U.S. carmakers move to shore up cash, Ford to restart some plants

By Ben Klayman, David Shepardson and Paul Lienert
FILE PHOTO: A Ford 2018 F150 pick-up truck moves down the assembly line at Ford's Dearborn Truck Plant during the 100-year celebration of the Ford River Rouge Complex in Dearborn

By Ben Klayman, David Shepardson and Paul Lienert

DETROIT (Reuters) - The two largest U.S. automakers on Thursday announced measures to shore up their finances as the coronavirus pandemic takes a deep economic bite, with Ford Motor Co <F.N> aiming to resume production next month of its most profitable vehicles while cutting costs further.

General Motors Co <GM.N>, the No. 1 U.S. automaker, said it planned to keep its plants closed indefinitely and was reducing the pay of salaried employees and executives and suspending some future product programs to conserve cash.

GM's chief executive and chief financial officer issued a stark warning to company employees in an internal video, saying that "significant austerity measures" were needed to preserve the company's long-term viability.

To generate cash, Ford said it was poised to restart production at some plants in North America as early as April 6, bringing back such profitable vehicles as its top-selling F-150 full-sized pickup, the Transit commercial van and SUVs. The plants that produce those vehicles are located in the U.S. states of Michigan and Kentucky and in Mexico.

To save cash, Ford said it was temporarily cutting top executives' salaries, among other actions. This came a day after Standard & Poor's downgraded the Dearborn, Michigan-based company's debt to "junk" status and warned more downgrades could be necessary.

"The actions we're taking now are wide-ranging and substantial," Ford's chief executive, Jim Hackett, told employees in an email early on Thursday. "We hope they will be enough to give Ford the financial flexibility to ride out the economic and business effects of the coronavirus."

The pandemic, which has killed more than 21,000 people globally, has forced the shutdown of auto plants around the world as entire cities have gone into lockdown to stem the spread of the virus.

Ford previously drew down credit lines to build its cash position and suspended its dividend. GM also drew down its credit line, but did not suspend the dividend.

The U.S. Senate on Wednesday passed a $2 trillion (1.6 trillion pounds) economic rescue package to help unemployed workers and companies, including the auto industry, hit hard by the outbreak. The measure has been sent to the House of Representatives for a vote on Friday.

President Donald Trump, concerned about the economic repercussions of an extended shutdown, has said he wants America to get back to business by Easter, which is April 12.


GENERATING CASH

To get more cash coming in, Ford said it would restart key plants, while introducing additional safety measures to protect returning workers from the coronavirus. It said it would provide details on the new measures later.

To conserve cash, Ford said its top 300 executives would defer 20% to 50% of salaries for at least five months starting May 1, with the executive chairman deferring his entire salary. Hackett will defer half his salary.

However, Ford employees will continue to get healthcare coverage and those exposed to the virus and placed in quarantine will get paid time off, he added.

General Motors Co <GM.N> and Fiat Chrysler Automobiles NV (FCA) <FCHA.MI><FCAU.N> previously said they would shut their North American operations through March 30 and reassess after that.

FCA on Thursday extended its shutdown through April 13, while its parts distribution centres will continue to operate with paid volunteers. Mexico's status is subject to a separate announcement.

GM on Thursday extended its shutdown indefinitely and said it would evaluate on a week-to-week basis.

GM's chief executive, Mary Barra, and chief financial officer, Dhivya Suryadevara, told company employees in the internal video, which Reuters heard a recording of, that it was essential that GM take immediate, aggressive steps to cut costs.

“If we don’t take significant austerity measures, we will do serious damage to the long-term viability of our company,” Suryadevara said. She noted that GM has very little revenue coming in “and we are preparing to operate the company temporarily on credit if necessary."

Barra said GM was "aggressively taking costs out of the business," including cutting its marketing budget ”and hundreds of other actions."

To save cash and avoid layoffs, the automaker said salaried employees would have 20% of their pay deferred, executives 25% and senior leaders 30%, starting April 1. GM said the deferred money would be repaid in a lump sum no later than March 15, 2021. Health-care benefits are not affected.

GM also said 6,500 salaried employees, mostly in manufacturing and engineering, who are not able to work remotely are being paid 75% of their salary as part of a "downtime paid absence" program in lieu of collecting unemployment benefits.

In an email to employees on Thursday, seen by Reuters, Barra said GM for years has been making "difficult decisions to strengthen our business and make it more resilient," and now those moves "will be put to the test."

United Auto Workers President Rory Gamble said Thursday the union viewed announcements like Ford's with concern, and any decision to restart production should be based on data and each state's position with regards to the coronavirus outbreak.

The UAW has said three union members who worked at FCA plants have died due to the coronavirus.

Michigan Governor Gretchen Whitmer issued an order on Monday barring non-essential businesses from operating until April 13.

Ford plans to begin production on one shift at its Hermosillo, Mexico, assembly plant, where it builds the Ford Fusion and Lincoln MKZ sedans. It will restart production on April 14 at its Dearborn plant that builds the F-150 and a Kentucky plant that makes the Super Duty version of the pickup as well as the Ford Expedition and Lincoln Navigator SUVs.

