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US:Ford forecasts $17 billion cash outflow from 2007-09

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#1 ·
Ford forecasts $17 billion cash outflow from 2007-09

Amy Wilson | Automotive News

DETROIT -- Ford Motor Co. expects to go through $17 billion in cash during the next three calendar years, with more than half of that occurring in 2007.

The cash outflow primarily will be the result of substantial operating losses in Ford Motor's automotive operations through 2008 and cash expenditures related to employee departures. Ford detailed the expected financial results in a regulatory filing today.

Ford said it also expects automotive cash inflows of about $4 billion in the 2007-2009 time period. That reflects the use of $3 billion in a long-term trust set up to pay for retiree benefits, proceeds from the receipt of government tax refunds and affiliate tax payments, and proceeds from planned divestitures of its Aston Martin and Automobile Protection Corp. units, offset partially by pension contributions.

That results in a net cash burn of $13 billion from the end of 2006 through 2009. Ford said it expects to have $38 billion on hand by the end of this year, including $18 billion in new financing it is seeking now. Ford said by the end of 2009 it expects to have $25 billion on hand.

Ford also said it expects an automotive operating-related cash outflow of about $3 billion in the fourth quarter of 2006, as well as restructuring-related cash expenditures of $500 million to $1 billion.

Beginning in 2007, Ford Motor Credit Co. is expected to suspend regular dividend payments. Ford Credit paid Ford Motor dividends of $2.3 billion in 2005, $4.2 billion in 2004 and $3.6 billion in 2003. Ford Credit has paid dividends of $950 million through the first three quarters of this year.

The company also said Ford Motor earnings will deteriorate in 2007 primarily because of lower earnings at Ford Credit and higher interest costs associated with a higher level of debt at Ford.

Ford said it expects Ford Credit's profitability in 2008 and 2009 to improve from 2007 levels.

The disclosures were contained in a presentation Ford Motor made today to prospective lenders and investors. Ford said Monday, Nov. 27, that it is seeking an $18 billion financing package. Ford intends to use its plants, office buildings and other automotive assets as collateral to secure $15 billion of the financing.

Ford also said it expects to continue to invest about $7 billion annually in new products through 2009. That's about the same level of product-related investment as the past few years.
 
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#2 ·
The agonising continiuum of reports on Ford's demise leads one to conclude that completely novel ideas and strategies are required to de-dinosaur this monster.
As an engine enthusiast,I can well imagine how complex and inefficient engine development and manufacture alone must be for Ford. Take the plethora of makes/models/variants worldwide and one can clearly see that
the centralisation of engine design and manufacture in a country which can supply raw materials, energy and human knowhow is the the obvious way to go.

Standardisation and long term security of supply would give Ford an economic edge via synergies and position it to supply powertrains
to small manufactures similar to the engine OEMs supply to the heavy truck manufacturers.

Queensland in Australia could be an excellent location for such an industrial collusus. It has endless energy and mineral resources on tap, a well educated workforce a stable economic and political regime and a western
gateway to a rapidly growing Asian market. Cheap Chinese labour is simply not the long term solution to meet hi-tech highly automated manufacturing
facilities of the future. And besides, the current ambitions of regions outside the USA could change profoundly and rapidly as we advance into the 21st Century thereby endangering such mega investments.

Australia's free trade agreement needs major projects like this to cement our US alliance and to ward off our relegation to holes in the ground by emerging Asian nations who want our natural resources to combat US economic dominance of the region.

Cheers
Moorooka Mick
Aus.
 
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