Is there any doubt that that Ford is heading for Chapter 11? Sure. There are plenty of auto industry eggheads and company officials who continue to believe that FoMoCo has what it takes– or will have what it takes at some point in the near to distant future– to pull out of its current corporate nosedive and return to greatness. OK, profitability. Um, how about market stabilization? Actually, at this point, staying out of Chapter 11 would be something of a victory. Meanwhile, Monday was Dia de los Muertos for The Blue Oval.
The headline number was almost enough to fell an elephant, never mind the bulls of Wall Street: $5.8b disappeared down the rat hole in the third financial quarter. In fact, Wall Street seemed unfazed, despite the announcement that Ford is in the process of lining-up a secured bank line facility. In other words, Ford's lenders will no longer fund on the committed unsecured line. The company will have to pay more money for its money, borrow more money and risk more of its tangible assets to keep the ship afloat. Needless to say, S&P was not impressed.
Ford's problems are a combination of continuing losses in NA and the huge cost of restructuring the business. While the $4b Ford is spending on downsizing will be spread out over time, The Blue Oval also has to fund product development, and there a lot of mouths competing for the corporate tit. As part of their ritual display of corporate entrails, Ford also revealed that they’re going to have to restate their earnings back to November 1947. OK, it’s “only” back to 2001, but this Accounting Odyssey is not good news. Oh, and Ford wants us to know that things are going to get worse before they get worse.
“Both the third quarter and fourth quarter of this year will be tough because of the production cuts on trucks and SUVs," Ford’s Chief Financial Officer (CFO) Don Leclair admitted, quashing the notion that the new Edge/MKX cross-border crossover will toss the floundering automaker a Taurus-like lifeline. "In addition, the first half of next year also will be tough." Coming off a $5.8b loss, what the Hell does “tough” mean? With $23.6b in the bank, the necessity to maintain [at least] a $5b pad just to keep the lights on, and a year-to-date hemorrhage knocking on $7.2b, she kennay take much more Captain!
FoMoCo helmsman Alan Mulally was so aghast/mortified at the results that he stopped making sense. “These business results are clearly unacceptable. Not just because they're unacceptable, [but] because this is not a viable business going forward with this kind of business model." When the tongue-tied CEO of America’s soon-to-be third largest automaker says his company’s financial results are unacceptably unacceptable, you know his employer is, um, struggling. And what’s with the broken business model routine? You’d think Ford’s newly-minted jeffe would’ve progressed beyond the “yup it sucks” part of the program by now.
I know, Big Al’s only been using the executive washroom (and corporate jet) for a few weeks. But FoMoCo’s running out of time. Aside from dumping $2b domestically, their hi-falutin’ Premier Auto Group (Jaguar, Volvo, Land Rover and Aston Martin) drained another $593m. Anyone who thinks that Ford’s should hang onto these foreign entanglements (save Volvo) any longer than say, next Thursday, should not pass Go or collect a thirty-five million dollar paycheck.
Yes sir; it’s time for some of them bold moves we keep hearing about. Aside from deeply worrying questions about Ford’s liquidity– which could force the company-killing “run on the bank” supplier scenario previously posited for GM– Ford’s product mix is about as appetizing as Aunt Jemima’s pancake batter formulated with battery acid. At the same time, Ye Olde Cash Cow is looking sickly. Ford Motor Credit Company is getting seriously squeezed, thanks to margin compression and a simple (if deadly) drop in automotive volume (down 64k units from last year's third quarter).
Although the Detroit News’ article on Ford’s losses dissed The Truth About Cars’ prognostication of a GM Chapter 11, the situation is so bad at Ford the august publication is happy to bandy about the “b” word for The Blue Oval. Why the disparity? Apparently, Bill Vlasic thinks FoMoCo's situation is different from the General’s: “GM, which reports its third-quarter earnings on Wednesday, has attacked its costs by completing a massive buyout of blue-collar workers and beginning a series of plant shutdowns. GM is also rolling out a redesigned line of pickup trucks that compete directly with Ford's older models.” I guess he missed the bit about Ford’s massive buyout of blue-collar workers, its series of plant closures and its soon-to-be-refreshed pickups.
Never mind. The stupid money is now on GM, as their inflated stock price proves. And no wonder. GM’s CEO is the company’s former CFO, a man with a storied history of playing fast and loose with the company’s books, to the point where department heads rolled and results were re-reported. Ford’s upcoming restatement of its earnings shows FoMoCo is not immune to the dubious charms of creative accounting. But the simple truth is that all three domestic automakers are in the same boat, and it’s leaking like crazy. The funny things is, if Ford ends-up beating GM to Chapter 11, it may finally find the edge it’s looking for.
Hmmm
Loosing mind boggeling amounts of money? Constantly in trouble? Either threatening to declare bankruptcy, or actually already there?
Sounds like the airline industry.
This might be a new business model.
“Sounds like the airline industry.”
Then Mulally should feel right at home!
an 80’s Town Car just drove by my window. I kind of want one, Ford should just start making those again.
Perhaps they can at least do some good in bankruptcy, like break union power and maybe even the dealer protection laws in most states.
Eliminating dealers would let them ruthlessly cull brands and cut out a lot of the nonsense in pricing that has made people hate purchasing a car.
Last month’s regional (Texas) ad blitz from Ford openly promoted FMC’s halloween treat, to the tune of:
“0% financing on most models, regardless of credit score.”
If that’s not scary, I don’t know what is.
35million? is that what Mullaly is getting-
Have I read between the lines properly?
Anyone who thinks that Ford’s should hang onto these foreign entanglements (save Volvo) any longer than say, next Thursday, should not pass Go or collect a thirty-five million dollar paycheck.
