The news comes at a time when Ford, the second largest U.S. auto company, is in deep financial trouble. Ford’s stock has fallen to its lowest level in 10 years, dropping 25 percent just in the first two weeks of October. "The company has barely been making enough money to cover its interest" payments, said an analyst at Egan-Jones Ratings, which recently downgraded Ford to junk-bond status. "Ford is right on the edge of a precipice."

Ford’s financial arm, Ford Motor Credit, is the largest issuer of corporate debt in the nation. It has a long-term debt of some $170 billion. As this debt balloons, banks are increasingly wary of extending the loans--totaling between $22 billion and $32 billion--that Ford is asking for to cover expenses in 2003.

The bosses at Ford are discussing plant closings and layoffs in the 110 plants they own worldwide. The auto giant’s "staggering debt load," New York Times business reporter Gretchen Morgenson wrote, raises "concerns about its ability to finance long-term pension and health-care obligations to workers."

This situation comes after three years of high sales, in which 50 million new cars were sold. For the past year U.S. auto makers have been offering special loan packages and cash-back incentives that have lured millions of people into purchasing new cars. GM began the trend last year with the introduction of the now-familiar "triple zero" campaign--zero down payment, zero interest, and zero payments for three months. Shortly after these loan packages were announced, new car sales shot up to the all-time record of 21.3 million annual rate set in October 2001.

Many of those attracted by these loan offers into buying a new car have discovering that within a year or two its value has plummeted. Wholesale prices on used cars dropped 6.3 percent in August.

For example, in 2000 the price of a new Ford Taurus was $19,440. Two years later the book value is $8,302--42.7 percent of its new value. Buyers, unable to sell their cars for even a fraction of what they paid for them, are often left paying off thousands of dollars in debts on a car they no longer own.

Now, in an effort to reverse the declining sales, the major U.S. auto makers are extending the incentive packages. But as more working people feel the effects of the spreading depression, fewer are buying. "Zero-percent financing and other incentives only worked because the economic backdrop remained essentially favorable." said Paul Ballew, GM’s head of industry sales and analysis.

The changing economic backdrop Ballew is talking about includes the decline in October of U.S. manufacturing as a whole for the second consecutive month. In the same month 49,000 manufacturing jobs were eliminated. Thirty-three steel companies filed for bankruptcy or ceased operations between 2000 and 2002. Over the past year 116 textile plants have closed.  
 
Unemployment reaches 13 percent
These pressures were registered in the official unemployment rate, which rose to 5.7 percent in October. John Crudele of the New York Post noted, "That 5.7 percent unemployment rate--or what the government calls the U-3 rate--only includes people who are actively looking for work. The jobless rate soars to 9 percent when you include anyone who has given up looking for work because they can’t find a job.

"And that figure--called the U-6--doesn’t include people who’ve given up looking for employment for more than a year. Washington disregards them entirely.

"Add up all the various levels of unemployment and you easily go over 10 percent. A better guess would be about 13 percent."

Leading bourgeois commentators are warning that the bosses will be bringing the ax down on thousands more workers in the coming months. The cover feature of the November 4 Business Week, titled "The Painful Truth About Profits," advises bosses to "look for massive consolidation and brutal job cuts ahead."  
 
 
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