Ford (F), the only US automaker not currently being propped up by federal loans, may have to contribute $4 billion to its ailing pension fund. That's cash the carmaker dearly needs to stay afloat, given abysmal auto sales from the US to Japan and everywhere in between.
According to Bloomberg, the company reported a loss of $14.3 billion for fiscal 2008 and earler this week drew all of a $10.1 billion credit facility.
As the stock market has tumbled, Ford's pension grew deeper in the whole. Future obligations now outweigh the value of it's assets and the company may have to pony up the difference. Some fear Ford's need for government assistance is inevitable, its cash troubles showing no signs of easing.
Ford is shopping around it's Volvo unit to raise capital, and is said to be in talks with China's Geely Automobile Holdings about a potential deal.
With General Motors (GM) and Chrysler already on the government dole, and once-mighty Toyota (TM) struggling to ofload cars onto cash-strapped consumers, it's a rough time to be in the business of selling cars.
Nor is it a great time to be guaranteeing pensions. The Pension Benefit Guarantee Corp, a quasi-public entity that backs corporate pension plans in the event they fail, estimates that collectively, American pensions have a $46 billion shortfall.
About half that deficit comes from firms connected to the auto industry.
This new economic stimulus package had better work.
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