Ford rushes to the aid of beleaguered auto-parts suppliers facing cash crunch
Ford burned through $8 billion in the first three months of the year, but it has built up a substantial cash pile by suspending its dividend, drawing down its credit lines and selling junk bonds.
(Bloomberg) -- Ford Motor Co. is helping some of its suppliers survive a coronavirus cash crunch by paying its bills early to ensure that critically needed parts continue to flow to its auto factories.
The car industry in North America is just restarting after shutting down for two months to slow the spread of the virus. That has caused a cash-flow crisis at many auto-parts suppliers that don’t have deep capital reserves.
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Ford burned through $8 billion in the first three months of the year, but it has built up a substantial cash pile by suspending its dividend, drawing down its credit lines and selling junk bonds. Now it is helping keep key component suppliers afloat by paying invoices early.
“In light of current market conditions, Ford is creating an early payment program for our supply base," Jennifer Flake, a company spokeswoman, said in an emailed statement. “This new voluntary program creates access to cash flow and working capital to Ford suppliers."
The automaker, which is projecting a $5 billion operating loss in the second quarter, said it is making these early payments to a small group of key suppliers it declined to identify. The company plans eventually to expand the program to other component manufacturers across its supply base, Flake said.
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