Standard & Poor’s lowers ratings for Ford, Ford Credit
DETROIT – Standard & Poor’s lowered Ford Motor Co.’s corporate credit rating further into junk territory Thursday, citing concerns about the company’s ability to turn around its North American operations.S&P also downgraded Ford’s financial arm, Ford Motor Credit Co. The agency cut the ratings for both two levels to BB- and assigned the automaker a negative outlook.S&P first lowered Ford into non-investment grade status last year; the latest move will make it even harder for Ford and Ford Credit to borrow money.Ford spokeswoman Becky Sanch said the company doesn’t comment on ratings actions.”We remain committed to accelerating our business plans,” Sanch said.The No. 2 U.S. automaker lost $284 million worldwide and $1.2 billion in North America in the third quarter. It is ceding U.S. market share to Asian rivals such as Toyota Motor Corp. at the same time that its health care and labor costs have been rising.S&P said weakened sales of mid-size and large sport utility vehicles has particularly hurt Ford, which depended on those products more heavily than other automakers.”With the SUV demand having plummeted industrywide, particularly during the second half of 2005, it is now dubious whether even additional new models can be counted on to help restore the company’s North American operations to profitability,” S&P said.Ford is expected to announce job cuts and plant closures when it reports its fourth-quarter earnings on Jan. 23. It will be the company’s second major restructuring plan in four years.S&P said the plan will be expensive and warned that it could be undermined if Ford’s market share losses continue and the company resorts to costly incentives. S&P said it will take Ford several years – at best – to turn around its North American automotive business.S&P said it was encouraged by a recent deal between Ford and the United Auto Workers that will save the company money on health care. But it said the agreement, which is similar to one at General Motors Corp., only partly addresses the company’s competitive disadvantage.”It remains to be seen whether Ford will be able to garner meaningful concessions in the crucial fall 2007 labor negotiations,” S&P said.S&P said Ford’s consolidated debt totals $141.7 billion and the company has $19.6 billion in cash.Ford shares were up 19 cents to $8.20 in afternoon trading on the New York Stock Exchange.—On the Net:Ford Motor Co.: http://www.ford.comVail, Colorado
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