Again an update about the struggling car industry in the U.S. The second biggest car constructing company in the U.S. after G.M. namely Ford Motor Company said this week that it hoped to eliminate $10.4 billion in debt by giving cash and stock to debt holders as part of a revamping of its sheet balance.
This move of Ford is similar to what G.M. and Chrysler had to do to get new loans from the federal government, but the Ford spokesman said it has no plans to seek federal aid. Ford will reduce its overall borrowing by 40 percent and at this moment Ford is the healthiest of Detroit’s auto constructors. This is because of their debt initiatives and an earlier agreement they made with the U.A.W. (United Automobile Workers) union.
Ford won the concessions from the union because of a good debt restructuring plan.
AlL the offers Ford had to make, were necessary as part of its agreement with U.A.W. to restructure the payments and retire trust. Another part of the contract with the union was to make other cost-saving changes.
I think this is a good action of Ford because they actually try to do something about this situation and not only count on the loans of the government to save the company like G.M. and Chrysler do.
We can see the debt restructuring plan works and I think G.M. and Chrysler have to take an example on Ford and do the same things, or make decision that have the same impact. It’s also good that Ford don’t need government loans and tries to save the company on his own strength.
Source: http://www.nytimes.com/2009/03/05/business/economy/05ford.html?_r=1&ref=business
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According to me, it's fantastic that they really want to do something to make their situation better without counting on government aid. They chose the difficult solution above the easy one!
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