Please, please tell me this is not accurate
The stupid money is now on GM, as their inflated stock price proves.
Sounds like you are going to loose the GM deathwatch franchise… Well, there is always Ford and DCX so cheer up!
GM is going to be in the RED tomorrow. Buy that bloated stock today RF!
That's Big Al's whack. As for GM's 3rd quarter results, I have no doubt they'll be positive. Anything less, and Wagoner will be roasted on a spit by Kerkorian's minions. Suffice it to say, we'll be looking at the numbers VERY carefully.
I love creative accounting
This has been one of the funniest editorials here so far. People were looking over at my desk as I was laughing out loud.
Best part:
“When the tongue-tied CEO of America’s soon-to-be third largest automaker says his company’s financial results are unacceptably unacceptable, you know his employer is, um, struggling. And what’s with the broken business model routine? You’d think Ford’s newly-minted jeffe would’ve progressed beyond the “yup it sucks†part of the program by now.”
Thanks Robert.
5.8 Billion dollars lost in a single quarter!?! And they are restating earnings back to 2001??? They only have 23.6 Billion in the bank, which could go into thin air once they restate earnings. . .
Even if they still have 23.6 Billion dollars, at this rate they only have 3 quarters more of cash burn. Bring on chapter 11, the house of Ford deserves it!
All,
Well, if it IS good news tomorrow for GM than I have a feeling the book-cooking conspiracy accusations will fly. That walks a fine line between the actual truth and manipulating the facts to reinforce your own agenda. Either way the only way anyone actually know is to be the accountant for the company or a CEO.
As long as I can get one more Grand Marquis – wishfull for a restyled 2009 with the new 3 valve 4.6 and a 6 speed tranny, I’ll be happy. I hope Ford can last until 2009 – I know my current Grand Marquis will.
I’ve still got my measely 100 shares of Ford stock at $7.50 that I’m holding – bought GM at $18 last December, and it’s worked out well. It makes good use of what would be beer money otherwise.
On the derivatives restatement, a lot of accounting requirements that have arisen from Enron etc. are finally hitting corporations’ books, so most large corporations are having similar issues – read the footnotes of your favorite Fortune 500 company. The real scare will be when Ford/GM will have to start carrying unfunded pension estimates on their balance sheets starting next year. Ditto for every other American corporation.
Take heart because Honda and Toyota employees don’t have pensions for U.S. workers – soon it will only be government employees who have pensions in the United States.
How bad is it? So bad, that parts supplier Collins & Aikman, which is already in Chapter 11 decided to play hardball with Ford:
New York Times, October 21, 2006, Market Place, When Ford Pushed, a Supplier Pushed Back, By Nick Bunkley:
DETROIT, Oct. 19 — For years, auto parts makers have faced relentless pressure from car companies to cut costs. And they have usually given in, rather than risk losing their biggest customers. Then last week, in a rare showdown, one supplier showed it was willing to push back, and forced Ford Motor Company to stop building its most popular cars for several hours by halting parts deliveries to a plant in Mexico. … The move led to an interim agreement in which Ford will pay more for the parts it receives.
… said Kim Korth, president of IRN, an automotive consulting firm in Grand Rapids, Mich. “For Collins & Aikman, as much as it may hurt them long-term in terms of getting left out of future bids, that’s a heck of a lot better than continuing to ship money out the door with every part that they sell to Ford.” …
“We’ve been very proactive to try to change the nature of the relationship,” said a Ford spokesman, Paul Wood, who said Ford was “very disappointed” that Collins & Aikman stopped deliveries on Oct. 13 in Hermosillo, Mexico. The factory missed assembling about 300 Ford Fusion, Mercury Milan and Lincoln Zephyr sedans, …
Hyperbole, thy name is TTAC. In case you didn't notice, Ford's stock only fell less than 2% yesterday, and surprise! it's rebounded back today. Maybe the collective financial wisdom of the market just doesn't understand the details of the upcoming financial restatement. Or maybe you're wrong. You be the judge. Same could be said for the overall loss this quarter . . . operating or 'special'. No massive run on the stock that I could see. Net drop in liquidity was also a big zero. Things ain't great, but they ain't as bad as you'd like, either.
Please don’t misunderstand me. I don’t “like” the fact that Ford is CTD. Most of the anger in these editorials springs from my disgust at the main players for allowing themselves to get into this entirely avoidable mess. Well, that and what my anger management counsellor calls “personal issues.”
“Perhaps they can at least do some good in bankruptcy, like break union power and maybe even the dealer protection laws in most states.”
I’m willing to bet any benefits of the bankruptcy will be wiped by shaken consumer confidence. Nobody wants to believe FoMoCo will chapter 11, that’s why their wares still sell. Once they file, (and Chap11 is the gates to Chap7 Hell), nobody will buy a car from a bankrupt company.
Cast doubts on warranty work and spare parts supply and watch everyone run the other way.
Consumers are fickle enough. Scare them and they may never come back.
Last month’s regional (Texas) ad blitz from Ford openly promoted FMC’s halloween treat, to the tune of:
“0% financing on most models, regardless of credit score.â€
If that’s not scary, I don’t know what is.
Wow. Didn’t they get the memo from Mitsubishi Motors about giving away loans to anybody with a pulse?
How would a Ford bankruptcy affect the profitable Mazda and Volvo brands?
I just spent a week with a 2007 Ford Explorer “Ironman” edition – painted a light orange and black that made suitable for Halloween. Powered by a 4.6 liter V8 with three valve cylinder head, it was competent; and seemed almost as well screwed together as the 2007 Toyota FJ Cruiser I had, just the week before.
