From My Retiree Newsletter RE: Ford Financial Strategy during COVID 19 Downturn

[P. A. Schilke]

Hi Folks,

From my Retiree Newsletter. Side bar Kumar Glahotra hired into Ford as a graduate trainee and worked for me for about 3 months early before his meteoric rise to his top position.... Smart Fellow for sure!

Best,
Phil Schilke
Ranger Vehicle Engineering
Ford Motor Co. Retired


Ford Takes Action to Address Effects of Coronavirus Pandemic; Company Offers New-Car Customers Six-Month Payment Relief





Mar-19-2020

DEARBORN, Mich., – Ford Motor Company is taking a series of initiatives to further bolster the company’s cash position amid the coronavirus health crisis, maintain strategic flexibility on behalf of its team and customers, and set up Ford to separate itself from competitors when the global economy emerges from the current period of acute uncertainty.
“Like we did in the Great Recession, Ford is managing through the coronavirus crisis in a way that safeguards our business, our workforce, our customers and our dealers during this vital period,” said Ford CEO Jim Hackett. “As America’s largest producer of vehicles and largest employer of autoworkers, we plan to emerge from this crisis as a stronger company that can be an engine for the recovery of the economy moving forward.”
The company today notified lenders that it will borrow the total unused amounts against two lines of credit: $13.4 billion under its corporate credit facility and $2 billion under its supplemental credit facility. The incremental cash from these borrowings will be used to offset the temporary working capital impacts of the coronavirus-related production shut downs and to preserve Ford’s financial flexibility.
“While we obviously didn’t foresee the coronavirus pandemic, we have maintained a strong balance sheet and ample liquidity so that we could weather economic uncertainty and continue to invest in our future,” Hackett said. “Our Ford people are extremely resilient and motivated, and I’m confident in the actions we are taking to navigate the current uncertainty while continuing to build toward the future.”
Ford has regularly described targets of having $20 billion in cash and $30 billion in liquidity heading into an economic downturn. At the end of 2019, those levels were $22 billion and $35 billion, respectively.
At the same time, Ford announced it has suspended the company’s dividend, prioritizing near-term financial flexibility and continued investments in an ambitious series of new-product launches in 2020 and long-term growth initiatives.
Also, Ford said it is withdrawing the guidance it gave on Feb. 4 for 2020 financial performance, which did not factor in effects of the coronavirus, given uncertainties in the business environment. The company will provide an update on the year when it announces first-quarter results, which is currently scheduled for April 28.
Ford this week announced plans to temporarily stop production at its plants in North America and Europe starting today. The actions were taken to protect the health and safety of employees and respond to issues with the supply chain and other constraints. The company will work with labor representatives to safely and effectively restart production in the weeks to come.
Hackett noted China was the first country to face the virus and is now emerging from the coronavirus crisis and showing improvements in automobile demand. This news on the China recovery should be a source of optimism about the overall economic recovery as the virus abates, he said.
‘Built to Lend a Hand’ Program Provides Peace of Mind With Up To Six Months of Payment Relief
Separately, Ford and its U.S. dealers are offering customers who are dealing with their own peripheral challenges from the coronavirus a variety of services, including six months of payment relief for new-car buyers under the new “Built to Lend a Hand” program.
Under the new program, developed with its dealers, Ford is offering six months of payment relief for eligible new-car customers who finance their purchases through Ford Credit. Ford will pay for three months and customers can defer for up to three more for a total of six months. The program is for people purchasing 2019 and 2020 model-year vehicles, excluding 2020 Super Duty trucks.
“Our dealers are incredibly connected to their communities,” said Kumar Galhotra, president, Ford North America. “And they’re willing to lend a hand by doing whatever it takes to help our customers in this time of need.”
More information about the “Built to Lend a Hand Program” is available at Ford.com.

News Bites

Under “Built to Lend a Hand” program, eligible new car customers in the U.S. can defer payments for up to three months, and Ford will pay for three months – providing up to six months of payment peace of mind
Dealers also will provide online, remote sales experiences along with pickup and delivery for service where available. In addition, convenient scheduling and one-touch access to Roadside Assistance is available via the FordPass app
Ford also is supporting dealers’ efforts to help customers affected by the coronavirus with a new vehicle disinfection process for their new and loaner vehicles
“Built to Lend a Hand” complements another Ford Credit program announced Monday, allowing existing U.S. customers affected by coronavirus to discuss options if they are having payment difficulty, including payment deferral

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[SemperVee]

Just shutdown all manufacturing like the rest of the car manufacturers - just now suspended dividend entirely until further notice as stock price is currently in low $4.30 per share.

 

[Dustoff262]

The Ford company knows its better to keep the vehicle in the hands of owners than to pay for repos. Its far cheaper to cover 6 months of payments, than to take in a vehicle thats been beat to hell, probably stinks of wet dog, and been modified thereby reducing its value.

 

[caprtaineddie]

I'm watching the stock price closely. Soon, it will be time to buy!

