PREVIEW-Ford seen narrowing loss, focus on cash burn

* WHAT: Ford Q3 results at 7 a.m. EDT Monday

* Analysts' consensus loss $0.12 cont ops EPS ex-items

* Focus on U.S. economy, cash burn, sales outlook

By David Bailey

DETROIT, Oct 30 (Reuters) - Ford Motor Co (F.N) is expected
to post a narrower quarterly loss with support from the U.S.
government "cash for clunkers" program, but the focus will be
on the outlook for the U.S. economy and auto industry sales.

Ford's cash burn rate, and the fate of its labor costs --
with a United Auto Workers union ratification vote on
concessions headed toward failure -- also will be a close
focus for investors.

Uncertainty over the strength of the U.S. economic recovery
has grown in recent weeks, and several of the top U.S. auto
dealership groups have pointed to a much slower recovery in
U.S. auto industry sales next year than Ford has projected.

Analysts on average expect Ford to post a loss of 12 cents
per share from continuing operations and excluding one-time
items in the quarter, compared with a loss of $1.31 per share a
year earlier, according to Thomson Reuters I/B/E/S.

But Ford could produce a positive surprise after gaining
market share and sales from the "clunkers" program and raising
production in North America, said Autoconomy.com analyst Erich
Merkle, who expects Ford to post an annual profit in 2010.

"I think they could have their profitability moment here in
the third quarter, but it will still be a little tricky,"
Merkle said. "Will it be sustainable and how much of it will be
because of cash for clunkers?"

Merkle expects U.S. auto industry sales to be substantially
higher in 2010 than this year, rising to more than 12 million
vehicles from slightly above 10 million in 2009.

Ford, the only large U.S. automaker not to reorganize with
a government-supported bankruptcy this year, has planned on
U.S. auto industry sales of more than 12 million vehicles in
2010, roughly 1 million vehicles above some dealer forecasts.

The ability to avoid the bankruptcies that engulfed General
Motors Co [GM.UL] and Chrysler has given Ford a leg up, but now
may be working against it in a union vote on whether to approve
concessions that would bring its costs in line with rivals.

Ford's U.S. factory workers at several UAW locals have
rejected making further concessions to the automaker and the
overall vote may fail. If the vote fails, Ford's long-term
labor costs would not be in line with rivals.

In February, Ford completed a revised labor agreement with
the UAW that cut costs by about $500 million per year. The
automaker has said it needs additional concessions to keep it
cost-competitive with GM and Chrysler over the long term.

The proposed agreement workers are chafing at includes a
"no-strike" clause on wages and benefits and a reduction in job
classifications for skilled trades workers, as well as some
production commitments and a $1,000 one-time bonus.

CASH BURN KEY

Morningstar analyst David Whiston said the automaker's
touting of increased U.S. market share and improved quality may
be working against it in the UAW vote. He does not believe a
rejection would have an impact on Ford's stock performance.

"Ford has a lot of good things going," Whiston said, adding
that he believes Ford has a good chance to post a profit in
2010, one year ahead of its target.

Ford posted net losses totaling $30 billion from 2006
through 2008 and has said it expects to return to at least
break-even in 2011, which would make a stunning rebound after
the deepest U.S. economic downturn in decades.

Until the U.S. economic recovery takes off, cash will
remain king for Ford, which borrowed more than $23 billion in
late 2006 to finance its turnaround and believes it has enough
money to complete its restructuring.

Ford burned through $4.7 billion of cash in the first half
of the year. Ford has said it expects the second half outflow
to be substantially slower than it was in the first half.

J.P. Morgan believes Ford could turn a third-quarter
profit, with a faster-than-expected return to profitability in
North America also possible.

Ford has been restructuring since 2005, trimming excess
production capacity, hourly and salaried workers and divesting
brands to focus on Ford, Lincoln and Mercury.

Earlier this week, Ford announced that Zhejiang Geely
Holding Group was its preferred bidder to acquire the
automaker's Swedish brand Volvo. Volvo is the last remaining
brand from Ford's former premier auto group.
(Reporting by David Bailey, editing by Matthew Lewis)