Chrysler LLC CEO Bob Nardelli in a memo to employees late Tuesday said the company in the coming weeks will release new information about its bid "to adapt to its new realities." The carmaker hopes to use government bailout money to help create what Nardelli said would be "a company that is leaner and more agile, and committed to relentlessly improving the quality of our products and our focus on customers." Though he doesn't say it, many inside Chrysler are worried that plan will also include new layoffs on top of the 30,000 white collar cuts already targeted.
Barclays Capital analyst Brian A. Johnson, meanwhile, in a research note Wednesday predicted Ford Motor Co. is likely to fall below its minimum cash level of $10 billion in the second half of 2009. But fortunately for that automaker, it, unlike its crosstown rivals, has options. Johnson said Ford could either tap its $10.7 billion in available credit or request loans that are part of a government bailout of the industry if a package, as expected, is approved by lawmakers.
The bottom line for Ford is it, at least for now, does not need government assistance as desperately as GM or even Chrysler does. "While Ford and auto suppliers would benefit from a gov't bailout that prevents a GM bankruptcy and the negative effects of a filing, we estimate that Ford has positive equity value without gov't assistance," Johnson wrote, while cutting his price target for Ford shares from $6 to $4 apiece in anticipation of a slower recovery in 2010.
Johnson's research backs up comments made by Ford CEO Alan Mulally before congressional leaders last week. "Speaking only for Ford," Mulally said, "we are hopeful that we have enough liquidity based on current planning assumptions and planned cash improvement actions." Mulally added that "while we are cautiously confident, we must also be prudent, and prudence at this point requires that we prepare ourselves for the prospect of deteriorating economic conditions in 2009."
Hardly a show of confidence. But given the sorry state of the auto industry and the headlines coming out of GM, an opinion that at least one of Detroit's Big Three can survive is at least some good news. - Lou Whiteman
See Dealwatch: Autos
Lou Whiteman is The Deal's senior airline and automotive reporter.
Though most of the attention in recent weeks focused on the tribulations of General Motors Corp., it is important not to forget that Detroit's other automakers are also scrambling to cut costs and survive a severe sales decline that is plaguing the industry.