 

[JimJa]

Ford needs to spend whatever it takes to get Alan Mulally back, if only temporary. The company is in economic trouble and heavily in debt. Their stock has never been very good at capital appreciation, for those needing its 5.5%-6.0% dividend is great and has remained pretty much constant. Due to the virus, and as noted above, the dividend is currently suspended. How long is anyone's guess. The majority stock holders, the Ford family, live off this dividend so I wouldn't look for the suspension to last too long. Probably be reduced until such time as Ford is in a better position, but for now...

 

[Truckee Bill]

Hi Folks,

From my Retiree Newsletter. Side bar Kumar Glahotra hired into Ford as a graduate trainee and worked for me for about 3 months early before his meteoric rise to his top position.... Smart Fellow for sure!

Best,
Phil Schilke
Ranger Vehicle Engineering
Ford Motor Co. Retired


Ford Takes Action to Address Effects of Coronavirus Pandemic; Company Offers New-Car Customers Six-Month Payment Relief





Mar-19-2020

DEARBORN, Mich., – Ford Motor Company is taking a series of initiatives to further bolster the company’s cash position amid the coronavirus health crisis, maintain strategic flexibility on behalf of its team and customers, and set up Ford to separate itself from competitors when the global economy emerges from the current period of acute uncertainty.
“Like we did in the Great Recession, Ford is managing through the coronavirus crisis in a way that safeguards our business, our workforce, our customers and our dealers during this vital period,” said Ford CEO Jim Hackett. “As America’s largest producer of vehicles and largest employer of autoworkers, we plan to emerge from this crisis as a stronger company that can be an engine for the recovery of the economy moving forward.”
The company today notified lenders that it will borrow the total unused amounts against two lines of credit: $13.4 billion under its corporate credit facility and $2 billion under its supplemental credit facility. The incremental cash from these borrowings will be used to offset the temporary working capital impacts of the coronavirus-related production shut downs and to preserve Ford’s financial flexibility.
“While we obviously didn’t foresee the coronavirus pandemic, we have maintained a strong balance sheet and ample liquidity so that we could weather economic uncertainty and continue to invest in our future,” Hackett said. “Our Ford people are extremely resilient and motivated, and I’m confident in the actions we are taking to navigate the current uncertainty while continuing to build toward the future.”
Ford has regularly described targets of having $20 billion in cash and $30 billion in liquidity heading into an economic downturn. At the end of 2019, those levels were $22 billion and $35 billion, respectively.
At the same time, Ford announced it has suspended the company’s dividend, prioritizing near-term financial flexibility and continued investments in an ambitious series of new-product launches in 2020 and long-term growth initiatives.
Also, Ford said it is withdrawing the guidance it gave on Feb. 4 for 2020 financial performance, which did not factor in effects of the coronavirus, given uncertainties in the business environment. The company will provide an update on the year when it announces first-quarter results, which is currently scheduled for April 28.
Ford this week announced plans to temporarily stop production at its plants in North America and Europe starting today. The actions were taken to protect the health and safety of employees and respond to issues with the supply chain and other constraints. The company will work with labor representatives to safely and effectively restart production in the weeks to come.
Hackett noted China was the first country to face the virus and is now emerging from the coronavirus crisis and showing improvements in automobile demand. This news on the China recovery should be a source of optimism about the overall economic recovery as the virus abates, he said.
‘Built to Lend a Hand’ Program Provides Peace of Mind With Up To Six Months of Payment Relief
Separately, Ford and its U.S. dealers are offering customers who are dealing with their own peripheral challenges from the coronavirus a variety of services, including six months of payment relief for new-car buyers under the new “Built to Lend a Hand” program.
Under the new program, developed with its dealers, Ford is offering six months of payment relief for eligible new-car customers who finance their purchases through Ford Credit. Ford will pay for three months and customers can defer for up to three more for a total of six months. The program is for people purchasing 2019 and 2020 model-year vehicles, excluding 2020 Super Duty trucks.
“Our dealers are incredibly connected to their communities,” said Kumar Galhotra, president, Ford North America. “And they’re willing to lend a hand by doing whatever it takes to help our customers in this time of need.”
More information about the “Built to Lend a Hand Program” is available at Ford.com.

News Bites

Under “Built to Lend a Hand” program, eligible new car customers in the U.S. can defer payments for up to three months, and Ford will pay for three months – providing up to six months of payment peace of mind
Dealers also will provide online, remote sales experiences along with pickup and delivery for service where available. In addition, convenient scheduling and one-touch access to Roadside Assistance is available via the FordPass app
Ford also is supporting dealers’ efforts to help customers affected by the coronavirus with a new vehicle disinfection process for their new and loaner vehicles
“Built to Lend a Hand” complements another Ford Credit program announced Monday, allowing existing U.S. customers affected by coronavirus to discuss options if they are having payment difficulty, including payment deferral

Many companies took their free cash flow last year and spent it all on stock buybacks and dividends. Ford was smart.

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