An electric van for commercial fleet use could even be on the street by 2010, according to the new plan, but to bring about the newly accelerated focus on hybrids, electric vehicles and profitability, the company will need an investment of about $14 billion.
Part of that cash influx will come from the sale of its corporate aircraft and an 'overall cash improvement plan.' The remainder, about $9 billion, will have to come from government-secured bridge financing - though Ford is committed to making its transformation without actually touching the funds. It simply needs them to be available to leverage the projects it has planned.
In fact, Ford says it does not see a serious problem with liquidity in 2009 unless one of its major competitors were to declare bankruptcy - a move which would severely strain the domestic supply chain and have repercussions on Ford's business.
“For Ford, government loans would serve as a critical backstop or safeguard against worsening conditions, as we drive transformational change in our company,” said Ford President and CEO Alan Mulally ahead of his testimony before Congress, due later this week.
Key elements of the Ford plan include market forecasts of 12.5 million cars sold in 2009, 14.5 million in 2010, and 15.5 million in 2011 - indicating that Ford, at least, sees 2009 as the turnaround year, with a slow return to normal volume levels over the ensuing 2-3 year period.
Another part of the plan to return to profitability include the possible sale of the Volvo brand, as reported yesterday. The sale would follow the sale of Aston Martin, Jaguar, Land Rover and most of its stake in Mazda, all of which have taken place since 2007.
Ford also guarantees that half of its entire fleet - including Lincoln and Mercury vehicles - will meet the federal 'Advanced Technology Vehicle' standard by 2010, and over 90% of its cars will do so by 2014, reflecting its acceleration of hybrid and electric technologies to commercial and consumer markets. The overall fuel savings from the shift to advanced technology vehicles is estimated to be 16 billion gallons compared to the 2005 fleet.
Finally, Ford will close more plants and lay off more workers in addition to reducing its dealer and supplier network to improve efficiency and reduce overhead. These reductions in the production and sales networks will net a large portion of the $5 billion in cash to be raised in addition to the $9 billion financing sought. By year's end, Ford will have cut its dealer ranks by 606 to 3,790, it says. Supplier ranks have been cut from 3,400 in 2004 to about 1,600 today, with final targets of 750 suppliers available for major contracts.
As an additional gesture, Ford CEO Alan Mulally will take a salary of $1 per year if necessary to secure the government bridge loans, as a sign both of his commitment to the turnaround and his confidence in Ford's ability to transform. All bonuses to be paid in 2009 are also off the table for management worldwide and all employees in North America.
“While we clearly still have much more work to do, I am more convinced than ever that we have the right plan that will create a viable Ford going forward and position us for profitable growth,” said Mulally.