Ford shares closed down 2.4%, while GM rose 4.8%.


(Reporting by Ben Klayman, Paul Lienert and David Shepardson; Additional reporting by Sanjana Shivdas in Bengaluru; Editing by Leslie Adler)

  • Virus-hit cruise ship arrives in Florida -- and another on way
    News
    AFP News

    Virus-hit cruise ship arrives in Florida -- and another on way

    A virus-hit cruise ship with dozens of ill passengers and crew docked in Florida on Thursday after being barred from several South American countries, concluding a harrowing time at sea for those stranded aboard. The Zaandam, operated by Holland America Line, tied up at Port Everglades in Fort Lauderdale

  • Pentagon removes captain of virus-struck aircraft carrier
    News
    AFP News

    Pentagon removes captain of virus-struck aircraft carrier

    The Pentagon removed the captain of the coronavirus-stricken USS Theodore Roosevelt Thursday, saying he mishandled communications over how the outbreak was sweeping through the warship. Acting Navy Secretary Thomas Modly said Captain Brett Crozier was wrong to distribute to a wide range of people copies

  • Window for containing coronavirus in Mideast closing - WHO
    News
    Reuters

    Window for containing coronavirus in Mideast closing - WHO

    Governments in the Middle East need to act fast to limit the spread of the coronavirus after cases rose to nearly 60,000, almost double their level a week earlier, the World Health Organization (WHO) said on Thursday. "New cases have been reported in some of the most vulnerable countries with fragile

  • Biden says will talk soon with Trump on coronavirus response
    News
    AFP News

    Biden says will talk soon with Trump on coronavirus response

    Democratic White House hopeful Joe Biden said Thursday he was finalizing plans to speak by telephone with President Donald Trump about the coronavirus crisis and how to stem the deadly pandemic. The administration suggested Wednesday that Biden, the former vice president and likely challenger to Trump

  • Venezuela opposition denounces arrests of Guaido allies
    News
    AFP News

    Venezuela opposition denounces arrests of Guaido allies

    Venezuela's opposition claimed Thursday that two members of leader Juan Guaido's team were arrested on the same day that he was due to appear before prosecutors investigating an alleged "attempted coup d'etat" and "magnicide." Demostenes Quijada and Maury Carrero were

  • Global virus cases top a million as Spain, Britain see record deaths
    News
    AFP News

    Global virus cases top a million as Spain, Britain see record deaths

    Confirmed coronavirus cases around the world topped one million on Thursday and the number of deaths soared past 50,000 as Europe reeled from the pandemic and the United States reported record numbers of people out of work. Despite more than half the planet imposing some form of lockdown, the virus

  • Short of blood, US relaxes restrictions on gay donors
    News
    AFP News

    Short of blood, US relaxes restrictions on gay donors

    The United States on Thursday relaxed rules that prevent many gay men from giving blood in an effort to tackle a severe shortage of donations due to the COVID-19 outbreak. The period has been reduced to three months, the US Food and Drug Administration announced. "The COVID-19 pandemic has caused

  • Pakistan overturns Briton's death sentence in Daniel Pearl murder
    News
    AFP News

    Pakistan overturns Briton's death sentence in Daniel Pearl murder

    A Pakistani court on Thursday overturned the death sentence of a British-born militant convicted 18 years ago in the kidnapping and beheading of American journalist Daniel Pearl, drawing outrage in the United States. Pearl's brutal murder sparked international revulsion in early 2002, putting pressure

  • World Bank to roll out $160 bln emergency aid over 15 months
    News
    AFP News

    World Bank to roll out $160 bln emergency aid over 15 months

    The World Bank on Thursday approved the first steps in a plan to roll out $160 billion in emergency aid over 15 months to help countries deal with the impact of the global coronavirus pandemic. "The goal of the World Bank in this crisis has been to take broad, fast action, that makes it most effective

  • Troops gather scores of bodies of virus victims in Ecuador city
    News
    AFP News

    Troops gather scores of bodies of virus victims in Ecuador city

    Troops and police in Ecuador have collected at least 150 bodies from streets and homes in the country's most populous city Guayaquil amid warnings that as many as 3,500 people could die of the coronavirus in the city and surrounding province in the coming months. A joint military and police task

  • U.S. Navy relieves commander of coronavirus-stricken aircraft carrier
    News
    Reuters

    U.S. Navy relieves commander of coronavirus-stricken aircraft carrier

    The U.S. Navy on Thursday relieved the commander of the aircraft carrier Theodore Roosevelt, who wrote a scathing letter that leaked to the public asking the Navy for stronger measures to control a coronavirus outbreak onboard the ship. The removal of Captain Brett Crozier from the command of the 5,000

  • Oil rockets as Trump signals end to price war
    News
    AFP News

    Oil rockets as Trump signals end to price war

    Oil prices rocketed Thursday, posting the largeset percent increase ever, after US President Donald Trump said Russia and Saudi Arabia planned to end their price war by slashing output. After Trump tweeted that Saudi and Russia could slash production by up to 15 million barrels, Brent hit $36.29 a barrel

  • US official denies claim that Americans buying up France's masks
    News
    AFP News

