Anybody else watch the news? Ford losing billions

[bmxmon]

12.9 billion dollar loss for Ford, crazy. I cant understand how a company can lose that much money and still be operating.

[drudis]

Ford and GM will never have the lion's share of the market, but they wont go under either. Smaller, fewer millions of cars sold, more limited selection (Ford wont make Freestar)...

I have confidence, and am counting on it. drudis@FORD.com

[Mr 5 0]

Originally Posted by drudis:

Ford and GM will never have the lion's share of the market, but they wont go under either. Smaller, fewer millions of cars sold, more limited selection (Ford wont make Freestar).

I agree, Drudis, and I voted that way.

The days of any domestic car company capturing nearly a third of the U.S. new-car market is long gone. Today, if a domestic car company can hold a 20% market share, they are doing pretty well. Actually, domestic auto manufacturers new-car market share has been dropping for some time, so Ford is hardly alone in it's troubles. Ford currently has a 17% market share which is predicted to drop in 2007. That means many millions less income from sales and a proportionate drop in Ford's profits, as expenses continue to rise every year. Toyota currently holds about a 15% new-car market share in the U.S. and that share is expected to rise slightly in 2007. Honda's U.S. new-car market share hovers near 10%. Apparently, any American car-buyer's aversion or hesitancy regarding Japanese cars has now vanished. Excellent build quality, good selection, high value retention and a fair base price, as well as a reputation for getting high gas mileage, will do that. It certainly isn't your father's domestic auto market, any more.

Meanwhile, as reality sets in at the corporate offices, decades of union contracts that were negotiated and signed by Ford execs on the confident (and short-sighted) assumption that 'The Big Three' would always have 95% of the U.S. new-car market - and the resulting profits - have be jettisoned - at a cost of billions to Ford, as well as GM and Chrysler. This will change the scope and 'generosity' of future contracts with the UAW and Ford, as well as those negotiated by GM and the restructured DaimlerChrysler AG.

Oh, salaries may stay fairly high to attract and motivate good workers but the days of a basically low-skilled auto worker making three times what he would have made in another job will be over. Auxiliary benefits (health and other insurance, pensions, etc) will also be cut drastically and if they have a brain, the union bigwigs will look at the company's (anemic) balance sheet, stop whining about executive compensation (which is really a stockholder issue and just a straw-man to justify higher wage/benefit demands from the unions) and take a reasonable deal for their members. I believe that a union strike in the near future could bankrupt Ford, which would be unfortunate for everyone concerned. I trust that won't happen.

Meanwhile, expect the cost of a new V-8 Mustang to go into the $30,000. range - while quality may or may not improve. We'll see. One can hope, anyway.

[Unit 5302]

This is an obvious question. Chrysler is already owned by a foreign company, Daimler. Although the name says Daimler Chrysler, there's no doubt where the ruling body of power lies. Ford is the next company on this block with rumored talks of Toyota purchasing Ford ongoing. Mulally has no great automotive history background with which to hold pride in, and Ford is currently screwed. Toyota has also indicated they are open to purchasing Ford Motor Company.

I don't think most people on this board understand exactly how dire the straights Ford is navigating are right now. They're absolutely on the verge of collapse, hemorrhaging cash from every location. After basically mortgaging everything they can get their hands onto, just to free up enough cash to try and turn the company around, it's a last ditch effort to avoid bankruptcy.

If things don't go exactly how Ford needs them to go over the next couple of years, I expect the Ford name be sold to Toyota, Honda or another major international company in a desperation move to maintain some value in the company.

[Mr 5 0]

Originally Posted by Unit 5302

This is an obvious question. Chrysler is already owned by a foreign company, Daimler. Although the name says Daimler Chrysler, there's no doubt where the ruling body of power lies. Ford is the next company on this block with rumored talks of Toyota purchasing Ford ongoing. Mulally has no great automotive history background with which to hold pride in, and Ford is currently screwed. Toyota has also indicated they are open to purchasing Ford Motor Company.