But the estimated mileage on the Explorer was 14 in the city and 20 on the highway. Observed mileage seemed to match that. Even if gas prices stay where they are, until the end of February – many people think the lower gas and diesel prices are a phenom related to next month’s election but who knows? – consumers, in general, aren’t going to accept such figures.
Ford is lucky to have the Escape hybrid and its cousin, the Mariner hybrid. Former President Bill Clinton just bought on the latter, for himself and his Secret Service contingent. It remains to be seen if that will help or hurt Ford. (Some Republicans in the heartland might not feel like shopping Mercury anymore.)
"akatsuki: October 24th, 2006 at 11:31 am Perhaps they can at least do some good in bankruptcy, like break union power " the reason that ford is in trouble is becasue they are not selling enough product, not because of the unions. The last time i looked, toyotas do not cost any less cause they arent union… blaming workers is an old trick, hoping to deflect blame from the outrageoulsy overpaid upper management. If ford folds, its middle and lower class people whe pay for it with lost jobs, cities and towns will become ghost towns, we all take a bad hit, while a few overpaid ******** buy themselves islands and retire there, without a worry.
I wonder what will happen to Mazda and Volvo if Fords gets bad enough to file Chapter 7. These two would make a great corporation on its own, I’d say. Maybe it’s time to splinter the company into “good” divisions and “bad” divisions, and then feed the bad part to the wolves. Together with corporate overhead, unions, and lame brands. Sure, you could try to salvage the beast, but what the hell for?
Let’s have the intelligence, let’s have the decency… to sign the death certificate, collect the insurance, and invest in something with a future.
I’d say, Mazda, Volvo, and Ford’s truck division qualify. Everything else can die, even if it has some good products – who cares. We’ll all miss Mustang, but I’d rather miss that early on than miss Mazda and Volvo later. Plus, a legendary car gets much better when it’s no longer made, right?
Most of the anger in these editorials springs from my disgust at the main players for allowing themselves to get into this entirely avoidable mess.
Exactly. I wish everyone understood why we criticize, its all about holding Corporate-level players accountable for their actions…or at least making everyone aware of them.
Last time I checked, most people want to make CEOs accountable for a company’s downward spiral.
I wouldn,t write Ford off just yet.If the Ford family leaves Mr Mulally alone,he might pull it off.My boss, the much maligned
Rick W.has got the General rockin and rollin Impalas,G6s,Solctice, A new truck.Stock price 36$ a share and making a profit take note FO.MO. CO it can be done!
Re: Stock Price: 1. F remains part of the S&P 500, and thus is a required purchase/hold by the myriad of index funds, a huge part of the market. 2. No sells will be coming from WS firms as long as the investment bankers on the other side of the “Chinese Wall” smell opportunities. Buffet isn’t worth a quadrillion dollars because he followed the crowds…and I really doubt if Warren is buying F these days.
I hope the Edge does well, but if the 500 and Fusion do not sell in mid-80s Taurus numbers I still can’t figure out how they get themselves back off of the precipice.
Facinating.
An average american makes about 2 million in his lifetime. So, a 5 billion dollar loss is 2500 lives wasted. Get this, it took more lives to get Ford through one (!!!) financial quarter than it took US Army to capture Saddam. About 5 times more, to be exact.
But then, US government does not plan to fight their war till their last soldier is dead.
Of course, some will claim that this ain’t that bad – the money gets injected back into economy anyway. Well, two people can make sand cakes and sell them to each other for millions, what a robust economy. Looks good on paper, too. Bottom line, if a company doesn’t make profit, it’s wasting workers’ lives by having them make “sand cakes”.
I seriously believe that GM and Ford (and Chrysler) need to go through backruptcy to be a better company. The UAW is a dead weight crippling the “jobs banks” and high level benefits for blue collar workers. Not to mention the stupidity and ignorance the management of all 3 (GM, Ford & UAW) have sealed their fate in pursuit of short term profits. GM/Ford management just can’t get the job done. They are losing a war that they should never had.
GM/Ford/Chrysler need to dump the UAW (UAW was a good concept in the beginning when GM/Ford/Chrysler had all the bargaining power) completely and move over to a normal and surviveable model with shared benefits and employee based retirement packages. UAW is now a greedy bloated mess that is not a staff infection with GM/Ford management that is so tainted they need to go to.
In all seriously both companies do turn out some good product (Ford makes some decent cars – though most are Mazdas) and GM has some of the best trucks. The tainted management just poisons their lackluster brands with the badge engineering.
CEO Trick #1:
– lump years worth of hidden charges into one hideously bad quarter, and take some big write-downs for future expenses while you’re at it.
– after bad results are announced, receive stock options at ridiculously depressed price.
– announce your bold plan to fix the hideous mess you just uncovered (caused by your predecessors, of course).
– execute plan, which may or may not actually improve earnings.
– announce better results and take credit for them.
– your options are now worth real money!
I’ve seen it over and over again. This is no different.
Dear Ford,
Let me run your company. I can do just as good a job as your current board of monkeys and to show some good will. i will take only 1/4 of what you are paying Mulally. get back to me if your interested.
thanks
scott
Let’s all remember, that Ford only owns a portion of Mazda. Thus even if Ford goes chapter 7 and disappears into history alongside Packard, Nash, Studebaker, Hudson, Borgward, Adler and dozens of others – Mazda should survive.
Volvo? I’m GUESSING that the Swedes won’t let it die, since most of the car manufacturing still is in Sweden and they would not want to have a huge influx of people on the unemployment suddenly, plus “national pride” and all. Volvo still have an independent sales operation worldwide, so I’d GUESS that Volvo truck (long separated from Volvo cars) and the socialistic Swedish government would step-in and buy up the assets from the bankruptcy court. Just a guess.
