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Moody's downgrades Ford to junk status

Ford's Chicago Assembly Plant in Hegewisch just across the state line. 

The credit rating Moody's has cut its rating on Ford to junk status.

Moody's expressed concerns about the balance sheet and outlook of the automaker, one of the Calumet Region's major industrial employers.

"The ratings reflect the considerable operating and market challenges facing Ford, and the weak earnings and cash generation likely as the company pursues a lengthy and costly restructuring plan," Moody’s Senior Vice President of Corporate Finance Bruce Clark wrote in the note. "The restructuring is expected to extend for several years with $11 billion in charges, and a cash cost of approximately $7 billion."

Moody's expressed concern about Ford's cash flow as it looks to keep up with innovators in electric and autonomous vehicles.

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"Ford is undertaking this restructuring from a weak position as measures of cash flow and profit margins are below our expectations, and below the performance of investment-grade rated auto peers," Clark wrote. "Moreover, these measures are likely to remain weak through the 2020/2021 period including a lengthy period of negative cash flow from the restructuring programs."

Ford turned a profit of $148 million the second quarter of this year, down from $1.07 billion in the second quarter of 2018. The publicly traded corporation, whose stock was trading for $9.29 a share when markets opened Wednesday, has $23.2 billion in cash.

The Dearborn, Michigan-based automaker employs about 4,500 workers just across the state line at the Chicago Assembly Plant at 12600 S. Torrence Ave. on the far South Side and another 1,250 at the Chicago Stamping Plant at 1000 Lincoln Highway in Chicago Heights.

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Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.