Federal-Mogul bolsters finances
DETROIT - With an extra $550 million credit line in hand to assure nervous creditors and customers, Federal-Mogul Corp. plans to fight mounting asbestos claims.
The new credit lines are expected to provide financial flexibility through 2004 as the supplier weathers a downturn in its original-equipment, aftermarket and heavy-truck markets.
Interim Chairman Steve Miller said Federal-Mogul would fight future asbestos claims because many earlier claimants showed no ill effects.
The company did not file Chapter 11 bankruptcy protection because it would have wiped out shareholder equity, he said. A provision in the bankruptcy act shields reorganized companies from asbestos claims.
The company paid $338 million in claims last year, up from $89 million during 1998. The company's enlarged credit line will not be used to pay claims, said Mike Lynch, company CFO.
Ford warranty covers tires
DETROIT - Ford Motor Co. now includes tires in new-vehicle warranties on Ford, Lincoln and Mercury cars and light trucks sold in North America.
The warranty, which took effect Jan. 1 for 2000 models, provides for replacement of tires that have defects in material or workmanship. The tires had been covered by the tire maker's warranty.
Ford CEO Jac Nasser said offering the tire warranty will play a role in the company's 'early warning system,' allowing Ford to monitor data on tire problems.
Ford came under scrutiny from the public and lawmakers last August during a recall of 6.5 million Firestone tires, most of which were standard on the Ford Explorer sport-utility.
The recalled tires have been linked to 148 traffic deaths and more than 500 injuries in the United States, according to the National Highway Traffic Safety Administration.
Previously, General Motors was the only manufacturer to cover tires under its warranty. GM has covered tires under its warranty since l996.
DCX to end Cherokee
DETROIT - The Chrysler group will end production of the Jeep Cherokee by the middle of the year.
Cherokee production had been slated to continue until June 2002, through the launch of the new Jeep Liberty, due in dealerships this summer.
The company had planned to offer the Cherokee as an entry-level model below the new Liberty.
Slumping Cherokee sales in late 2000 and Chrysler's cost-cutting drive contributed to the about-face, said spokesman Trevor Hale.