You’re Ahead In A Ford All The Way
By Eastan McNeal on May 14, 2009 at 4:45 PM in Auto Industry, Bailouts, Current Affairs, Economy, Ford, General Motors & Chrysler, Steve Rattner, Unions
Ford passed Toyota to become the No. 2 car seller in the U.S. in April of this year.
See the UPDATE at end of story.
*You’re Ahead In A Ford All The Way – Ford Ad slogan 1950s-60s.
Ford, the American carmaker most likely to survive the auto implosion without going bankrupt or taking government aid, deserves credit for making prescient decisions before the meltdown. - The Street
- Cut the number of Ford, Lincoln and Mercury dealerships 14% between 2005 and 2008.
- Jettisoned its Jaguar, Aston Martin and Land Rover brands in 2007.
- In 2008, when the getting was good, disposed of most of its stake in Mazda. GM, on the other hand, finds itself stuck with a litter of hard-to-sell legacy nameplates.
- In March, secured contract concessions from the United Auto Workers, which lowered its labor costs by $500 million per year and helped it shore up cash.
- Ford Credit resisted the temptation to dip into subprime mortgages and other troubled loans that have crippled GMAC, GM’s lending arm.
- Instead of breaking into mortgage lending when credit was easy a few years ago, Ford took advantage of the situation and mortgaged much of its asset base. The move allowed it to stockpile cash. And They Held On To The Cash. The company had $21 billion in cash at the end of the first quarter.
Savings, deal making, product choices, hoarding cash reserves and prudence have allowed Ford to avoid having to beg Uncle Sam for a bailout. But they are also taking steps on their own that may keep them in front.
Embracing the future. On May 6, Ford announced plans to spend $550 million to retool a Wayne, Michigan, sport-utility vehicle factory to make small cars, including an electric version of the Focus model. Ford is not eschewing all financial relationships with the government. They are just wise in how they use existing programs. Low-interest U.S. loans to help build fuel-efficient vehicles may cover as much as $440 million of the cost.
Working with the workers. And, on Tuesday, Ford flexed its financial muscles by raising $1.4 billion through the sale of 300 million shares to help fund its retiree health care trust. – Instead of letting the government give the union a huge chunk and control of the company in lieu of cash payments.
Staying Independent. And that (staying away from Uncle Sam’s clutches) is attractive to customers and partners. Last month you read polls here that suggested that auto buyers were more likely to choose a car from a non-government run company. Well, those pesky polls can sometimes be right on target. Though they will be using stimulus money to help their customers buy into the program, Ford will be delivering electric vehicles to about a dozen utility companies for real-life field testing. Ford is not the only company making electric vehicles, but..
“We’ve been trying to engage with some automobile manufacturer, and let’s face it, a couple have had other things on their mind,” said Don Clevenger, vice president of external affairs for Oncor, a Texas Utility.
True they may have trouble with supplies if the component manufacturers, who also make parts for GM and Chrysler, go out of business. But we can assume someone in Dearborn is thinking about that right now. GM and Chrysler may leave bankruptcy with lower costs and revitalized lineups from their $19.4 billion in U.S. cash infusions and restructuring, but Ford will likely be more nimble without a car czar committee governing market reaction and development modifications.
Ford ran in the red last year and is running in the red today. But at the annual shareholders meeting today the board announces that they are on track to be in the black by 2011. They will also discuss the fate of the Class B stock that gives the Ford family a 40% voice on the board. Directors including Executive Chairman Bill Ford and Edsel Ford II will urge no change there and I personally agree.
UPDATE. The shareholders meeting is over and the Ford family still controls 40% of the vote. Some quotes from the meeting:
“At last year’s meeting, talk was of profitability in 2009. Now, there is talk of profitability in 2011,” said William Thrower, of Katy, Texas, who introduced a proposal seeking limits on executive pay and an elimination of bonuses until Ford reports a profit. “As stockholders, we must insist that all available capital be used for …restructuring.”
My comment: You still own a car company. Be happy.