Mazda could do worse than to buy up Volvo in case the worst does happen with Ford.
I’d only give Ford a 30% chance of survival, GM maybe 50%. Not good odds.
1984, Al-Pharazon, mikey and crew…..quarter to quarter performance is not a measure of a companies well being. Just because GM may post positive results in the 3rd quarter does not mean squat. If they are still losing market share and/or sales are stagnant, then their ‘earnings’ came from accounting trickery (restructuring of liabilities, etc.).
If any of you do any sort of financial calculations, you would understand how money can be made or lost ‘on paper’. Change in an interest rate, change in the cost of capital, health care/pension fund liabilities, etc. can make, or lose, a company money even if their sales are stagnant.
For instance, one way GM made money on paper was by reducing their annualy warranty liability.
RF and crew will not scream that the books are cooked, but you three (and others) need to read with an open mind and truly UNDERSTAND what is going on.
KTM! How are you! GM Market share is up 2% Cutting overhead = Money = Bad… Um OK?
Derivatives
Derivatives
Derivatives
Ford must restate 5 years of earnings because of their derivatives bomb. No financial numbers have been release, but you just know they have to be ugly.
Boom!
It never ceases to amaze me that a majority of posters are quick to bash the U.A.W. the minute any negative press is released.I have a feeling some are irate at the wage they make,or perhaps the benifits & pensions.
Maybe some people need to relize that the standard of living for themselves could have actually have risen due to unions eventhough they where not a member.See an example by looking at other “blue collar manufactures” that would prefer non-union workforces.
Or maybe someone who has the ability to check into this site while at work ( not a factory worker I bet ) and is pissed that some lowly,car building cretine actually makes a higher yearly wage than themselves……For shame Forshame
Bad buisness will in turn yeild concessions from unions.The days of ignoring economic data-especially from the Corp. you work for is over. Need an example— G.M. & VEBA.And thats only the beginning as far as contractual givebacks.
To wish death to any union is usually uttered from the mouth of someone who feels they deserve better from their employeer but would find that the company.in good times and bad, would have no problem axing them.
Even though GM supposedly “closed” that plant in OKC, the parking lot still has lots of cars in it Monday through Friday.. I guess all those people still have to show up for work to get paid. If GM still owns that plant, then they could reopen it at any time. Build some Camaro’s in there instead of waiting till 2009 to build them? Take a poll to see which of their prototype vehicles is the crowd favorite and build those? Bring back some car from the past for some true retro considering all the design/engineering is all done for it? Any car from the past with modern fuel injection(for emissions), shoulder belts, and air bags if required..
Ford could bring back 1966 Mustangs… I wonder if they’d sell? And how much would they cost?
In the past twenty years, has there been any car or truck that everyone just had to have and they sold really well?
For Ford:
What sells and what doesn’t? Take your worst selling vehicles and cease their production immediately. What are your best selling vehicles? How can you make them even better and more desirable? A buy one get one free deal? Sell them for a dime a dozen?
You want to sell some hydrogen powered internal combustion vehicles? I think every major city has a place where hydrogen in both gas and liquid is sold at:
http://www.airgas.com/
http://www.airliquide.com/
Take existing vehicles, put the hydrogen fuel system on them and install some 10,000 psi tanks and then you are set:
http://www.lincolncomposites.com/products.html
http://www.scicomposites.com/alternative_fuel_cylinders.html
http://www.dynetek.com/hydrogen.php
http://www.qtww.com/products/haft/hydrostorage.php
But no, they will wait for Toyota or Honda to go first(after the 2.5 aren’t around any longer..).
Mr. Farago,
I assume you’ve been asked this question before, but what happens if GM and/or Ford don’t file for Chapter 11?
I mean, I generally agree with your writings on GM for the past year or so, but really, there’s a pretty good chance that in the year 2010 we’ll look back and see that neither company pulled the plug.
How long does the Death Watch go on before you thow in the towel?
Mike, it’s a fast-changing world, and life is getting harder. You have to be on top all the time. Think, if Ford could fire half of their employees, who would they fire first? Yep, the bad ones. And if you’re good and you got fired, then it’s either a) you’re not good enough, or b) you’re wanted somewhere else where they can appreciate your qualities. Labor market is a supply and demand thing. And the union tries to fix the demand curve (or point, actually). Doesn’t work anymore. This is a global market now, if they can’t make cars cheaply here, they’ll make them in China, and the union dreamland will go down the drain together with american auto industry.
By all means, if someone thinks they can do a better job than me, for less money, let them try. I know my job is not going anywhere, and if it is, it’s my fault and noone else’s. Let the best man win.
Why do we keep hearing this absurd idea that for GM and Ford to survive they have to declare bankruptcy? This is even being promoted by people who claim to be all knowing and see the “truth” about the North American auto producers. The simple truth is that if GM or Ford were to declare bankruptcy they would become extinct.
There have been many discussions about the ramifications on consumer confidence. As we know, there wouldn’t be any confidence and sales would plummet. GM already observed sales declines when it was prevalent in the media that the company might have to file for bankruptcy. They could not survive the restructuring period or the aftermath with such depressed sales.
Secondly, when the UAW goes on strike who will keep the factories running. You could probably replace 90% of the workers fairly easily and train people of the street within a week. They would not be as good as that operator who is now on the picket line but they could get the job done to the minimum stadard. On the other hand, you could not easily replace the other 10% of jobs with replacement workers. This includes hourly group leaders and skilled trades employees. In any automotive plant today there is a large amount of automation that requires constant attention. Management would be too few to keep such a large network running. Sure they are skilled trades people they could hire off the street but they would take months to train and become familiar with the equipment. What do think would happen to quality if they suddenly had a new work force? That’s right, it would probably be worse than GM quality levels in the 80’s. They could not afford to ship that kind of product and would burn through whatever cash they had left.
