Ford, the second-largest US automaker, on Friday, Nov 7 reported a third-quarter operating loss of $2.98 billion and said it would cut jobs and spending to preserve its perilous cash reserves. GM was facing similar challenges after warning that it was running out of the minimum cash it needs to operate until the end of the year, and posting third-quarter operating losses of $4.2 billion. The dire news from the auto industry was a reminder of the hardship faced by not only individual auto companies, but also the suppliers, small businesses and communities dependent on it, US president-elect Barack Obama said Friday, Nov 7.
"The auto industry is the backbone of American manufacturing and a critical part of our attempt to reduce our dependence on foreign oil," Obama said while speaking to reporters in Chicago in his first public appearance since winning Tuesday's election.
"I have made it a high priority for my transition team to work on additional policy options to help the auto industry adjust, weather the financial crisis and succeed in producing fuel-efficient cars here in the United States," he said.
On Thursday, chief executives of the ailing ;Big Three; automakers - GM, Ford and Chrysler - met with top Congressional leaders to discuss a further bail-out package and the future of the loss-making industry.
US auto sales plummeted 32 percent in October to the lowest monthly total since 1991.
Ford on Friday announced that it used up $7.7 billion in cash as revenues plunged. While chief executive Alan Mulally remained confident they could reverse the sharp downturn, he warned it would take some time, projecting continued weak sales in North America and Europe.
Ford said it aimed to boost its cash reserves by $17 billion by the end of 2010, a move that would include cutting annual capital spending of $1 billion.
This quarter, the company fired 1,500 salaried employees to help slice off at least 15 percent of its costs for its North America work force. There were 2,600 third-quarter buyouts for its US factory workers.
GM, the largest US automaker, has sought federal aid to avoid a collapse. The company said it needs at least $11 billion in cash each month to pay its bills.
In the third quarter, GM used $6.9 billion in cash and said it could fall below the minimum it needs to operate for the rest of the year.
GM also also suspended merger talks with Chrysler LLC, Bloomberg financial news agency reported.
While GM announced a series of job and spending cuts to boost its cash reserves by $5 billion, it said this might not be enough to tide it over the ongoing crisis in the auto industry.