Ford Says CEO Will Work for $1 to Get Loans

December 2, 2008 - 3:26 PM
Ford Motor Co. will tell Congress that it plans to return to a pretax profit or break even in 2011 when its CEO appears before two legislative committees this week.

House Speaker Nancy Pelosi (D-Calif.) speaks during a meeting in her office on Capitol Hill in Washington, Monday, Dec. 1, 2008. (AP Photo/Susan Walsh)

Detroit (AP) - Ford Motor Co. will tell Congress that it plans to return to a pretax profit or break even in 2011 when its CEO appears before two legislative committees this week.
 
Also, CEO Alan Mulally said he'll work for $1 per year if the automaker has to take any government loan money.
 
The plans Ford submitted to Congress on Tuesday also say the company will cancel all management employees' 2009 bonuses and will not pay any merit increases for its North American salaried employees next year.
 
The company also said it will sell its five corporate aircraft. The CEOs of all three Detroit automakers were harshly criticized during congressional hearings last month for flying to Washington in separate corporate jets while seeking loan money.
 
Mulally said in an interview with The Associated Press on Tuesday that Ford will emphasize its cost cutting efforts with the United Auto Workers union and will give much more detail to Congress than it did when lawmakers grilled the automakers' CEOs last month.
 
Mulally said Ford will seek $9 billion in government loans but may not need them. The Dearborn-based company has said it has enough cash to make it through next year without assistance.
 
As part of the plan submitted to Congress, Ford said it does not anticipate a liquidity crisis in 2009, "barring a bankruptcy by one of its domestic competitors or a more severe economic downturn that would further cripple automotive sales." The loan would provide a safeguard against worsening conditions, the company said.
 
The company said it will accelerate plans to roll out plug-in electric vehicles as part of its plan. The vehicles will come out starting in 2010 and include the Transit Connect small van and a car the size of the Ford Focus compact.
 
Ford also said it will accelerate plans for hybrid gas-electric vehicles.
 
The CEOs of the Detroit Three are scheduled to appear before congressional committees Thursday and Friday to seek a total of $25 billion in government loans. Chrysler LLC and General Motors Corp. have said they are perilously low on cash and need the government loans to survive the recession and the worst auto sales environment in 25 years.
 
Ford's plans to achieve profitability or break even by 2011 are based on industrywide sales estimates of 12.5 million units in 2009, 14.5 million in 2010 and 15.5 million in 2011. The seasonally adjusted annual sales rate dropped to 10.6 million vehicles in October.
 
Ford's plan calls for an investment of up to $14 billion to improve fuel efficiency over the next seven years. The company said would improve the overall efficiency of its fleet by an average of 14 percent in 2009.
 
Mulally also says he will encourage automakers and parts suppliers to join forces to develop new battery technologies in the U.S. for future electric cars so the country doesn't rely on foreign batteries.
 
Ford's plan said it will reduce its number of dealers by 606 to 3,790 by the end of the year. It will also trim the number of major sourcing suppliers it uses to 750 from 1,600.
 
Ford reiterated its intention to offload Volvo, by either selling the Swedish automaker or spinning it off into a separate company. Since 2007, Ford has sold its Jaguar, Aston Martin and Land Rover lines. It also sold most of its stake in Madza.