U.S. carmakers move to shore up cash, Ford to restart some plants By Reuters


© Reuters. FILE PHOTO: A Ford 2018 F150 pick-up truck moves down the assembly line at Ford’s Dearborn Truck Plant during the 100-year celebration of the Ford River Rouge Complex in Dearborn

By Ben Klayman and Paul Lienert

DETROIT (Reuters) – The two largest U.S. automakers on Thursday announced measures to shore up their finances as the coronavirus pandemic takes a deep economic bite, with Ford Motor Co (N:) aiming to resume production next month of its most profitable vehicles while cutting costs further.

General Motors Co (N:), the No. 1 U.S. automaker, said it planned to keep its plants closed indefinitely and was reducing the pay of salaried employees and executives to conserve cash.[nFWN2BJ1MS[

To generate cash, Ford said it was poised to restart production at some plants in North America as early as April 6, bringing back such profitable vehicles as its top-selling F-150 full-sized pickup, the Transit commercial van and SUVs. The plants that produce those vehicles are located in the U.S. states of Michigan and Kentucky and in Mexico.

To save cash, Ford said it was temporarily cutting top executives’ salaries, among other actions. This came a day after Standard & Poor’s downgraded the Dearborn, Michigan-based company’s debt to “junk” status and warned more downgrades could be necessary.

“The actions we’re taking now are wide-ranging and substantial,” Ford’s chief executive, Jim Hackett, told employees in an email early on Thursday. “We hope they will be enough to give Ford the financial flexibility to ride out the economic and business effects of the coronavirus.”

The pandemic, which has killed more than 21,000 people globally, has forced the shutdown of auto plants around the world as entire cities have gone into lockdown to stem the spread of the virus.

Ford previously drew down credit lines to build its cash position and suspended its dividend. GM also drew down its credit line, but did not suspend the dividend.

The U.S. Senate on Wednesday passed a $2 trillion economic rescue package to help unemployed workers and companies, including the auto industry, hit hard by the outbreak. The measure has been sent to the House of Representatives for a vote on Friday.

President Donald Trump, concerned about the economic repercussions of an extended shutdown, has said he wants America to get back to business by Easter, which is April 12.

GENERATING CASH

To get more cash coming in, Ford said it would restart key plants, while introducing additional safety measures to protect returning workers from the coronavirus. It said it would provide details on the new measures later.

To conserve cash, Ford said its top 300 executives would defer 20% to 50% of salaries for at least five months starting May 1, with the executive chairman deferring his entire salary. Hackett will defer half his salary.

Hackett said Ford’s goal was to avoid layoffs during the crisis, but warned that could change if the impact of the outbreak is more severe than anticipated. Ford is also deferring salary increases more broadly, suspending overtime for salaried employees and freezing hiring in non-critical areas, he said.

However, Ford employees will continue to get healthcare coverage and those exposed to the virus and placed in quarantine will get paid time off, he added.

General Motors Co (N:) and Fiat Chrysler Automobiles NV (FCA) (MI:) (N:) previously said they would shut their North American operations through March 30 and reassess after that.

FCA on Thursday extended its shutdown through April 13, while its parts distribution centers will continue to operate with paid volunteers. Mexico’s status is subject to a separate announcement.

GM on Thursday extended its shutdown indefinitely and said it would evaluate on a week-to-week basis.

To save cash and avoid layoffs, the automaker said salaried employees would have 20% of their pay deferred, executives 25% and senior leaders 30%, starting April 1. GM said the deferred money would be repaid in a lump sum no later than March 15, 2021. Health-care benefits are not affected.

GM said near-term programs like its redesigned full-size SUVs, electric vehicles such as the Cruise Origin, and new Ultium battery “will continue as planned.” But it will adjust timing and milestones of other future programs “as necessary” to conserve cash, it added.

United Auto Workers President Rory Gamble said Thursday the union viewed announcements like Ford’s with concern, and any decision to restart production should be based on data and each state’s position with regards to the coronavirus outbreak.

The UAW has said three union members who worked at FCA plants have died due to the coronavirus.

Michigan Governor Gretchen Whitmer issued an order on Monday barring non-essential businesses from operating until April 13.

Japanese automaker Honda Motor Co Ltd (T:) said on Thursday it would resume work at its U.S. and Canadian plants on April 7.

Japan’s Toyota Motor Corp (T:) said it would extend a shutdown of its North American plants for two weeks, through April 17.

Ford plans to begin production on one shift at its Hermosillo, Mexico, assembly plant, where it builds the Ford Fusion and Lincoln MKZ sedans. It will restart production on April 14 at its Dearborn plant that builds the F-150 and a Kentucky plant that makes the Super Duty version of the pickup as well as the Ford Expedition and Lincoln Navigator SUVs. Other assembly and parts plants will restart then as well.

Ford shares closed down 2.4%, while GM rose 4.8%.





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‘Welcome to the shore, now go home!’ — New Yorkers fleeing to surrounding areas get blasted by locals


Stay at home? Not the Manhattan elite.