These are just a few reasons why this strategy would fail. The bottom line is that bankruptcy is NOT an option!
On the other hand, you could not easily replace the other 10% of jobs with replacement workers.
Gotta disagree here Event,most facilities contain on average 45% skilled trades,at least at G.M.Appretices in training take at minimum 3 years to move-on to journeyman status.
I do agree a strike would cripple production and quality even with replacement workers,but thinking a week is sufficient time to train production workers is simply wrong.
Onto Alex—I”ve read a few of you’re posts in the past and find them quite logical.With what you stated above,I’m in total agreeance.Be it white-collar or blue-collar,I think we all have seen every sector of employment outsourced save the medical field.Even customer support/ service.
I do strongly believe there will be a presence of unions in the future regardless of globalization.Sometimes things being exported out of one country into another are more than durable goods.Would’nt be the first time a social or economic idea spread this way.
The Fusion and Five Hundred aren’t going to sell in mid-1980s Taurus numbers. The Fusion and Milan are, in my opinion, about as good as the outgoing Toyota Camry and current Accord (I own a 2004 Accord and spent plenty of time behind the wheel in the Milan). That’s not going to be racking up the sales.
Like the futility of arguing with Dick Cheney about national security, you can’t beat Honda and Toyota on their own turf. Although they won’t tell you that your comments have just weakened the life of every American, they do own the C/D segment. It doesn’t matter what front wheel drive, sharply styled sedan Ford builds, current Camraccord buyers won’t take it seriously.
If GM and Ford are going to sell a truly competitive car, it’s time for drastic styling changes. Be bold doesn’t mean grasfting a razor onto the front of your sedan. Take a look at the 1986 Ford Taurus and the 1987 Toyota Camry and you’ll see what a style asskicking it was.
http://www.ajovalo.net/Historia/images/88Camry1.jpg
http://gfx.dagbladet.no/magasinet/2003/06/16/ford1986.jpg
“Bold Moves” or an “American Revolution” need to be what they say they are if they want to actually ramp up sales without bullshit accounting and 0%. Maybe that means RWD across the line, with a full range of engines from fuel efficient weenie-mobiles to 8 cylinder beasts. Maybe this means going the other direction and selling every single car standard with a powertrain that gets 60mpg highway. No matter what, the styling needs to be the difference between Janeane Garofalo and Charlize Theron. I don’t know about you, but I only want one of those women in the back seat of an 86 Taurus.
I leased a Windstar for my company’s vehicle (hey, I don’t drive the thing) and it is due next week. The next company minivan will probably be a Kia Sedona, but I stopped into Ford to see if I could get a deal on a Freestar.
There were no Freestars. They cannot be had in a 30-mile radius. But Ford is sending me promotional literature on the 2007 Freestar even though the plant is closing (great waste of paper). I know most of you are applauding the death of the Freestar BUT…
There were no Freestyles.
There were no Edges.
BUT, the dealer had two Ford GTs on the showroom floor! It gonna take a lot of Fusions and Mustangs to pull Ford just through the month of NOVEMBER for chrissake!
4 crucial differences between GM and Ford.
1. GM actually has viable, profitable international operations.
It now sells more cars otside the US than stateside.
2. Revenue was actually up last quarter on less volume. While I am no financial genius it does seem to lend credence to their claim that they are cutting back on dealer incentives and pulling away from low margin fleet sales. Ford meanwhile got last month’s sales bump from dumping 27,000 tauruses in fleets.
3. GM still has a stable of strong brands. With the possible exception of Pontiac, none of it’s brands is beyond redemption. Saturn for my money has the best upside potential of any brand.
4. Market share has actually held up this year better than anyone could have predicted.
It ‘s never going to have Toyota type margins but it ‘s not going anywhere either. I d’ont think Ford is ever going to be the same again. It ‘s probably going to survive in a drastically altered form as maybe the #4 car company in america. Toyota and honda are about to become #2 and 3
BTW wasn’t this the year GM was supposed to roll over and die.
1984, I am fine. Fortunately for you, I can remain objective. If GM’s market share is up 2%, fantastic, I am quite happy to hear that. If their earnings are a direct effect of increased sales, kudos!
I merely wanted people in the ‘other’ camp to think beyond what the CFO states for the company’s financial performance. Just because a company makes a ‘profit’ for one quarter does not mean that it is on the road to recovery. It’s a short term gain.
Hyperbole, thy name is TTAC. In case you didn’t notice, Ford’s stock only fell less than 2% yesterday, and surprise! it’s rebounded back today. Maybe the collective financial wisdom of the market just doesn’t understand the details of the upcoming financial restatement. Or maybe you’re wrong. You be the judge.
I think most holders of Ford stock now are in it for the long run; they’ve accepted the company will either go through Chap. 11 or eventually pull through, at which point they could realize a huge profit. It’s not like the company didn’t expect or even announce they’d lose a whackload of money – and no one has said it’s over.
The other thing is that you are looking at a company with 23B in the bank but when you add up the value of all shares you only get 15-16B. For Ford to go any lower you’d have to believe they are “dead man walking”. As much as I believe Ford will/should go into Ch11, it’s probably not going to happen tomorrow, and there’s a lot of people clinging to the hope things will be OK eventually.
doubleE:
1. Ford’s international operations were all profitable as recently as 3 months ago, and historically have been much stronger than GM’s.
