With the U.S. auto industry melting down, General Motors Corp. executives are burning up phone lines to Washington seeking billions in financial aid to help cement a merger with Chrysler. Ford Motor Co., meanwhile, has developed an intriguing strategy: Sit back and watch.
Crashing sales, mounting losses and frozen credit markets have forced all three major U.S. automakers to raid their cash stockpiles. GM hopes that a tie-up with Chrysler will help it cut costs. But GM's first choice was Ford, which it approached before Chrysler about a deal only to be rebuffed, according to individuals familiar with the company who were not authorized to speak publicly about the talks.
Instead, Ford's plan, these insiders say, is to let GM and others do the heavy lifting, exploring options for help from the federal government and, potentially, hammering out new cost reductions from the United Auto Workers union.
So even as governors from six states sent a letter Thursday to the Treasury Department and the Federal Reserve urging "immediate action" in resolving the automakers' woes, Ford brass were at the company's F-150 pickup plant in Dearborn, Mich., announcing the hiring of 1,000 workers and the addition of another shift on the line.
"Whatever happens in the industry, there should be parity," Ford Executive Vice President Mark Fields said. "We fully support all the things that the Federal Reserve and Treasury are doing to stabilize the market and provide liquidity."
"Parity" is something of a buzzword. The idea is that any help GM gets from Washington -- be it via guaranteed loans, direct equity investments or access to the Treasury's $700-billion distressed asset purchase plan -- should apply to Ford as well.
Ditto for concessions from the UAW, which is said to be under pressure from GM to allow the carmaker to postpone billions in payments into a trust created last year to manage retiree benefits.
"If they're going to give money or other benefits to GM, there's no way that Ford won't be asking for those, too," said Aaron Bragman, auto industry analyst at IHS Global Insight. "Their argument is that if one company gets access to low-interest loans, so should we."
For Ford, such a strategy could make a lot of sense. Thanks to $23 billion in loans it took out two years ago, the nation's second-largest automaker has a stronger cash position than GM, and most analysts expect it to survive 2009 at current spending rates.
