Crazy Henry’s heirs and descendants own enough “special class B” stock to control 40 percent of the automaker’s shareholder votes. Translation: Ford owns Ford. While the Ford family isn’t down to its last $100m, the automaker’s plummeting fortunes must be more than slightly worrying. The last time Fortune checked-in with Ford family finances– April ’07– the Blue Oval Boyz and Girlz lost a cool (if paper) $581m. This after Ford suspended payments (September ’06). The last time TTAC checked-in with Bill Ford’s wallet, the FoMoCo Chairman had “modified” his pledge not to take a dime from his employer until it was back in black (a 2008 then 2009 prophecy that’s long since been abandoned). Ford (the failed CEO) agreed to defer (rather than forgo) the compensation until Ford (the failing company) returned to profitability. As the undisclosed bounty piles up, Billy may have something of a liquidity problem. Reuters reports that he’s unloaded one million shares of Ford common stock [not class B] to pay down debt that he took on to exercise options and acquire stock in the automaker in 2004 and 2005. “Ford sold the shares at an average weighted sale price of $5.05 on Thursday and continues to hold more than 5.3 million shares of common stock in the automaker, according to a filing on Friday with the U.S. Securities and Exchange Commission.” All credit to Bill for investing in his own optimism. But here’s a question: when Chrysler and GM file for C11, will Ford follow suit? If so, it will mean the end of Ford family control.
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Life is hard and then you die.
Or maybe he expects the stock to plummet, for some reason.
What’s the easiest way to make a small fortune? Start out with a large one.
Is there a more earnest, well-meaning, benevolent (at least outwardly) “shooter” in the auto industry than Bill Ford? Although it must have been very humbling to dismiss himself as CEO, he’s obviously not so enamored with himself that he couldn’t see that some one could do the job better. Make no mistake, he has a lot at stake, and I’m sure money is a big driver in his decisions. However, it’s hard not to root for a guy who, despite his gazillions of dollars, projects as well as he does. If there is a gold standard for “class” in this duplicitous, incestuous, hubris-laden, politically-charged, profit-centered industry, then he certainly deserves consideration.
The only good thing about a Ford bankruptcy would be putting a dent the multi-generational Ford family wealth and control.
What exactly have Henry Ford’s heirs done to deserve their wealth?
If there is a gold standard for “class” in this duplicitous, incestuous, hubris-laden, politically-charged, profit-centered industry, then he certainly deserves consideration.
Well said.
John Horner: All in all, I don’t think the Ford family’s management has been any worse than GM’s over the last two decades. Indeed, you could argue that Ford has recently been quicker to change direction than GM.
There can be no Ford Ch 11 if it would mean the end of Ford family control. Getting government money is problematic too, at least anything more than low-interest loans. And they are too big for the chinese or anyone else to buy them. If this turnaround doesn’t work they might be the first to go down. At any rate I see them as being in the most precarious position. I know everyone here likes Mullaly and what he’s doing but that doesn’t pay the bills at the end of the day.
Why doesn’t the Ford family deserve control and their wealth? Afterall it is their family business.
windswords:
I think the reason why Alan Mulally and Ford is such a favorite here is because Ford is the only company that has a concise plan, appealing and plausable products in the pipeline, and a BOD that actually knows whats its doing.
Lets review the turnaround plans.
Ford: Consolidate its world operations. Sell much-superior Eurpoean products stateside, and redesign current models in vein of the European models.
Chrysler: Run around like a chicken with its head cut off, just spouting shit while selling completely class-bottom products, and then make a bunch of shady moves while we rebadge japanese cars and everybody specualtes of use filing C11.
GM: 1. Build the Volt. 2.???? 3. Profit!
Pity, pity poor Billy.
He’s deferred?? Sounds highly motivating to all Ford employees worldwide.
Here in Brazil their downward spiral goes on. The new Ka was but a bleep, just cannibalizing bigger and more profitable brother Fiesta, but, no, no conquest sales. Analysts now say Renault is within striking distance to become Brazil’s 4th largest car maker. As of now, Ford’s 4th at about 8.5%, but going down. And the French are at 5.5%, but going up. Ummm, another minor shake up going on in the world’s 6th or 7th largest market?
RUNFROMCHENEY:
Their consolidation apparently isn’t being managed very well. At least down here. Though I hope they do make it since I’m a kind of Ford guy.
I know how Bill can get some extra cash. SELL THE DETROIT LIONS!!! Please, please, pretty please. Even the worst NFL franchise has to be worth a few hundred mil. Maybe the city could raise itself out of the ashes if we didn’t have to endure the embarrassment of watching that disgrace take the field every Sunday.
this is a major reason why Ford is fighting to the end to not file C11.
GM has to file C11 and will get bailed out. Has anyone mentioned the GM board has the Kodak CEO or Chairman who sat at the helm when digital cameras showed up and basically crippled Kodak to what it is today.
Maybe the bastard has a soft spot for Red Ink Rick.
Note Kodak has never recovered………
What exactly have Henry Ford’s heirs done to deserve their wealth?
Besides being members of the lucky sperm club, some of the Fords have actually taken what Henry made, and made more of it.