I don't think most people on this board understand exactly how dire the straights Ford is navigating are right now. They're absolutely on the verge of collapse, hemorrhaging cash from every location. After basically mortgaging everything they can get their hands onto, just to free up enough cash to try and turn the company around, it's a last ditch effort to avoid bankruptcy.

If things don't go exactly how Ford needs them to go over the next couple of years, I expect the Ford name be sold to Toyota, Honda or another major international company in a desperation move to maintain some value in the company.

This rumored 'Toyota buys Ford' scenario could become reality.

For other reader's edification, Toyota is currently #1 in sales in Japan. Here in America, Toyota is #2 in sales, right behind GM - and gaining. GM has announced that it plans to 'trim' vehicle production this year. Toyota plans to expand production. With billions in cash on hand, Toyota could probably afford to absorb Ford, especially if Ford sheds it's hyper-expensive UAW pension obligations, as they are attempting to do with the buyout package the company mortgaged it's soul to pay for.

Ford CEO Alan Mulally and Toyota Chairman Cho had a 'summit meeting' (tellingly, in Japan) back in December. While Ford and Toyota spokesman stressed that it was only to discuss 'cooperation on hybrid vehicle technology', no one paying attention was fooled as to the likely purpose of that extra-high-level meeting. However, the Ford family's controlling interest in the company could be a stumbling block to a future Japanese takeover of Henry's 104-year-old institution. Ford family pride (ego) may not allow them to let go of control without a fight. Even so, Ford's steadily deteriorating financial circumstances may force Ford family members to face -and accept - reality. It isn't 1959 anymore.

Japanese automakers, hungry and willing to take risks, started from scratch in the U.S. and, after spending years as little more than 'niche' auto manufacturers, making underpowered, tiny cars that most Americans then laughed at, learned, adapted, and, with design innovations, clever marketing and a dedication to excellence, even if it reduced profits a bit, have basically eaten domestic auto manufacturers lunch with reliable cars that people really want to buy.

Oh, Ford has certainly had it's moments - like the 1964½ Mustang - but a huge corporate bureaucracy and moribund management apparently could not be overcome. The brilliant Lee Iacocca - who was the major force behind bringing the Mustang to life, as it were, was abruptly fired by Ford Chairman Henry Ford II- because, as Mr. Ford said, "I just didn't like him". This boneheaded act of arrogance occurred in a year (1978) when the Ford company had a 2 billion dollar profit. Such was the arrogance and incompetence of of Ford senior management. No wonder the once-powerful Ford company has fallen on hard times. Sure, the over-generous union pension deals, benefits and high salaries hurt, but they are only a part of Ford's problems, not the true cause of Ford being in the unenviable position it finds itself, today. 'Poor management' may sound like a catch-all term but, in Ford's case, it fits.

For instance: allowing the popular Taurus to just fade away and then, ceasing it's production entirely (translation: they killed it) was a typical bonehead decision by Ford management, no matter what anyone may think of the now-defunct Taurus. The original Ford Taurus made it's debut in 1986 and was hailed by car critics as a true innovation in auto manufacturing. It was FWD, which was fairly unusual in a medium-priced U.S. car 20 years ago. The Taurus also abandoned the boxy body style most cars (including Fords) had being using for many years, going for an 'ovoid' (egg-shaped) look, which most potential buyers found appealing. Ford made improvements in the Taurus almost every year. Well, for awhile, anyway. Believe it or not, for a few years in the early-to-mid '90's, the pedestrian-but-popular Taurus was America's best-selling car.

Then, recognizing this was the kind of car the U.S. car-buyer wanted, Toyota and Honda basically co-opted it with the Camry and Accord and finally eclipsed it in U.S. sales, while Ford watched and then allowed the Taurus to become a rental-car staple. It's re-sale value as well as it's popularity slowly went down the drain while Ford looked the other way and pushed SUV's and pickup trucks for short-term gain. Japanese auto manufacturers also push their SUV's, vans and pick-up trucks, but they don't neglect their staple vehicle: the family sedan. As I see it, the Taurus was a winner out of the gate that Ford basically allowed Japanese auto manufacturers to mimic, improve on and finally, sail past it in sales, gaining customers (and their loyalty) as they found the Japanese cars were not 'cheap', but user-friendly and a good value, too. Sales of Camrys and Accords soared. Ford management yawned.