With coronavirus bringing New York City to a virtual standstill, those with the means to get out of town are reportedly doing just that. And apparently it’s only making matters worse.

The White House Coronavirus Task Force on Tuesday said that a flare-up of coronavirus infections on Long Island in recent days suggests that New Yorkers on the move have spread the virus, and it urged those who have left the city to self-quarantine for 14 days.

Of course, there’s little doubt that there are many on the move.

For instance, the population of Southampton, an area of several villages in Long Island, has seen its population surge to an estimated 100,000 over the past couple of weeks, from just 60,000.

“I would prefer that if you are coming from New York City, a hot spot, you stay there,” Jay Schneiderman, chairman of the East End Supervisors and Mayors Association, told the New York Times. “I can’t stop you, but we’d love people to heed the advice of the CDC and stay home.”

The same sentiment could be heard from frustrated locals in the Catskills, the Hamptons and southern New Jersey, where the popular “Welcome to the shore — now go home” bumper sticker takes on a more urgent meaning. Basically, don’t bring your problems to us.

Long Beach Township Mayor Joseph Mancini, who said his little town has tripled in size from 15,000 residents to 45,000, packaged it in much more friendly terms.

“We all love the summer people,” he said. “They drive our economy. But when they come down here now, the services here aren’t geared up for them.”

Less-measured messages have echoed across social media in recent days, as well:

One Catskills Facebook page joined the growing chorus.

“The only cases in Greene County were brought here from downstate people so stay down there,” one man wrote in a post cited by the New York Times. “Just because you have a second home up here doesn’t mean you have the right to put us at risk.”

Greene County’s website said it has “NO hospital!” and told prospective travelers that visiting “from any area at this time is inadvisable and is highly discouraged.”

In the tony Hamptons, tensions are rising between the year-rounders and the summer super-rich who are coming out social distancing, and maybe even social climbing, in their seaside estates.

“There’s not a vegetable to be found in this town right now,” one resident told the New York Post. “It’s these elitist people who think they don’t have to follow the rules.” Another said perhaps it’s time to “blow up the bridges” to keep them out.

And they just keep coming. With some pretty wild demands.

Real estate agent Dylan Eckardt said he’s gotten calls from diplomats and CEO types, including one who said he’d pay anything for a nine-bedroom house with a pool and a tennis court.

“I found him a house that’s a little over 15,000 square feet — $150,000 for 50 days,” Eckardt told the Wall Street Journal, adding that the new tenant brought his own cleaning crew. They spent eight hours in zip-up suits basically sterilizing the house.

It’s not just in the New York area, either. Here’s a not-so-friendly message from Florida, which has seen a steady influx of visitors looking to ride this thing out in warmer weather.

Fear of the spreading virus is understandable considering the latest stats. As of Wednesday night, there were nearly 66,000 confirmed cases in the U.S. with 926 deaths, according to Johns Hopkins University. New York state is home to about half of the overall number of cases.





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Revlon goes for layoffs, debt refinancing to shore up its balance sheet


Shares of Revlon Inc. fell more than 2% late Monday after the cosmetics company said it would lay off workers, cut costs, and refinance its debt amid deepening losses for U.S. equities.

Revlon
REV,
-14.76%

struck an $850 million agreement with Jefferies to refinance some of its debt and get new funding to “significantly enhance the company’s capital structure,” it said in a statement.

The company also announced a restructuring program aimed at saving between $200 million and $230 million by the end of 2022.

Related:Estee Lauder downgraded on travel retail exposure to coronavirus

About 60% of the “cost reductions” will come on the back of “headcount reductions occurring in 2020,” Revlon said. Revlon had about 7,300 employees in late 2018, according to a filing.

“The Revlon 2020 restructuring program includes rightsizing the organization and operating with more efficient workflows and processes that the company implemented during the 2018 optimization program,” the company said.

Revlon said it expects to see between $105 million and $115 million in cost reductions this year, and incur about $55 million to $65 million in charges related to severance costs. Restructuring charges in a range between $65 million and $75 million are expected in 2021 and 2022, the company said.

The company said it “continues to work” with Goldman Sachs on “the strategic alternatives process, which remains focused on exploring potential options for our portfolio and regional brands.”

The company also reported preliminary fourth-quarter results, saying sales for the quarter fell to $699 million from $742 million in the year-ago quarter. It swung to a profit of $26 million, or 49 cents a share, versus a loss of $70 million, or $1.33 a share, a year ago.

Analysts polled by FactSet expected a break-even fourth-quarter on sales of $755 million.

Shares of Revlon ended the regular trading day down nearly 15% amid a bloodbath for stocks as a price war among major oil-producing countries triggered a deep plunge for U.S. equities already battered by fears related to the novel coronavirus spread.

The shares have lost 23% in the past 12 months, versus an advance of 0.1% for the S&P 500
SPX,
-7.59%

and compared with a retreat of 6.3% for the Dow Jones Industrial Average
DJIA,
-7.78%

in the same period.



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