2. No argument there, although we’ll see if it’s a long term trend or a blip.
3. Buick, GMC, Saab aren’t any better off than Pontiac in the grand scheme of things. Have you read Doug Flint’s recent editorial on Cadillac? Talk about a comeback that’s running out of steam!
4. Again no argument, but remains to be seen if the trend continues. Market share was also up at the peak of the SUV era, it stay like that permanently.
Being the market leader in the world’s fastest growing market is nothing to be sneezed at. Gm ‘s market potential and brand strength in china are huge. Ford is like #10 in china.
GMC is actually GM ‘s most profitable brand.I guess there is something to be said for only selling trucks.
If Buick, cadillac and saab build good cars the buyers will come. The market is past caring about Lincoln and mecury at this point.
Something else i forgot to add, compared to ford, gm’s product pipeline is bursting.
As Americans, we really (and I say this in all sincerety)…we really owe alot to immigrants. Without fresh ideas and the deeply engrained ideals of competition, new horizons, the ability to lift oneself up off the floor and make the “American Dream” a reality…
…without all that which the immigrant brings to the US, we as a nation would rank right up there with Mozambique.
Honestly, what DOES “American” mean…in it’s “traditional” sense?
F-150’s, Toby Keith, NASCAR, Budweiser, Miller beer, Domino’s Pizza, K-Mart, Wal-Mart, Jiffy Lube, McDonnald’s with their “Happy Meals” and McNuggets, Hamburger Helper, track housing, the Tasty Freeze (of some famous Country
Western song fame), Tricia Yearwood singing about how She’s In Love With the Boy (…Her daddy says, “he ain’t worth a lick
When it came to brains, he got the short end of the stick”
But Katie’s young and man she just don’t care
She’d follow Tommy anywhere)….
…and yes, oh yes..I almost forgot, HAWGS and TATOOS!!!
Are you cathing my drift? When illiterate lyrics rings home of “Americana”…then GOD YES,
“Americana”, home of the Motel 6, represents the basest of the base! The Lowest Common Denominator!
So go ahead and run this company right into the ground…you’re in GOOD COMPANY!
Thank GOD America still attracts top talend from all around the world. Thank GOD American still attracts the foreign students who attend grad school, with that lust for all that IS GOOD in America. Thank GOD *SOMEONE* out there still BURNS WITH DESIRE for a better future for themselves and their families.
Good riddance, Ford. You have LITERALLY been HANDED a bright future (during your SUV / Pickup cash-cow heydays), and completely PISSED IT AWAY.
Pathetic, and yet, I (along with countless others out there) have watched this all unfold before my very eyes.
Ford tries to compete with Honda/Toyota on a 1on1 basis. These all around, one size tries to fit all, front wheel drive, 150 hp, not low cost, 20 something mile per gallon bore cars. And they can’t win.
They should offer 3 cars and beat the competition in every way. Each car wins in one way. What do you want? Great mileage? High performance? Low cost? Take your pick. They could even offer a fourth model that tries to do all three of those things well(kinda like they try and do now..).
One thing they could do is offer true “base models”. It’s so annoying to read the information paper on the window of a new car and that huge “standard equipment” list! I don’t want any of that stuff!!! Every single item on that list should be an option. I should be able to hack and chop $1,000’s of dollars off the price of the car by not opting to have all those items.
We could have cars which cost less, weigh less, and as a result, better 0-60 times and also, better 60-0 times. How?
Let’s use the Mustang for this example, but this applies to all cars and trucks of all brands.
How heavy are those stock cast aluminum wheels? Not as light as forged aluminum ones would be or even these newer, high tech, lighter weight, fancy “vacuum molded” cast aluminum wheels are.
Is the OEM really getting the best deal on the tires they are sticking on the cars even though they are buying them in a bulk volume purchase? Those can’t be low cost tires I see on these ’05 up Mustangs… (how “good” do the first set of tires really need to be considering I’m just going to paint the streets with them and turn them into dust and smoke and then buy some better tires anyways.. ;) )
Does the dash on the car really need to be the size of a picnic table? These dashes are monstrosities anymore. Why can’t it just be a little panel? How much does that huge dash that I could fit inside of cost anyways?
Do the seats really need to weigh ~75 lbs each? How about some lightweight “racing” seats like the ones I see in the magazines?
How about a basic interior and also a more luxury interior?
I don’t think the auto manufacturers read the reviews of their vehicles in magazines and on the net. The complaints are always the same and they never, ever rectify anything. They say your interiors suck. That should be your base interior. Make something that blows the world away and is the best it has ever seen. Make two. One costs ~$1000 and one cost more. The base interior sucks? Well that’s why we make two more that don’t! And if you didn’t know, we can’t afford to make these two other ones at the same price as the base!
The car handles poorly? The car handles rough? 2 suspensions to satisfy everyone’s needs! Airbags for the luxury ride and a suspension that could win races for the other.
Road noise? As an option, sound deadening the likes of which the world has never seen. Other wise, standard sound deadening(and no sound deadening for the gear heads to get the price/weight down).
Those are what the problems are. They try and make a single model be all things to all people when that just can’t be.
How much would it cost to make a batch of cars configured like this and a batch like that?
What about stop making front wheel drives? American cars could all be rear wheel drive. Offer solid axle and independent rear on all models. What’s one good thing about front wheel drive? I don’t like working on them. I don’t like torque steer driving me into the curb. I don’t like snapping axles/cv joints. I really hate how there is about 1/2″ of room between the passenger side strut tower and the front of the engine accessories. Ever change timing belts, water pumps, and clutches on front wheel drive? Not fun! Now if the engine compartment on fwd was spacious and they didn’t try and pack every last inch full… axles/cv joints though :(
I think Boeing’s profit margin used to be(maybe still is) a million or two or more per plane… a little bit of mark up there.
