford, and Chrysler would be to figure out what to do to get the financial industry on its feet again. All of the automakers have seen major drops in sales in recent months at least partially due to problems extending credit to buyers.

Update

Chrysler and GM have submitted their plans, too. Honestly, at this point I see mostly symbolism and a plan to have a plan. Why exactly should we believe that what they’re committing to doing will turn them around? I continue to believe that without an agreement with the UAW in hand the situation for the auto makers is hopeless.

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