Ford Executive Chairman Bill Ford Jr. acknowledged the company’s challenges.
“In all my years with the company, I have never seen market conditions as difficult as they are now,” Ford said. “However, I have never been more excited about the prospects for our future.”
Ford’s stock price, now trading at more than $5 per share, has more than tripled since Feb. 20 when it was at $1.58, while GM’s stock hovering around $1.20 per share.
“I’m glad to see the stock price has come up, and I’m glad they did not take Obama dollars,” said Melody Schools, a nurse from Richwood, N.J., who occasionally attends Ford’s annual meeting. “Compared to some of the other companies, they are doing pretty good.”
Agreed.
Disclosure statement: My first car was a 1964 ½ Ford Mustang.
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It does help to have Ford family still involved. I was president of our small family corporation for 2 years, long enough to dig the company out of certain bankruptcy. You care more and can’t have the business dissolve on your watch (I was in the 3rd generation of owners).
Btw, running a family business can be the greatest headache you’ll ever have, especially if you have a family member/owner threatening to sue you at every turn as I had.
Aaron. You have a perspective we can all learn from. I was plagued by a Wall Street gang that inserted too many managers between me and operations. I went independent. And I do think passion and pride can drive a commitment to excellence.
For the sake of the future of the American entrepreneurial spirit I hope Ford and others like them survive and set long lasting reminders for at least another generation.
the original is still the best..go FORD!!!!!!!
Well, I was and am still partial to my ‘55, ‘56, and ‘57 Chevrolet Belaires–love those old two-tone cars we grew up with and drove in high school. But I also remember cruising in a friend’s turquoise and black Victoria.
BYW, was that an earlier version of MO we saw, wearing her pretty housewife frock and getting ready to go out and do her housewife visits?
My favorite car in the world is still a Mustang. It’s just a pretty, powerful car. I don’t know if they still use them, but when I was young the TX Dept. of Public Safety drove souped up ‘Stangs. Fools would try to outrun them, but I never saw anyone get away.
As for govt. “help”, I saw an interview on ABC news tonight from a LI Chrysler-Jeep dealer who just today learned he was being shut down. He has 65 employees who’ll be out of work. The odd comment is this: he said he’s one of the top Chrysler dealers, but is being forced to close so his dealership can be given to some other dealer “down the street”. He can’t understand the logic of shutting him down when he’s so profitable.
This smells really fishy to me.
Great article Eastan. My family loves Fords. We own three Fords and one Mercury. They have been very good cars. My son just bought a 2008 Mustang that is gorgeous.
While we’re reminiscing, my first car was a 2-door, ‘68 Chevelle — palmino yellow body with a black vinyl top and beige vinyl front bucket seats. It couldn’t have cost more than $2,200.
My brother’s family drove a ‘69 Ford station wagon that I know was large enough for a family of 4 to live in.
There was a gas war between 2 stations in our town and gas got down to 18-20 cents a gallon. A pack of cigarettes cost 20-25 cents. The good ole days….
Memory recall: the huge Ford wagon had to be a ‘70-’73 model.
Martha, that’s one snazzy sounding car. I don’t remember red and white, 2-tone interior. One of my classmates drove a white t-bird to high school.
I think I was under the impression that the car floated rather than drove…I was in 7th heaven. I have actually seen the same color combo at car shows. I’m going to look for Fairlane convertibles at the next “Cherries Jubilee” here in Monterey. My then future brother-in-law had a Fairlane hardtop, light green and cream. They are still very snazzy looking cars. I think it cost somewhere around $1800.
After seriously slamming my Dad’s ‘56 Chevey into a roadside mailbox post, learning to drive, my car became a ‘57 Ford Fairlane Convertible; black with a white top, red and white leather upholstery. My Dad didn’t want me behind the wheel of his Impala again. Wish I had that Ford today.
Oh nice. I wish I had your Ford today, too.
Good for Ford, Great post, thank you.