I think some of us certainly do understand the dire straits Ford is currently attempting to navigate. As a more-or-less disinterested observer (I don't hold any Ford stock) I have to honestly state that I see Ford as being in a corporate 'death spiral'. That being the case, a Ford-Toyota merger, similar to Chrysler-Daimler, may occur soon. That assumes that the Ford heirs and stock-holding relatives are willing to get out of the way and allow it to happen in order to see the Ford name - and their stock's value - survive.

We'll see.

i gotta agree with Mr 5 0 and drudis. either they learn to compete in this world or they will be bought out quickly.

[Mr 5 0]

AUTOMAKER ACKNOWLEDGES MISTAKE IN DROPPING TAURUS

February 7, 2007

By MARK PHELAN

Acknowledging Ford should have kept the Taurus name, Mark Fields, Ford Motor Co.’s president of the Americas, said this morning that the 2008 model of the Five Hundred will be called the Taurus.
Likewise, the Freestyle wagon will be called the Taurus X and the Mercury Montego will get the name Sable, as the Mercury version of the previous Taurus was known.
“We never should have walked away from the equity we built up with the Taurus name,” Fields said.

Ford surveys show the Taurus name is still recognized by 80% of consumers, making it the company’s “third-strongest Ford name behind the F-Series and Mustang,” he said, while only 40% of buyers even know the Five Hundred exists.

Using the right name is important, he said, but having the right vehicle must be the top priority.

“Winning companies are the ones embracing more products their customers want.”

The 2008 models go into production in Chicago after the summer shutdown.


I rest my case.

[bmxmon]

I just heard that on the news. I've always liked the 500, thought it was a sharp looking car. Hopefully sales will improve with the name switch.

[Mr 5 0]

“Winning companies are the ones embracing more products their customers want.” - Mark Fields, Ford V.P.

Stating the obvious is hardly brilliant insight.

Ford is in an absolute death-spiral. Too bad. A 104-year-old U.S. auto manufacturer with a great history - including the Mustang - but mismanaged into extinction. R.I.P.

[bmxmon]

Im wondering if the US govt would let Ford/Gm be bought out by foreign auto manufacturers. I dont know what the exact situation was with the airlines, (I dont think anybody wanted to buy them) but I wonder if the govt would step in, though they did nothing for Chrysler. Just a thought.

[Unit 5302]

Originally Posted by Mr 5 0

“Winning companies are the ones embracing more products their customers want.” - Mark Fields, Ford V.P.

Stating the obvious is hardly brilliant insight.

Ford is in an absolute death-spiral. Too bad. A 104-year-old U.S. auto manufacturer with a great history - including the Mustang - but mismanaged into extinction. R.I.P.

If I'm correct, Mr. Fields has been in his current position for a relatively short period of time, and openly attacked the decision to kill the Taurus shortly after his hire. Unfortunately, "the obvious" is something that has completely escaped Ford's senior management for many years so suddenly hearing it from anybody at Ford is probably a good thing.

In summary, I think his comment was more directed as a "duh, about friggen time" at Ford's executive management and board of directors than a new groundbreaking philosophy at Ford.

[Unit 5302]

Originally Posted by bmxmon

Im wondering if the US govt would let Ford/Gm be bought out by foreign auto manufacturers. I dont know what the exact situation was with the airlines, (I dont think anybody wanted to buy them) but I wonder if the govt would step in, though they did nothing for Chrysler. Just a thought.

The answer to this question is no. They might be willing to find a way to help bail Ford out of a bankruptcy situation if there were no suitors like was Chryslers situation a couple times in the 80s, but they would not step in to block a large Japanese or European auto manufacturer making an outright purchase of or aquiring controlling interest in Ford Motor Company. They might step in and make it difficult if they felt the purchaser was not financially able to absorb Ford's operations which would result tens of thousands of US jobs being on the line. It's also likely that some legislators would make lip service arguments against it to console their constituents filing complaints, but ultimately, there isn't a whole lot the government could or would want to do.