Let’s see here… B-52’s and F-15’s check. A hand full of B1’s and B2’s that were intended to replace the B-52’s but the price…. I think the B-52 is still scheduled for usage up to 2030 or 2040 now? I don’t know if Boeing Boy is going to be able to save the day or not considering the disservice they do to the federal government over the cost of the planes. He’s in it for the money. He wants another 35 million next year and every year after that. He didn’t care about saving the government any money or helping to have the best air force in the world. He doesn’t care about us having the best cars at the best price in the world. He just wants his 35 million. He ain’t no car guy. His heart’s not in it. He’s probably never even worked on a car before! Make that ahole drive a Ford Focus to work everyday. A yellow one.
RTZ,
Where to begin? Your delusional rant is all over the place, and often contradictory, but never mind.
I will correct you in one area: “Boeing Boy” as you call Alan Mulally, never ran Boeing’s military division… he ran the Commercial Airplanes division, selling not to the gov’t but to the airlines.
GM and Ford are locked into death spirals with the majority of their existing car platforms. Retooling takes time, and an enormous amount of resources, and while they are doing that other manufacturers are not standing still.
Already, GM and Ford (and to some extent DCX) are several product cycles behind their competitors with their compact and medium sized cars; and they are all locked into large cars that people do not want in sufficient numbers to justify their production.
It’s a vicious spiral. And the fact that we’re seeing offers of “0% financing regardless of credit history” says it all.
Whether the solution is bankruptcy is really moot. There may be no other recourse, it’s not as if they can choose to declare themselves bankrupt or not. The moment they are no longer able to pay their way, they are bankrupt. And the fact that they have delayed and delayed facing up to facts means the window of “opportunity” has narrowed to a point where it’s a glimmer of daylight, at best, coming through.
Where other manufacturers are selling their cars with good margins, and in some instances to waiting lists of eager customers – these companies are filling up lots and parking spaces with their cars, giving them away through financing incentives, spending a fortune on advertising and selling them at a loss.
So – to all declaring that Farago’s Death Watches may be disproved by events, I think one can safely claim that those events will be cataclysmic, and not the “smooth” transition into a hinterland of automotive glory that the holdouts are envisioning.
It’s going to be very, very ugly. And then people of initiative will look at the pieces remaining and let’s trust find a better way of fitting them together.
Glenn:
We don’t have a socialistic government in Sweden anymore. In the September 2006 referendum the right-wing alliance had a landslide win. But I think any government would be reluctant to any subsidiaries with the save the shipyards debacle in the seventies in mind. Anyway, I think Volvo can do allright on its own. All they have to do is to add a little smiling to the (Swedish) Volvo salesmanship.
Kablamo,
You make a good argument on its own merit. You don’t need to quote Doug Flint to make a point — there are a good 20 people who post on TTAC I would trust more than Flint. (although his son the mechanic is funny).
A couple of people have suggested abolishing the American FWD. Yes they are a PITA to work on. But as long as there’s snow I don’t see front wheel drives going away. :)
Hi Jan Andersson
Thanks for the correction about Sweden’s government change. Hopefully Volvo will survive Ford’s demise, it would be a pity to lose Volvo from the automotive landscape. Volvo has done a lot towards improving the safety and reduce emissions on vehicles over the decades, and has a proud heritage. Likewise, to a lesser extent, Saab which is totally also entrapped within GM, if GM goes down, so also goes Saab.
Do you suppose Volvo truck would buy the automobile side back again? If Ford collapses entirely and takes PAG with it, it may not be possible to separate Volvo out and have it survive, I’m no international bankruptcy law expert. But we can hope.
As I mentioned, Mazda has a good chance of survival, not being entirely owned by Ford.
Perhaps Mazda or Hyundai (which could use a luxury brand) should buy Volvo, but I don’t know if Ford would be willing to sell. They want to sell Aston Martin, and I understand also want to sell the huge money losers Jaguar and Land Rover as a bundled deal. Nobody is dumb enough to buy that money-pit though (except, obviously, FORD several years ago).
Glenn,
Volvo is very much entangled in the Ford sphere now. They are dependent of the success of the brand new small model (30-series), as well as the new S80 and the new V70 wagon, built on the S80, launched in spring 2007. If they can sell, it’s all right. If they can’t, well, Volvo have to scale down fast. And, as a matter of fact, I think that process has already started.
Volvo truck have a big purse these days, and who knows? Maybe they are saving to bring their lost son back home.
And as you know, Volvo is located in Gothenburg, and there have always been a bit of competition between the industrial region Gothenburg, and Stockholm, the cultural region. So Volvo will not turn to Stockholm for support. But with a little luck, Volvo could increase their sales substantially in 2007 and 2008.
Rastus, you are one insulting SOB . . . you sound more like you belong trolling on some Yahoo message board, not here. You seem to forget that there has to be something here that’s making all the people want to immigrate here in the first place. Sorry to drag out an old chestnut, but if the US is so darn bad, do us all a favor and get the hell out.
Goldman Sachs raised their assessment of Ford today, and the stock is up about 30 cents, or another 4% versus yesterday. Of course that’s all probably due to cooked books, a conspiracy with mutual funds, and space aliens.
Ar-Pharazon,
Hey there. I understand I may come across as negative, but it’s because I’m reacting to what I see. If you can honsetly tell me and anyone else that both GM and Ford were NOT making cash hand over fist (to the tune of 8-10K profit per large SUV!) and in turned did NOT piss it all away, then I’m all ears.