    US official denies claim that Americans buying up France's masks

    A senior US official on Thursday rejected allegations from French politicians that Americans have been snapping up Chinese masks previously ordered by France during the coronavirus crisis, calling the stories "completely false." The leader of the Ile-de-France region, which includes Paris,

  • Pandemic forces polio eradication group to suspend campaigns
    News
    AFP News

    Pandemic forces polio eradication group to suspend campaigns

    The COVID-19 pandemic has dealt an unprecedented blow to the world's battle against polio, the head of the global organisation to combat the disease told AFP Thursday after it suspended vaccination campaigns for the first time in three decades. With the coronavirus marching swiftly across the world

  • North Korea insists it is free of coronavirus
    News
    AFP News

    North Korea insists it is free of coronavirus

    North Korea remains totally free of the coronavirus, a senior health official in Pyongyang has insisted, despite mounting scepticism overseas as known cases of infection topped one million worldwide. The already isolated, nuclear-armed North quickly shut down its borders after the virus was first detected

  • Global coronavirus cases surpass one million - U.S. researchers
    News
    Reuters

    Global coronavirus cases surpass one million - U.S. researchers

    Italy had the most deaths, more than 13,900, followed by Spain. The United States had the most confirmed cases of any country, more than 240,000, said researchers at the Center for Systems Science and Engineering at Johns Hopkins University.

  • Under-fire UK government pledges 100,000 tests a day
    News
    AFP News

    Under-fire UK government pledges 100,000 tests a day

    Prime Minister Boris Johnson on Thursday vowed Britain would "massively increase testing" for the COVID-19 virus as his health minister said the aim was 100,000 tests a day within weeks The pledge came on the day the UK recorded more than 500 daily deaths for a second consecutive day. Johnson

  • Explainer: How an old tuberculosis vaccine might help fight the new coronavirus
    News
    Reuters

    Explainer: How an old tuberculosis vaccine might help fight the new coronavirus

    Researchers in Australia and Europe are testing whether the Bacille Calmette-Guerin (BCG) vaccine, introduced in the 1920s to fight tuberculosis, might be deployed to combat COVID-19, the respiratory disease caused by the novel coronavirus. The BCG vaccine contains a live but weakened strain of tuberculosis

  • U.S. paying Russia for entire planeload of coronavirus equipment sent by Moscow - U.S. official
    News
    Reuters

    U.S. paying Russia for entire planeload of coronavirus equipment sent by Moscow - U.S. official

    The United States is paying Russia for a planeload of medical equipment sent by Moscow to help fight the coronavirus outbreak, a senior Trump administration official said on Thursday, clearing up confusion as to who footed the bill. It had been unclear whether Russia had sent the 60 tons of equipment

  • Turkey mayor urges lockdown for Istanbul
    News
    AFP News

    Turkey mayor urges lockdown for Istanbul

    Istanbul's opposition mayor on Thursday called for a lockdown in Turkey's largest city after it reported the country's highest number of coronavirus cases and criticised the lack of coordination with President Recep Tayyip Erdogan. Turkey's government has announced measures to contain

  • Milan shuts crematorium to deal with body backlog
    News
    AFP News

    Milan shuts crematorium to deal with body backlog

    The city of Milan on Thursday shut its main crematorium for the rest of the month to deal with a surge of bodies that have accumulated in the course of the coronavirus pandemic. Italy's epicentre of the global outbreak admitted it was experiencing a "constant and progressive increase of the

  • World Bank approves initial $1.9 billion in emergency coronavirus funds
    News
    Reuters

    World Bank approves initial $1.9 billion in emergency coronavirus funds

    The World Bank on Thursday said it had approved an initial $1.9 billion (£1.53 billion) in emergency funds for coronavirus response operations in 25 developing countries, with more than half the aid earmarked to help fight the fast-spreading disease in India. Action on projects in scores of emerging

  • Temperature checks, masks new norm for Amazon employees
    News
    AFP News

    Temperature checks, masks new norm for Amazon employees

    Amazon on Thursday said it is temperature-checking more than 100,000 workers daily and handing out masks as part of ramped-up defenses against the coronavirus pandemic. Amazon this week began checking the temperature of workers arriving at US facilities, asking those with apparent fevers to go home,

  • Brazil's Bolsonaro isolated, weakened by coronavirus denial
    News
    Reuters

    Brazil's Bolsonaro isolated, weakened by coronavirus denial

    At a tense cabinet meeting on Saturday in the Brazilian president's official residence, Jair Bolsonaro found himself isolated. The far-right leader convened the emergency meeting in Brasilia's modernist Alvorada Palace to resolve a dispute with Health Minister Luiz Henrique Mandetta, who publicly

  • Chile agrees extradition to France of accused in Japanese student murder
    News
    AFP News

    Chile agrees extradition to France of accused in Japanese student murder

    Santiago's Supreme Court on Thursday agreed to hand over a 29-year-old Chilean man to face trial in France for the murder of a Japanese student. French investigators had requested the extradition of Nicolas Zepeda, who is suspected of murdering his Japanese ex-girlfriend in the eastern French city