[bmxmon]

Yeah, thats what I thought. Almost too bad, until you realize they put themselves in this position.

[Mr 5 0]

Just for historical context:

back in 1979, the U.S. government (then running under the Carter administration) agreed to gave the financially sick Chrysler Corporation 'loan guarantees' of 1.2 billion dollars. In effect, the U.S. government 'co-signed' Chrysler's loans. If Chrysler defaulted, the government (via our tax money) paid Chrysler's creditors. The officially-named Chrysler Corporation Loan Guarantee Act of 1979 also helped Chrysler 'restructure' it's huge debts by basically paying their creditors about 30¢ on the dollar and laying off tens of thousands of workers. Just about everyone financially connected with the government bailout lost in some way - except Chrysler (and the U.S. taxpayers). Tough luck if you happened to be a Chrysler line worker or had extended credit to the company. You got hosed.

Then-Chrysler Chairman Lee Iacocca, the guy Henry Ford II foolishly fired in 1978 because Mr. Ford 'just didn't like him' was highly instrumental in securing the government bailout. Of course, the U.S. economy was in bad shape then but, against all odds, Chrysler did rebound, mostly due to the introduction of the FWD K-car and the then-innovative and new minivan. The Chrysler Corporation was solvent within 4 years and the government never had to spend any taxpayer money to 'save' Chrysler.

The Chrysler bail-out was a matter of much controversy at the time. I seriously doubt such a deal would ever find acceptance by Washington politicians - or the taxpaying public - today. Besides, judging by recent sales figures, most Americans like foreign cars, especially Japanese cars. The old WWII-era aversion to things 'made in Japan' has died off as the WWII generation died off. It's a different world, today. I suspect that only a minority of Americans would make a big fuss about a popular and highly successful Japanese car company merging with Ford, assuming (as Unit 5302 mentioned) most of the U.S. auto plants - and workers - were retained along with the Ford name. Unionization could be a stumbling block as could Ford family resistance to giving up control of 'their' company, but where there's a will, there's a way - and the jobs that would be lost if Ford simply went out of business would be huge when you count the many suppliers and Ford franchise owners (dealers). All that would make a Toyota/Ford merger look pretty good, considering the consequences of simply watching Ford fold up like a cheap umbrella. Unfortunately, if a prospective Ford/Toyota merger failed, Ford would likely go under, and they don't have a Lee Iacocca - or a minivan - to save them, this time.

I don't know what will actually happen but if Ford does fold or has to merge or drastically downsize, the losses can be traced back to clueless management and Ford fam)ly arrogance that couldn't be 'fixed' this late in the game. The auto business has evolved, like most other big businesses. When that happens, a company has to adapt and change - or die. Ford tried, but floundered around too long with bonehead management decisions like the aforementioned dumping of the Taurus name, now being reclaimed, but probably too late.

I certainly have no desire to see Ford go under but I don't like seeing stupidity rewarded, either, and Ford management has been incredibly stupid over the past dozen years or so. If Ford can't pull out of its current financial death spiral, it will be the fault of senior management that couldn't seem to find a successful way to compete with the Japanese car companies in design, innovation, build quality and value. Just having the Ford nameplate on your latest model doesn't guarantee sales, anymore. Buyers have been disenchanted with some of the Ford cars and some of the problems they have encountered with them. Enter the Japanese. While their cars are not 'bulletproof' as some seem to imagine, they are well thought out, usually economical, well made and tend to hold their value. Just what America wants in a new car. I think it's likely too late for Ford to 'come back' without some major restructuring. I hope they survive but I'm long past worrying about it. Nothing personal, it's just business.

[69fastback]

It is Fords on fault. They chose to go with the big SUVs instead of getting good GPA. I can't blame them though because at the time the big SUVs were making all the money. Then all of the sudden the Jap crap with good mileage started making all the money. I am a life long Ford fan and all the other brands, including the Chevy, can kiss my ass. I am one of the last few people that believe in American iron let alone Ford. I will live and die Ford for the rest of my life. If there is anyone else that has the balls to feel the same way then let me know?

