Ford To Further Draw Down Lines, Burns $5.5 Billion In 4Q

Ford Motor Co. (F), which has already slashed thousands of jobs, will cut even deeper and draw on available credit lines after the company burned through $5.5 billion in cash in the fourth-quarter and posted its third consecutive annual loss.

The Dearborn, Mich.-based auto maker will eliminate 1,200 jobs in its Ford Motor Credit unit and draw down $10.1 million from its credit lines as it attempts to hold off from asking the federal government for money to ruin its operations.

The voluntary and involuntary cuts in the credit unit will start next month. Ford will receive the $10.1 billion from its drawdown on Feb. 3.

"Ford and the entire auto industry faced an extraordinary slowdown in all major global markets in the fourth quarter and that clearly had an impact on our results," Ford Chief Executive Alan Mulally said in a statement Thursday.

"We continued to take the decisive actions necessary to lower production to match the lower worldwide demand and reduce costs, which we expect to allow us to significantly reduce negative operating cash flow in 2009."

Ford, the second-largest U.S.-based auto maker, is desperately trying to control costs as sales of new cars and trucks continue to slump around the world. U.S. sales alone fell to a 15-year low in 2008 forcing auto makers to idle plants and cut jobs.

Chrysler LLC and General Motors Corp. (GM) sought and won low-interest loans from the federal government to keep themselves afloat.

Ford opted out of the loans but secured a $9 billion line of credit to use if the economy worsens. Accessing the federal loans would open the company, still dominated by the Ford family, to government involvement.

Ford reiterated that it doesn't need to access a federal low-interest loan at this time.

For the fourth-quarter, Ford widened its loss to $5.9 billion, or $2.46 a share, but said its full-year loss for 2008 ballooned to $14.6 billion compared with $2.72 billion for 2007.

Ford succeeded at easing its cash burn during the fourth quarter but it now has $13.4 billion on hand to get it through 2009.

The year promises more slumping sales around the globe as many economies slip into a recession. The number of cars and trucks sold in the U.S. alone could fall to as low as 10.5 million units.

Auto makers took deep financial hits last year as failing banks, tightening credit and a recession turned buyers away from showrooms in the U.S. starting in mid-2008. The financial panic swept around the world, slowing sales of new cars and trucks. Ford and their competitors were forced to cut jobs, idle plants and boost incentives to drive sales.

Ford, looking to halt some its financial erosion, sold its Jaguar and Land Rover brands in 2008, cut hourly and salaried workers and is now preparing to sell off its Volvo brand.

-By Jeff Bennett, Dow Jones Newswires; [phone]; [e-mail]

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