WAYNE - Ford Motor Co is on track to improve its balance sheet as the auto industry rebounds from a severe downturn and the U.S. economy stages a slow recovery next year, executives said on Friday.
Executive Chairman Bill Ford Jr. said the automaker would spend more time in 2010 to address its balance sheet.
The only major U.S. automaker not to restructure under a U.S. government-funded bankruptcy in 2009, Ford faces pressure to reduce its long-term debt, now a much heavier burden on the company than on rivals General Motors Co and Chrysler.
Ford borrowed more than $23 billion in late 2006, mortgaging most of its remaining secured assets including the familiar Blue Oval logo, to amass cash to fund a restructuring and continue with its product development plans.
Obviously our balance sheet strategy is something we spent a lot of time on, and we will be spending even more time on, Ford told reporters on the sidelines of an event at a Ford assembly plant in Wayne, Michigan, near Detroit.
We have a really good plan to address all the balance sheet issues, Ford said.
Chief Executive Alan Mulally told reporters Ford remains right on our plan to improve its balance sheet, a process that will accelerate as the company returns to profitability.
We have a temporary disadvantage right now because we are paying a little bit more in interest rate, but everybody knows how fast we are getting back to profitability and free cash flow and then we will just accelerate the improvement in the balance sheet, Mulally said.
Ford posted a nearly $1 billion third-quarter profit that was better than the average analyst expectation and raised its outlook to solidly profitable in full year 2011 from at least breakeven.
Mulally said going into 2010 Ford was probably the best positioned it had ever been to lead the recovery and would stay focused on executing its turnaround plan.
We always are concerned about the economy, but having said that, we have built into our plan as you know a relatively slow recovery which seems to be what's happening, Mulally said. I feel really good about the economy and where it is going.
Bill Ford also said the No. 2 U.S. automaker does not expect a change in its relationship with the United Auto Workers union after Bob King, UAW vice president in charge of negotiations with Ford, was named this week as the candidate to succeed current president Ron Gettelfinger next year.
I've known Bob King for a long time. He cares very deeply about the industry and about Ford. He has a different style than Ron, clearly, but I don't anticipate huge changes, Ford said.
Ron is very plain-spoken, and he gets to the point very quickly. Bob is perhaps, more cerebral, in some senses.
Ford's some 41,000 hourly workers agreed to concessions in February that would save the automaker some $500 million in annual labor costs, but rejected additional concessions negotiated between Ford and the UAW leadership in November.
I would have liked to see that happen ... But we've got a whole lot done in the last three years so this was not the end of the world and we're working very hard to maintain that relationship, Ford said.
Mulally said there would be no need to reopen again the UAW contract, which expires in 2011, and the automaker is not disadvantaged by the current agreement.
Separately, Mulally said that talks were progressing on the sale of the automaker's Volvo brand. Ford is in nonexclusive talks with China's Zhejiang Geely Holdings Group for the sale of the brand.
The talks are progressing well on Volvo and hopefully we will have something to announce soon, he said. We haven't put any timetable because they are very sophisticated conversations and we want to make sure we get it right for both parties. (Reporting by Soyoung Kim and David Bailey, editing by Gerald E. McCormick, Dave Zimmerman)