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Old 06-17-2003, 08:18   #1 (permalink)
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Ford dismisses speculation of cash problems

U.S.:Ford dismisses speculation of cash problems
By Jeremy Grant in Dearborn, Michigan

Ford Motor Company on Monday dismissed recent Wall Street speculation that it might be among Detroit carmakers vulnerable to bankruptcy in the next several years by saying it had enough cash to survive "no matter what the world throws at us".

Bill Ford, chief executive, told an annual shareholders meeting that the company was on track with its 18-month old restructuring.

"We have one of the highest levels of cash of any corporate in the world. We have tremendous flexibility as we attack these issues. Yes it's tough out there but thankfully we have the balance sheet that allows us to survive no matter what the world throws at us," Mr Ford said.

Ford has a cash pile of about $26bn and has improved cashflow over recent quarters. But, like its Detroit rivals, it faces massive retiree pension and healthcare liabilities. However, Allan Gilmour, chief financial officer, said Ford expected that cost reductions would offset "all cost increases, including rising pension and health care costs, as well as the deterioration in net pricing associated with higher incentives".

He was referring to the increasing cost of financing consumer loans and cash rebates, which at Ford have reached an average of $4,000 per vehicle - a level roughly in line with its Detroit rivals. Mr Gilmour said the company planned to maintain its annual capital expenditure of $8bn on new product development despite other cost pressures.

He also said Ford was working with the company's healthcare providers to reduce the cost of administering the company's massive healthcare programmes.

General Motors, Chrysler and Ford - which pays more than 90 per cent of the cost of healthcare for its retirees - all face tough negotiations this summer with automotive unions over a new labour contract. The burden of sharing healthcare costs is likely to top the agenda at the talks.

Ford also said that Carl Reichardt, vice-chairman, is to return to retirement after a year and a half spent working on the company's $9bn restructuring plan.

Mr Reichardt, a Ford veteran, oversaw a significant turnround at Ford Credit, the carmaker's financing arm, after being asked to rejoin Ford management in 2001.

He will remain on Ford's board of directors. Ford Credit will now report to Allan Gilmour, chief finance officer, who was also recalled from retirement 18 months ago.
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