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Ford’s Cash Cushion Is Ready For An Economic Downturn

Automobile sales are down in many parts of the world and have led to Ford shutting down factories and letting workers go. Recently Ford North American CFO Matt Fields was on hand at the J.P. Morgan conference in New York. At the conference, he talked about preparations that Ford has made to get ready for a possible economic downturn.

Fields said that Ford was sitting on a cash buffer of $20 billion to help it manage through a potential economic downturn. The potential for an economic downturn is high in the automotive sector as tariffs are looming that could drive the costs of materials up and the cost of importing and exporting vehicles and components up as well. The cash buffer will also help see Ford through weakening demand for vehicles at home and in China.

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Ford isn’t alone in preparing for a possible economic downturn; GM is also sitting on a substantial cash cushion. GM’s head of finance says that the automaker is sitting on a cash cushion of $18 billion with the potential to pay two years worth of dividends. Both automakers are building up their cash cushions as the trade war between the U.S. and China drives fears of a global recession.

Ford has been laying off workers around the world and has stated that most of the 12,000 workers in Europe it lets go will be voluntary separations. Ford has been laying off salaried workers in addition to hourly workers.

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Source: Reuters

Shane is a car guy with a fondness for Mustangs and off-roading.

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Comment

  1. Ford Owner

    If this “economic downturn” hits the U.S., then Tesla will not survive, having billions in debt, and no cash at all. This can happen quickly when Ford begins marketing the electric F-150 sooner, and potential EV truck buyers will go to Ford, instead of waiting another two years for Tesla’s unknown offering.

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