Will wonders never cease? The head of a major (well, formerly major) American company has said No to a government hand out! Yes, really. Well, sort of. Alan Mulally, CEO of the Ford Motor company, told reporters at the National Automobile Dealers Association yesterday that “We don’t want to borrow any more money. We have sufficient liquidity to fund our transformation plan, which means our business is in a relatively good shape.”
Could this be the dawning of a new attitude in corporate America? Could it be the start of a trend: away from dependence on government handouts towards–gasp!–private initiative? Perhaps Mr. Mulally took Barack “I won” Obama at his word last Tuesday when the Dear Leader informed his worshippers that we are at the threshold of “new era of responsibility,” yada, yada, yada?
Maybe. Or maybe Ford is just enjoying a sleepy postprandial respite as it digests all the money it borrowed in 2006 and contemplates what it wants to spend the $9 billion worth of credit for which it has applied to Washington when that is approved. Here’s a sentence students of business will want to savor:
“Mulally said Ford was in a better situation than its rivals because it borrowed more than $23 billion in 2006, using most of the company’s assets as security, including its well-known blue oval logo.”
While Ford’s made some really stupid mistakes in marketing its wares (dropping the successful “Taurus” nameplate for “Five Hundred”, missing several boats with the “Windstar” product [they could have beaten Chrysler to market with the drives side rear door back in the 1990s but decided that folks really didn’t need that door]), it has kept its eye on the quality ball in its automobile line (even Consumer Reports thinks so) and still does well with its trucks. It has shed its Jaguar / Rover cash drain and seems to have learned a lot about crashworthiness from Volvo even though it may soon sell that brand. It seems to be spending its limited funds more smartly than GM and has interesting products under development and more that it can bring in from overseas. It alone has a future in the coming decade of reduced vehicle demand worldwide.
Chrysler’s about dead – bringing in Fiats ain’t gonna help.
GM has too many brands, mostly lousy management, and a lousy management structure. They’re betting everything on the Volt, a car that can never recoup its investment, meaning that it will be sucking on the government teat for years to come.
I’m more optimistic than Mike. Ford seems to actually be in good shape. Quality is excellent, the interiors on their new cars are very well made, handling is often very good. They have a constant winner in the Mustang. As for GM, they are paring down their brands (at least, that’s the buzz on GMinsidenews.com). Pontiac is going down to 3 models (G8, Solstice, and Vibe), Buick is already pared down, and GMC…well, they’re just Chevys with better interiors and grills. Those three are getting consolidated into one “channel” or brand with three different nameplates, possibly paring down saturn and adding that to the channel as well. I personally believe GM has the best product, although quality wise they’re a step below Ford, Toyota and Honda. They’re still miles above Nissan, Volkswagen and the rest when it comes to reliability and build quality.
And I wouldn’t be so sure that FIAT won’t help. The guy in charge of FIAT is a pretty smart guy…he took a basically insolvent and useless company and turned it back into a regional competitor. If he sees something valuable in Chrysler it might just limp on into the future like it did back in 1980.
Thank you for bringing some good news.
Buy Ford and boycott the wreckless parasites at GM, Cerberus, Merrill Lynch, AIG, Citi, et. al!
The parasites are going to fail eventually, and even though Congress has been allowing the artificial booms and busts and bailouts since at least 1932 (passage of FDIC deposit guarantees), at least we don’t have to support the parasites with our consumer dollars….
The question is, what beenfit will Ford get for doing this, which is related but not the same question as what penalty will GM pay for accepting taxpayer funds
My wife tells me *every* day how much she loves her 2008 Edge. She doesn’t tell me every day that she loves *me.* What does that tell you about a car we’ve had for almost a year?
The Microsoft Sync hands-free cell phone system/audio management system is genius. It needs to go on every car in Ford’s line, like NOW.
Ford stock is at $1.88. You can buy it direct (no broker) for a minimum of a $1000 buy.
When’s the last time you could buy Ford at less than $2?
