Fisker workers on temporary furlough to conserve cash while seeking rescue
Fisker Automotive has placed its workforce on furlough to preserve cash, according to a statement released by the company on Wednesday. The company has had a long series of troubles (amid successes) over the last year, has not built a car since July, has been entertaining buyout bids from other automakers, and saw co-founder Henrik Fisker leave the company last month.
A statement from the company explained the furlough this way: ""This is a common practice, particularly in the automotive industry, to manage costs and operations based on current activity levels and commercial requirements."
The furlough is to last just one week, “In parallel with the process of identifying a strategic partner, Fisker is, of course, continuing to manage its day-to- day operations and has recently instituted temporary furloughs for its U.S. workforce covering the final week of March.”
Starting late in 2012, Fisker Automotive management had begun entertaining buyout or rescue bids, but that process took a turn for the worst after co-founder Henrik Fisker left the company. See: Second Chinese bidder for Fisker Automotive pulls out of buyout talks
According to a Reuters report, Fisker Automotive faced a loan payment in April on Dept. of Energy loans from the ATVM loan program. Fisker was one of the recipients of ATVM loans in 2009. Their loan amount totaled $529 million, and was slated to cover two things: 1) development (but not manufacturing) of the Fisker Karma, 2) development and manufacturing of the Fisker Atlantic (code name: Nina)
Of the $529 million, Fisker has only tapped about $200 million, most of which went into development of the Fisker Karma. The Karma is manufactured outside the U.S. and Fisker was unable to apply the Dept. of Energy loans to support manufacturing of that car. Manufacturing of the Fisker Atlantic was to be supported by Dept. of Energy ATVM loans, and take place at a factory in Delaware that Fisker acquired from General Motors. That part of the loan program was frozen a year ago after Fisker missed several business development milestones.
Fisker has been unable to build more Karma's for several months (in part) because of the financial woes and later bankruptcy of battery supplier A123 Systems. See Fisker's horrible year leading to Henrik Fisker's resignation
Over its corporate lifetime, Fisker Automotive has received over $1 billion of private investment financing, as well as access to the Dept of Energy ATVM loans. However, the inability to manufacture cars meant an inability to sell cars, drying up revenue, leading to a cash crunch.