Press Release: Ford Motor Company, Ford Motor Credit Company & Ford Credit Canada Limited

Press Release: Ford Motor Company, Ford Motor Credit Company & Ford
Credit Canada Limited
Date of Release: Jan 11, 2002
Confirms at A (low) and R-1 (low)
David Schroeder, Kam Hon / 416-593-5577 ext.2232, ext.2243/ e-mail:
dschroder@dbrs.com
Ford Motor Company
Rating	Trend	Rating Action	Debt Rated	
A (low)	Stable	Confirmed	Long Term Debt	
R-1 (low)	Stable	Confirmed	Commercial Paper	
Ford Motor Credit Company
Rating	Trend	Rating Action	Debt Rated	
A (low)	Stable	Confirmed	Corporate Rating	
Ford Credit Canada Limited
Rating	Trend	Rating Action	Debt Rated	
A (low)	Stable	Confirmed	Guaranteed Unsecured Senior Notes	
R-1 (low)	Stable	Confirmed	Commercial Paper	

DBRS is confirming the above ratings of Ford Group of companies, ("Ford"
or "the Company"), all with Stable trends. The confirmation follows
today's announcement by the Company of a revitalization plan aimed at
improving profitability, and Ford will take a $4.1 billion (after-tax)
charge, mostly non-cash. This restructuring action, along with
expectations for weak results in 2001 and 2002, has been anticipated.
The main emphasis of the plan is to improve the efficiency of the North
American and, to a lesser extent, the South American operations and to
maintain the momentum in Europe where restructuring is well underway and
on track. The key elements of the North American revitalization plan
are: (a) rationalizing capacity to increase utilization; (b) reducing
material and overhead costs; (c) improving quality; (d) enhancing
product offerings with new models; and (e) strengthening supplier
relationship. The plan calls for the reduction of annual installed
capacity to 4.8 million units by mid-decade from the current level of
5.7 million units, which would increase capacity utilisation to 110%
from 95% in 2001. Associated headcount reduction is expected to be about
20,000. Potential benefits from implementing the revitalization plan
(increased capacity utilization, reduced overhead and material cost,
improved quality, etc.) are expected to amount to about $9 billion by
mid-decade. If these savings are achieved and assuming the market does
not go into a prolonged downturn and new models prove successful, Ford
should return to past levels of profitability. The main challenge the
Company faces is executing the revitalization plan.
Ford has also announced cutting its dividend by an additional 33% to
save $1.1 billion over the next three years, completing asset sales
totalling about $1 billion this year, and issuing $3 billion - $4
billion of Trust Preferred Convertible Securities. These actions should
further strengthen the Company's liquidity position allowing it to
weather the downturn in the auto industry. Net cash in the automotive
business is expected to remain positive in the near future. In addition,
steps are being taken to improve the performance of the credit
subsidiary.
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