I hope Ford benefits from anti-bailout backlash. Ford seems to do better at putting together reasonably desirable cars at a time when their cross town rivals are just starting to deal with cheap plastic dash issues. I could imagine owning a Ford. Ford also has the benefit of most sales flowing through a surviving brand, Ford, with only Mercury and Lincoln to possibly euthanize. Ford somehow seems to have benefited from their Mazda and Volvo ownership stakes, gaining better handling and safety, while not destroying the viability of Mazda and Volvo as spin off brands. In contrast, GM absorbed and pretty much destroyed Saab and Isuzu.
Ford is in great shape they just walked out a tremendous number of talented people to keep costs down, the paperwork drag within the company is at an all time high, it rquires a VP signature for anything more than $5.00. Mr. Mulally doesn’t want the Government loans because of all the strings that are attached like his plant to go home to Seattle where his family lives, his $21 million dollar bonus for losing $12 Billion in one record year. They did stop flying the other 5 or so Company planes and poor Mark Fields has to fly commercial home to Florida where his family lives. So the 2 top Operating officers don’t have any ties to the Metro Detroit Community, so if they fail they will take their millions south and west and live happily ever after, while good Detroiters go on the dole… yep they are in great shape, no not Ford Motor Company, Mulally and Fields.
Hey Billy, are you *trying* to put those union workers out of a job? Because talking down Ford like that isn’t helping.
Wreckless? I’ve seen plenty of GM cars in wrecks.
But if you want to boycott the *reckless* parasites, OK then.
Ford’s powertrains are far behind GM’s, overall. Powertrain’s are very expensive to develop and deploy, and Ford’s are 5-years behind GM at minimum. We’ll see if they survive, but their crap product decisions have been just as crappy as GM’s, and neither deserves any sympathy or special notice.
But is not hypocrisy the tribute that vice pays to virtue?
Jamie Irons
I live in Japan and occasionally see Fords owned by Japanese. Yay?
The bailout loans have a large amount of baggage. Any company that accepts them looks like a poor investment from a customer standpoint. Why buy a vehicle from an automaker that is at risk for failing at any moment, or will cease building your vehicle and make repairs an expensive proposition? Not to mention the large amount of government oversight that will interfere with the restructuring plan as cluless officials try to force the construction of vehicles that wont sell but are poltically correct.
Yes Ford is in hock, but they had the wisdom to take these steps before the crash, and their plan has some chance of returning them to profitability before needing a bailout. Why not take advantage of that? At minimum it is good PR.
Ford didn’t hock the furniture because of their “wisdom”… they did it because they were running out of money… and this was way back in ’06 before the economy crashed. Their management is just as bad or worse than GM’s, and they demonstrated their fundamental weakness when they were forced to seek that loan, long before GM had to go begging..
There is excess capacity in the industry, including in the pickup truck and SUV segments. If GM were to drastically cut its capacity in a Chapter 11 situation or go away in a Chapter 7 liquidation, Ford would look pretty healthy for at least five years and probably more. Its strong position in trucks and SUVs would enable it produce long runs at reasonable margins if it could get GM out of the way.
Of course there would still be the CAFE problem, the UAW problem, and the entry of Toyota into the larger models to deal with in the long run, but the picture for Ford would be a lot brighter if they could get rid of GM.
Ford has a good reputation in Europe for selling high-end compact cars. Europe loves the sportiness and quality of all of the Ford models. They rank the highest against most affordable car companies. Ford’s advantage in other countries is that it can ease on safety standards, which results in lighter cars, hence, better gas mileage. While in America the safety standards weigh them down. It seems idiotic that we can share the road with motorcycles, but if you drive a car, it must be built like a Sherman tank!
As far as forgoing the handout, it was in the best interest for Ford to do so; Ford has marketing plan for the future, customers will gain more confidence, and the company has a good standing world wide that GM does not share.
The pitiful situation is that our economic down turn has yet to finish it’s slide. With job losses and banks unwilling to lend, no mater how great the company, it may still not be able to survive.