Funny, just yesterday at Lowes, I stopped dead at a car pulling in. I was wondering what it was, it has such a nice retro look. Yep, a Ford Thunderbird.
http://www.lemonfree.com/reviews/images/04-thunderbird-1.jpg
Now, wouldn’t an Electric Ford T Bird be AWESOME?
My OWN first car, was a Ford Comet. Although my Mom had 5 kids she would buy cars for to use and pass on.
When I met my hubby in ‘79, he was driving a Ford Pinto. (YIKES)
Oh, dear. I had one of those too. It gave birth to my first Japanese car, a Honda hatchback.
My next car was…a Yugo, no lie. And we had a friend who thought I was nuts, he was a mechinic, loved his Bikes and his Corvette. Until he borrowed my car one winter night in New York and he freaked how well it hugged the road and handled itself. He then bought 2! One for street racing. And he became quite popular with that car.
Hubby’s next car was…a Fiat x1/9
And no coincidence that the Yugo was being built in a Fiat factory and had the same suspension as a vette and had power like you wouldn’t believe and also had a double barrel Weber carburetor.
After having my car, I became quite familiar with their insides, having to frequently give my own tune ups, oil, etc.
Guys used to drive by and scream out “Gross, a girl grease monkey”.
I think the nostalgia I am seeing here tonight is a reminder of how attached we were to our automobiles. Seeing the maker of the 57 Chevy in the shape it is in is sort of like seeing an old favorite uncle coming down off of a drunk and being then led away by a sly, fiendish friend down a different alley to smoke some crack with cousin Dart. It is sad to see them go that way.
Chevrolet and Dodge are part of the American family. We may never look at them with the same fondness again but perhaps our great great grandkids will have one of each parked between their flying Ford and helium powered Harley.
For now, we have decided that when we get our youngest daughter her first new car it will not be a GM or Chrysler automobile. We simply will not trust a car built by a company run by greedy union bosses and easily distracted politicians.
We will choose the sober uncle, who is not living with his relatives, Ford.
Chrysler’s demise started with their Daimler-Benz merger.
My first car was a “74 Mustang with half the engine in metric and half in american measurements for the parts.
It was a great car. It hugged the road and was heavy. A little weight in the trunk and I could go anywhere in the snow.
I had an 1977 Oldsmobile Cutlass Supreme that I absolutely LOVED a long time ago. Haven’t had good luck with American made cars unfortunately and at the price tag, I now drive a Honda Civic. No offense, but it is an excellent vehicle, there are Hondas made in the US. I looked at all kinds of vehicles before purchasing this. For what I got, an American made counterpart was several thousand more. US manufacturers are in the mess they are in because they simply pay their workers too much and charge too much for their cars.
The Chrysler and GM dealerships being FORCED to close are a subject that needs to be investigated very closly. Who is deciding which ones close? What is the reasoning behind closing very profitable dealerships and leaving others open? Is it re-distribution? Could it be that the minority dealership accross town that will now get to STEAL free of charge the brand that the dealer who worked his whole life and invested all of his money into is the one who will benefit? I cannot prove it, but I will bet my right arm that this is what is going on.
These dealers OWN THEIR DEALERSHIP. They OWN THEIR INVENTORY. They front the money for company rebates, and incentives and then the car company pays them back every few weeks. How many of these dealerships do you suppose will get the incentive money owed to them? So not only do they lose their livelihood, and their employees. The local TV and papers lose the advirtising $$’s. Which in most markets account for about 65% of their income. How often can you listen to the radio, or watch TV without a car commercial. The local down the line suppliers will go out of business.
Why in the hell is Obama being allowed to totally TRASH out country and not one ledgislator, or one attorney has raised a hand to stop him?
It is sickening! Spineless men always want to be in charge of everything, and then they just roll over and give up or make a dirty behind the back deal. I am so sick of the metrosexual male it just makes me want to puke! Where are the real men at? OH I forgot, in Iraq, and Afganistan, and on the border of the country having their lives, and livlihoods, and civil rights being sold out from under them by the stinking cowards that are here.