Ford bets the farm on their future

Canadian Business: Ford restructuring to cost US$11 billion

WASHINGTON (AP) - Ford Motor Co. said Wednesday its restructuring plan would likely cost $11.18 billion, with more than half of the expenses devoted to programs for laid-off workers.
In a filing with the Securities and Exchange Commission, the No. 2 U.S. automaker estimated spending $5.96 billion on a jobs bank and other "personnel-reduction programs," along with $2.74 billion to scale back pensions, $2.2 billion for fixed asset writedowns and $281 million to shut plants.
The company also confirmed it has pledged all its buildings, trademarks, intellectual property, shares in the main company, and shares in Volvo, Jaguar, Aston Martin, Ford Motor Credit Co. and other operations as collateral for a $23.4-billion line of credit to fund its restructuring plan and cover losses expected until 2009.

In this instance, the aphorism "rearranging deck chairs on the Titanic" is not entirely apt. With this level of debt being leveraged to try to save the company, I think a better aphorism would be "Trying to re-lay the keel, overhaul the engines, and replace the driveshafts on the Titanic while already underway at cruising speed on choppy North Atlantic seas."

Unlike Chrysler, for whom Daimler can't seem to find a buyer, I get the sneaking suspicion that Ford will end up with a new owner in the near future: they will end up in the hands of the banks who have extended them credit, whether the banks want them, or not.

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