[Mach 1]

I think ford has a good product line, I beliieve the 500, fusion, new mustang, etc... have all gotten good reviews, they are all good looking cars, and I havent compared them value wise to the competition, but I dont see why they cant survive in the long run..

not to mention the many die hard ford truck guys that are extemely brand loyal

[Mr 5 0]

Originally Posted by Mach 1

I think Ford has a good product line, I believe the 500, Fusion, new Mustang, etc... have all gotten good reviews, they are all good looking cars, and I haven't compared them value-wise to the competition, but I don't see why they cant survive in the long run.

Not to mention the many die-hard Ford truck guys that are extremely brand loyal

Unfortunately, truck sales alone can't save Ford or they would have, already. That's why Ford had to borrow 18 million to 'restructure' the company last year and put much of it's real estate up for collateral. Sales are in the dumper. It doesn't look good. That's why Ford/Toyota merger stories are floating around

While the current Ford vehicle line is decent, the new models are mostly unknown quantities to the average new-car buyer and past Ford quality issues still haunt the company, hurting both public acceptance and sales for the new models. Once you buy a new Ford and have it need go back to the dealer for repairs time and again, that sours you on the brand, as it has many people over the years.

Enter, the Japanese auto manufacturers, who have built up a reputation for both innovation and build quality, as well as holding good re-sale value. Check the retail price on a 2003 Ford Taurus or Focus and a similarly equipped, same mileage 2002 Accord, Civic, Camry or Corolla. There's usually a difference of thousands in the retail price -used - and it's always less for the Ford. There is a simple reason for that: high demand for Japanese cars. Fairly low demand for domestic models. In this instance, Ford. Sure, the Mustang holds it's value pretty well, but the Mustang is a very small part of the market and can't 'save' Ford, any more than it's truck sales can.

This is partly a case of 'chickens coming home to roost' or, more accurately, minus the metaphor; actions have consequences.

[1SVT2NV]

its all bs they do this all the time to gain buisness and promote their attempts at regaining the market

[Mr 5 0]

Originally Posted by 1SVT2NV

its all bs they do this all the time to gain buisness and promote their attempts at regaining the market

No, it's quite true. Do some research and find out.

Ford, a 104-year-old American car manufacturer with a worldwide reputation that has to borrow millions to 'restructure' and use it's factory and office real estate as collateral while rumors float around that they're either about to go bankrupt or will be absorbed by a foreign car company is hardly going to help them 'gain business' or regain the market. Who wants to buy a car from a company that could be out of business next year?

Ford's stock price is holding fairly steady (at about $8. per share) but institutional investors are very worried about the Ford stock they now hold. If they begin to sell off, Ford is finished, as the smaller investors will panic and everyone will try to sell, killing the price of the stock, which would be fatal for the company.

If this is a way for Ford to 'gain business', it's sure a strange method of doing so, as their sales are down 20%. Maybe Ford needs a better idea.

[1SVT2NV]

Originally Posted by Mr 5 0

No, it's quite true. Do some research and find out.

Ford, a 104-year-old American car manufacturer with a worldwide reputation that has to borrow millions to 'restructure' and use it's factory and office real estate as collateral while rumors float around that they're either about to go bankrupt or will be absorbed by a foreign car company is hardly going to help them 'gain business' or regain the market. Who wants to buy a car from a company that could be out of business next year?

Ford's stock price is holding fairly steady (at about $8. per share) but institutional investors are very worried about the Ford stock they now hold. If they begin to sell off, Ford is finished, as the smaller investors will panic and everyone will try to sell, killing the price of the stock, which would be fatal for the company.

If this is a way for Ford to 'gain business', it's sure a strange method of doing so, as their sales are down 20%. Maybe Ford needs a better idea.

Its the old theory make them think your weak when your strong. Do you think ford could afford to spend billions developing the ford gt if they were going out of buisness. or even cars like the svt cobra. ford has had the number one selling pickup 30 years running. dont believe everything you hear my friend. Ive worked for ford I know how things are going. Same thing goes for gm. its all hype. It pushes americans into buying domestic to protect our economy