More Bad News for Ford

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The Bush Administration has denied the auto companies access to the $700 billion economic bailout program approved for banks and insurance companies. President-elect Barack Obama, though, says some members of Congress may be asked to try to convince Treasury Secretary Henry Paulson to reconsider. The auto companies are looking for $25 billion in loans with few strings attached.

Global Cost-Cutting

But Mulally also cited Ford's plan to raise a surprising $14 billion to $16 billion between 2009 and 2010 through aggressive global cost-cutting, including having 100% of its world vehicle portfolio aligned, plus head-count reduction. Ford intends to sell the same vehicles worldwide in five years instead of spending billions to customize them for Europe, the U.S., and Asia.

If the CEO, in his third year after coming to Ford from Boeing (BA) can pull that off, it will be a big part of his legacy. GM, by comparison, is trying to take over Chrysler, which would involve a messy and distracting restructuring, in part to get its hands on about $8 billion to $10 billion in cash Chrysler is holding.

But Ford is benefiting from government help, too, including overseas governments. In addition to its application to the Energy Dept., it is also applying for a portion of the European Union's economic bailout package to help banks and industry, as Ford is a significant employer in Britain and Germany.

Mulally plans to raise another $6 billion to $8 billion through equity for debt swaps and asset sales—possibly the Volvo division, which is losing money, and a portion of its stake in Mazda.

Ford's results are as grim as GM's and other automakers through the current downturn. Ford's market share fell a full point in one year, from 13.4% to 12.4%. Its share of retail consumers for Ford-Lincoln-Mercury fell even more, from 10.5% to 9.2%. Its revenue in the quarter fell by $9 billion, in part due to the sale of Jaguar and Land Rover earlier this year.

Ford lost $2.6 billion on car operations in North America and $100 million in Asia Pacific; that's on top of losses at Volvo and Ford Motor Credit. Ford earned $480 million in South America and about broke even in Europe.

Consumers Wait It Out

What is significantly hurting Ford is the plummeting demand in the U.S. for trucks and SUVs, which have in recent years provided most of the company's profits and revenue. The recent reduction in gas prices, which tends to prop up sales of such vehicles, is not expected to help much as consumers are finding difficulty qualifying for loans and are staying on the sidelines until the economy improves. Ford sales in September and October were down more than 30% from a year ago.

Ford said it is pursuing 5,000 more job cuts by January, after it has already cut head count substantially and eliminated extras like employee 401(k) contributions and education grants to workers.

The automaker just received a good report card from Consumer Reports, which said Ford's quality is allowing the company to pull away from its Detroit competitors and come close to parity with Toyota and Honda. Now it appears all the company needs is a bit of time, cash, and luck to take advantage of the good news.

Kiley is a senior correspondent in BusinessWeek's Detroit bureau.