• Aug 10, 2010
Ford was the only one of Detroit's three automakers able to avoid taking a direct government bailout in 2009 to bypass bankruptcy. However, that doesn't mean it hasn't been able to benefit from some government largess.

Back in 2006 before the credit markets collapsed, Ford essentially mortgaged every facility it had in order to borrow $23.5 billion. That money was used to provide operating cash flow that General Motors and Chrysler didn't have when things went south in 2008. The money allowed Ford to keep the lights on, but it also saddled the company with the debt service payments of $318 per vehicle in the second quarter of this year.

Rather than direct bailouts, Ford has been able to take advantage of several government-backed low interest loan programs like the Advanced Technology Vehicle Manufacturing program run by the Department of Energy to fund new vehicle development and factory retooling. Ford is also getting tax breaks and low interest loans from various states as well as other countries like the UK and Russia. At the same time, it has used profits earned in the past year to pay down higher interest debt earlier than planned. In doing so, Ford hopes to get back from junk bond status to investment grade by late 2011 or early 2012.

[Source: Wall Street Journal]


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    • 1 Second Ago
  • 47 Comments
      linmarco
      • 1 Month Ago

      Bottom line the government is involved.

      • 4 Years Ago
      I do not discriminate against Asian engineers (American or not).
      • 4 Years Ago
      So the truth comes out, all you GM bashers, GM was not the only company that borrowed federal funds, no matter how you look at it, they essentially did the same GM did, but presented it in a different way. GM did it out in the open, and they were criticized for it. I think we may should call Ford "Governor Ford Motors"
        • 4 Years Ago
        Did you even read the article, or did you stop at the headline? Nevermind. We already know the answer.
      • 4 Years Ago
      I don't thinkFord's loans are directly supplied by the Fed, but rather only backed by the Fed. So the loans are basically insured against default by the fed. At least that is how I understand it, maybe I am wrong, please correct me if I am wrong. Just like the a VA Loan does not come directly from the fed, it is only backed by the Fed. The money comes from a private bank but if the borrower defaults the fed is on the hook. Think of it as a co-signer.
        • 4 Years Ago
        I believe you are correct. The government acts as a loan insurance provider not the direct loan provider. Banks, investment groups, other governments, and similar organizations will actually provide the finances. The interest rate may be a smaller percentage but 3% of $10 billion is still $300,000,000, and its guaranteed.
      • 4 Years Ago
      Not seeing the problem. Companies like Hyundai are basically owned by the Korean gov't. Ford getting gov't help is pretty much in line with everyone else.

      Don't even get me started on currency manipulation, the Yen and Honda/Toyota...
        • 4 Years Ago
        "various states"

        This is a reference to countries, not US state governments..
        • 4 Years Ago
        I think the problem is a VERY poorly worded title followed by nobody reading/understanding the article. They're not using governtment money to pay off loans, they're using government loans to pay for operating costs that the loans were approved for (like the Advanced Technology Vehicle Manufacturing loan for retooling plants) so incomming profits can be used to pay down debt.
        • 4 Years Ago
        @Epyx:

        Well according to the autoblog article: "Rather than direct bailouts, Ford has been able to take advantage of several government-backed low interest loan programs like the Advanced Technology Vehicle Manufacturing program run by the Department of Energy to fund new vehicle development and factory retooling."

        Now it does say "government-backed" but the program is run by the Department of Energy, which is part of the U.S Government so they must be getting the money from the Government. Now I wish I had more information but sadly I don't have a subscription to the Wall Street Journal. (Someone can correct me if I'm wrong)

        Also in another sentence in the article: "Ford is also getting tax breaks and low interest loans from various states as well as other countries like the UK and Russia".

        If you are getting" low interest loans from various states" and since each state government is part of the larger Government then it is getting money from the Government.
        • 4 Years Ago
        If you are going to proclaim currency manipulation, then clearly you are a brain washed UAW shill.
        • 4 Years Ago
        Just to comment on the tax payer number, the US has 300 million people in the country, not all of them pay taxes (especially the 0-18 year olds), and only a small portion pay high taxes. You are right that the US government has a lot of money, but they also have a lot of debt to worry about.
        • 4 Years Ago
        @ gua,

        "The US government is the world's richest government having over 300 million high-paid taxpayers."

        what are you smoking?...almost half of that 300 million dont pay taxes
        • 4 Years Ago
        The only "problem" is the holier-than-thou / holier-than-those attitude being reflected by typical Ford fanboi.

        Other than that, it's business as usual - everybody's taking the money. Some obviously, others, not so much.

        The only question to me is whether we get to call Ford "Governement Motors", too...
        • 4 Years Ago
        "U.S Government lends to Ford"

        No they dont. Backed not supplied.
        • 4 Years Ago
        So why were GM and Chrysler criticized so much around here for getting government help? Now that Ford does it, it's all fine and dandy apparently. It's a pretty slippery slope to say that it's okay since other governments do the same thing. Hell, we might as well subsidize and help all the industries that the US lost until they can compete like electronics and textiles.
      • 4 Years Ago
      Such a sensationalist headline.
      • 4 Years Ago
      The article doesnt even say what the autoblog title says, Ford is using funds as intended which are allowing them to turn a profit which is paying off their old higher interest loans. I am trying to figure out what the issue is? A lot of this money is available to all automakers, including the transplants.
      • 4 Years Ago
      These are just loans and tax breaks (don`t worry Toyota and Honda get LOTS of tax breaks at the tax payers expense too). Also Toyota .. and then Honda received GIFT (essentially the same effect to the taxpayer as a bailout) from the Japanese government (not to mention C4C which largely went to Toyota, Hyundai/Kia, and Honda at the American taxpayers expense).

      Ford restructured BEFORE the industry collapse .. so they were actually worth something (ie their stock had not collapsed to a huge degree yet). That allowed them to borrow money against their assets (like Toyota .. which became over extended actually). To a degree they were lucky -- that said they also knew they needed to clean up their products before GM and Chrysler too (ie. they saw the warning signs in time to act).

      When GM and Chrysler stock collapsed, they could not borrow money at a reasonable cost because it would not be secured against assets. So they had to hope the gov`t would lend them money as rates reflective of being backed by assets.

        • 4 Years Ago
        Please list all the loans Honda is getting at the tax payers expense.
        Provide links too.
      • 4 Years Ago
      Not even close to the same. Ford didn't do bankruptcy and the loans and credits are available to other businesses as well.
      • 4 Years Ago
      More importantly, why is their sign a giant iPod Nano? IT SHOOTS VIDEO!
      • 4 Years Ago
      Seems like sound business to me. All of it. They aren't writing off anything, just moving it around in a way that makes sound financial sense. They'd be stupid not to use whatever programs are available.

      Just like moving my credit card debt to a lower rate. It's a step towards lowering my debt.
      • 4 Years Ago
      This is old news from June 2009. It's not bailout money, the AVTM is money allocated in 2007 to retool factories to produce high-tech vehicles. So far Ford has received 5b, Toyota 2b, and Tesla .2b. GM and Chrysler have received nothing, because financially they're still unsound.
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