Originally Posted by The Wall Street Journal

After assessing their company's dire near-term outlook, as many as 38,000 Ford Motor Co. U.S. factory workers agreed to take buyouts. Now, Ford Chief Executive Alan Mulally must convince those who remain, as well as investors, that Ford has a future.

Ford's buyout announcement yesterday was on the high end of Ford's projections and could bolster Ford's previously discussed effort to cut $5 billion in costs per year, though company officials declined yesterday to discuss details. The workers taking buyouts amount to 44% of the company's hourly work force in North America as of the end of last year.

Ford also shed more light on the depth of its financial crisis, saying it expects its automotive business to bleed more than $11.5 billion in cash by the end of 2007, with $3 billion of the outflow coming in the current quarter.

The disclosure provides the latest evidence of the tough financial situation the auto maker faces. Ford isn't in danger of running out of cash in the near-term, but the company expects to lose more than $10 billion this year and needs breathing room to restructure operations.

Ford forecast a total cash outflow of $17 billion between 2007 and 2009, according to a Securities and Exchange Commission filing. About $10 billion of the total will be related to automotive operations and $7 billion will come from costs associated with the company's restructuring of its North American operations.

Ford also said in its SEC filing that it expects a "deterioration" in its earnings next year because of reduced earnings at its Ford Motor Credit Co. subsidiary and increased interest costs associated with a higher level of debt. Ford Motor also said Ford Motor Credit will suspend its regular dividend payments to its parent company, Ford Motor, in 2007. Ford Motor added that Ford Motor Credit's profitability will improve in 2008 and 2009.

The dividend has totaled about $10 billion in the past three years, according to Ford spokeswoman Becky Sanch. The auto maker decided to suspend the dividend in order to sustain the health of the lending arm, which has been hit hard by junk-status credit ratings and other factors.

The financial projections highlight how critical it is for Mr. Mulally to sell Wall Street on a package of $18 billion in loans and credit lines Ford wants to put in place to help fund its restructuring between now and 2010. The additional liquidity, much of which was won by pledging nearly all of its U.S. automotive assets, will increase Ford's available liquidity to $38 billion, the company estimates. Ford said it has guaranteed its creditors that it will always keep at least $4 billion in available liquidity on hand.

With the $18 billion, Ford said yesterday that it expects to have $25 billion in available cash on a net basis in 2009, after the projected $17 billion outflow in 2007 and 2008. Ford reiterated in statements yesterday that it expects to be narrowly profitable by 2009. Ford shares were up two cents at $8.17 in 4 p.m. New York Stock Exchange composite trading.

Mr. Mulally wasn't available to comment yesterday, a spokesman said. In a presentation filed yesterday with the SEC, Mr. Mulally said Ford's business units are "not well integrated" and that its cost structure is "not competitive." "North America is our top priority," Mr. Mulally said, adding that Ford will "operate as one company" by leveraging global assets, integrating regional business units and accelerating product-development efforts.

Mr. Mulally and Chief Financial Officer Don Leclair also touted Ford's new-model plan, which calls for 16 new vehicles by 2008. The Ford that emerges will be a different, much smaller company. By 2008, Ford has projected it will have about 83,500 to 88,500 North American hourly and salaried workers, down from 128,100 at the end of 2005.

Like its Detroit rivals General Motors Corp. and DaimlerChrysler AG's Chrysler Group, Ford is forced to shrink because it has ceded market share in recent years to foreign competitors with leaner cost structures. Ford and GM are each in the midst of restructurings involving plant closures and massive job cuts. Ford said that, of the workers leaving by next fall, slightly more than half will take education or training funding provided by the company for new jobs.

Despite the big buyouts at GM and Ford, the auto makers hope to persuade the UAW to offer more concessions next year on such issues as health care and the so-called JOBS Bank programs that pay workers even when they are idled by slack demand.

Chrysler is getting set to launch a turnaround plan of its own after marketing miscalculations pushed it into the red for the third quarter. As of October, Chrysler had 50,000 vehicles for which it had no dealer orders, on top of bulging inventories on dealer lots. Yesterday, Chrysler marketing chief Joe Eberhardt said Chrysler's inventory is now in the "low 500,000" range, down from around 600,000 vehicles earlier in the year. Mr. Eberhardt declined to say how many sales-bank vehicles remain, but said he is confident Chrysler will eliminate the bank by Jan. 1. Sales-bank vehicles are cars Chrysler built without having dealer orders in hand and haven't been included in the company's inventory figures.

Chrysler's dealers have complained about Mr. Eberhardt's sales and marketing tactics. Asked if his job is on the line, he said: "I think that at a certain level in an organization your job is never secure." He added he believe he has the support of top management.