How may former “American” automakers once existed? The list is as long as my arm. Go back to the turn of the 20th Century and move forward to today…and just count the number of automakers who went belly up. That’s your homework for the evening :)
Seriously…the world is becoming a much smaller place. The internet is a wonderful thing. Jet travel (on Boeings, nontheless) is also a great thing…it opens up new horizons, new ways of looking at the same old problems, and it opens up new markets (if you are smart). Toyota is now making large pickups in Texas, among other things…right here in America.
I’m telling you right now…the “aw, shucks…we’s just some good ole boys” trying to make a living …and playing off loyalty…and yes, employing mentaly challenged Country Western “musician” to sell a product.
I mean, seriously, why dumb down your target audience?
Why? Especially when the world if moving forward…at a pretty amazing clip if you ask me.
If the idea is to build a company which GROWS, instead of maintaining market share of the “bubba crowd”, then dammit anyway…pull your head out of your ass and INVEST some of that bubba money from the SUVs and pickups and cover your bases!!!
The Prius was a side project at Toytoa. It’s what all other companies call “R&D”, with equal weight given to “RESEARCH” and “DEVELOPMENT”.
I’m sorry if I offended anyone…but folks, were down to 2 automakers left.
…and stop already with the “point 5” nonsense. Who are you kidding?
Look at Intel. Semicondustors is a capital heavy industry. A wafer fab costs billions to build and outfit. Many choose to contract out the actual fabrication, but Intel still does everything in-house. While they too are going through tough times,…I’ve never heard anyone from Intel lobbying congress! When was the last time Andy Grove “scheduled” a meeting with President Bush …looking for handouts?
That’s the difference between a world-class American company and one which is on the tail end of a downward skid.
I’m sorry to see Ford in this predicament…but indeed…they truely Did “piss” it away.
“Hopefully Volvo will survive Ford’s demise, it would be a pity to lose Volvo from the automotive landscape. Volvo has done a lot towards improving the safety and reduce emissions on vehicles over the decades, and has a proud heritage.”
This is a very interesting point. I believe that long term a company must have a compelling reason to be in order to prosper and survive. There must be something which that company brings to the table which would be clearly missing if they left the marketplace. Volvo has provided a huge service to the world by constantly emphasizing the importance of safety. The rest of the makers have had to play catch up.
Now one must ask what it is that Ford Motor Company brings uniquely to the table? At it’s high point Ford transformed the world with the idea that automobiles could be produced at a cost nearly everyone could afford rather than being a special toy for the wealthy. But what does the FoMoCo of today uniquely bring to the world? What would be missing from the marketplace if FoMoCo were sold off in pieces at an estate sale? Certainly the employees and retirees would be worse off, but that is an inside the company perspective. Outside of Ford, what would it matter if they went away? The cars are all forgetable also ran products. The trucks can be readily replaced by similar models from GM and others. What makes FoMoCo relevant? The Ford heirs have been living high off the hog for generations now, enjoying the fruits of a tree others planted long ago. But the tree is now old and suffering from years of neglect and abuse.
Look at the poor Lincoln and Mercury brands. Rarely have two large consumer brands been so horribly treated by their caretakers as these two have been for the past four decades.
Let the watch continue.
John
OK, so it was due to “special charges” & write downs of stuff they own, but since when is a $115 million loss considered a profit? Yeah, it’s less than the $1.5 billion Chrysler posted & the $5.8 billion that Ford posted, but it’s still a loss. Not only that, but GM’s sales are down 2.5% for the first 3/4 of the year. Marketshare up 2%? The article I read said it was down 1% (to 24%) compared to Q3 2005.
Rastus, I didn’t even read the bulk of your post as a rant against Ford, but instead against ‘traditional America’. I just re-read it, and still to me it sounds like you’re saying that at it’s core, ‘American’ means uncultured low IQ . . . only the cultured immigrants save us (until, presumably, they assimilate and become as dumb as the rest of us). That’s insulting.
I’m sorry, but I’m not stupid enough to believe that suddenly everything great about this place has vaporized because of six years of poor governance. Nor am I going to buy that the most base, negative stereotypes characterize the whole country.
You believe globalization is such a great thing . . . fine, that’s your right. I don’t think it’s going to finally open up America to the glorious bounty of a global economy, though. I think instead it’s laying bare our soft underbelly, and allowing the predators of the world to enrich themselves at our expense. It’ll do nothing to raise the standard for people living here . . . it’ll just help to bring us down to the level of the Indias and Chinas and Mexicos of the world. If you think that’s a good thing, fine . . . I don’t.
Apparently, many of the people who post here don’t really care a hoot for anyone but themselves. That’s why they’re so gleeful when they suggest dumping employee health insurance and retiree benefits in the name of competitiveness. I’m sure Intel does not have the commitments in those areas as do Ford and GM, and perhaps since their not bound by contracts to their employees, they’re free to jettison any they have when it’s convenient. You think that’s a good thing . . . I think it’s a bad thing.
Ar-Pharazon,
Don’t let that guy bother you. Every post just gets more bizarre without provocation. I think he knows that the comments are insulting to just about everyone, not just you. Gotta love the internet!
What would you really expect from a person that has a user name that is a racial slur against black people?
Bush has finally agreed to talks with the 2.5 CEOs. The talks will go something like this:
1. The CEOs will want Bush to put a gun to their competitors heads.
2. The CEOs will want Bush to put a gun to the Taxpayers heads.
3. The CEOs will want Bush to repeal the stupid “Labor Laws” that make them so uncompetitive.
If you guess 1 and/or 2, you are right. If you guess number 3 than you are far to rational.