Ford seeks insurance should recession worsen: CEO

DETROIT (Reuters) - Ford Motor Co has sufficient liquidity to weather current economic conditions, but has sought government aid for insurance against a worsening of the economy, Chief Executive Alan Mulally said on Tuesday.

"Clearly, we are in a recession and if this gets much worse, and the industry declines, and sales decline, than we are asking for a line of credit, so to speak, that we could tap to make it through this recession and continue the transformation of Ford," Mulally told Reuters in an interview.

Ford went to the market in late 2006 to borrow more than $23 billion, pledging substantially all of its assets, including the familiar blue oval logo.

The automaker seeks access to up to $9 billion in bridge financing from the government as a backstop should the economy worsen, and hopes to complete its restructuring without tapping the line of credit if possible.

Mulally, who spoke to Reuters via telephone while riding in a Ford Escape Hybrid headed toward Washington for Congressional testimony later this week, said the automaker highlighted more details on product development for the upcoming testimony.

He described the detailed plans as "shared sacrifice" that includes compensation cuts for Ford management and workers.

Ford has had discussions with the United Auto Workers to improve its competitiveness in North America, he said.

"A lot of what we can do on productivity is built into the basic contract, that allows us to continue to make productivity improvements through the life of the contract, but we have not decided with the UAW to technically open up the contract itself," Mulally said.

Mulally said the jobs bank, which allows idled workers to receive pay and benefits for up to two years, would be one element of competitiveness.

The jobs bank, management compensation and luxury travel arrangements were all points of criticism for U.S. automakers when automaker CEOs appeared before Congress in November. All three CEOs had flown in corporate jets last month.

"I am in an Escape hybrid right now," Mulally said, declining to say when he had left for the trip.

Ford said on Tuesday that Mulally had agreed to take a $1 annual salary if the company accepts government aid. The automaker also plans to sell its corporate jets.

"This really is a shared sacrifice for us," he said. "We have agreed that our entire team would forgo any merit increases on their base salary, plus we are forgoing any bonuses or incentives. This is pretty dramatic already."

"If we need to access taxpayer's money, I am prepared to work for $1 a year because I believe in the plan," he said.

Mulally said Ford felt it needed to give its "best estimate or forecast" for profitability. Earlier this year, Ford abandoned a goal of returning to profitability in 2009.

The automaker's forecasts were based on an assumption that there will be a slowdown in the U.S. economy in 2009 and a gradual recovery starting in 2010, "generally consistent with a lower and longer recovery," Mulally said.

Ford expects U.S. auto industry light vehicle sales of about 12.5 million units in 2009, rising to 14.5 million in 2010 and 15.5 million in 2011.

"We want to continue this transformation, but if the economy gets worse, and the industry gets worse, we want to be able to access the bridge loans also to keep our transformation going and be part of the economic recovery," Mulally said.

(Reporting by David Bailey; editing by Gunna Dickson)