Henry Ford II, Crazy Henry’s grandson, took over the Ford Motor Co. at the height of WWII in 1943. Edsel Ford, Hank the Deuce’s father, had died of cancer and the old man took over managing control of the company. In the middle of a war, a major military supplier could not be run by a lunatic now senile, so the Deuce got discharged from the army and took the reigns of FoMoCo. It was Henry Ford II, who was responsible for bringing in the so called “whiz kids”, like Robert Macnamara, who ran the company during the war and were responsible for the first true postwar car, the 1948 Ford. Since the Deuce pretty much ran the company in the golden days of the 1950s and 1960s, I’d say he made his bones in the auto biz.
Shorter version: Henry Ford II was responsible for the development of the Ford GT 40.
A side note: after the failure of Ford’s first automobile venture, Henry was obsessive about not losing control to investors, and as soon as the success of the Model T allowed it, he bought out employees like James Couzens who owned stock, resulting in Henry owning 49%, Edsel owning 48%, and Clara, Henry’s wife, owning the remaining 3%. After Edsel died, his shares went to his widow, Eleanor. It was clear that the old man could not run the company yet he refused to give up control until Eleanor and Clara threatened Henry that they would sell their stock if he did not abdicate in favor of his grandson. The threat of losing control to outside investors evoked old fears and Ford relented.
As for Billy, yes he failed as CEO, but he was smart enough to realize he failed and hiring Alan Mullaly seems to be a good move so far, a much better move than Nardelli at Chrysler. Mullaly has experience both running and turning around a large manufacturing company, Boeing.
And yes, the failure of the Detroit Lions is due to the fact that William Clay Ford Sr. has never had to excel at anything. He ran the short lived Continental division in the 1950s and was the force behind the Continental Mark II in 1956. While the Mark II is considered a landmark in terms of automotive styling, it wasn’t a huge seller. WCF is considered to be a nice, genial man, loyal to a fault. The Lions were actually a decent team in the early 1970s with some decent players and a good coach, Joe Schmidt, who played linebacker on the Lions’ championship teams in the 1950s. The 1971 team made the playoffs and lost to the Cowboys 5-0 in a game that the Lions actually were the better team. After that season, Schmidt wanted more power over personnel. The Lions’ GM was Russ Thomas, who wasn’t as bad as Matt Millen, but wasn’t very good. Thomas, however, had helped Ford get sober in the early 1960s and Ford was loyal to Thomas and fired Schmidt. Other than one semi decent year under coach Wayne Fontes back in the 90s, the Lions have been mediocre at best, somewhere between 7-9 and 9-7. Now, however, they are so bad that I actively root for them to get as embarrassed as can be. I cheer when Kitna throws an interception.
Bill’s big mistake was not realizing he was in over his head much earlier.
law stud: the Japanese were already eating Kodak’s film lunch at the time. I think it’s just another case of American business hubris.
I can’t see how the Fords will allow a bankruptcy of their own company if they are holding so many shares of the stock.
Highrpm:
One doesn’t “allow” a bankruptcy. One files for it when one doesn’t have a choice, usually just before one’s creditors file a different form of bankruptcy to have your company assets taken away and sold to the highest bidder to pay bills you haven’t been able to pay.
Mortgaging every physical and intellectual property titled to Ford, as they did a few years ago, was the Ford family strategy to “not allow” bankruptcy. At the time, they had to have accepted that it would take two full product cycles to see if that bet was a winner. Like most of the people in the world, no way they could have foreseen the Second Great Oil Spike, or the collapse of the real estate and banking markets. These calamities have destroyed sales in North America for Ford and the other D2.8, exascerbating the biggest problem for all the companies in the auto industry, including their suppliers: Cash flow. Right now, Ford is the only remaining member of the D2.7 with a plan, as RUNFROMCHENEY cleverly points out. Ford’s other advantage is their capital structure….the Family controls the board. Which is why they were able to wrangle together support for Mullaley and put together his plan so (relatively, for the Big 2.7) quickly….they did not have to wrestle with a board of directors, many with outside (not to say, necessarily, conflicting) interests and points-of-view.
Ford’s ability to stave off ignominious failure depends on the ability of their management to choke off a cash hemorrhage long enough for a.) new European-style models to come to the market and b.)the economy in North America to wobble back into some sort of stability, so that consumers and lenders can regain confidence enough to start buying cars again. Then they must hope that the market finds their vehicles attractive and reliable enough to actually buy. Ford may actually be helped by a GM or Chryberus C11 or C7, from which as a result they may gain some domestic sales volume. (Corporate darwinism and canabalism among the Big 2.7! Film at 11:00!) So, instead of the 2 product cycle time window they may have thought they had, in reality, given their current cash burn, they’re down to one product cycle. Now they must hope that their new products come out of the box like a rocket. Quality truly must be Job One.
The Irony for the Ford Family is that, although they individually will never have to wait for the next paycheck to make the car payment, they are vicariously, through their company, learning what it means to live “payday to payday”, like many of the rest of us do. That is why the Ford family-driven capital structure is, also ironically, currently an advantage (where frequently in the past it may have been a dis-advantage)….financial crises tend to quell family squabbles and make contentious family members fall in line behind stronger leadership…blood is thicker than old school ties.
One more point about Hank the Duece and his supposedly fabled auto industry chops: In the late 60’s, he and Iacocca got into a famous snit. The disagreement was about many other issues, but manifest itself into a pissing contest about the final design of the 1970 Thunderbird. Iacocca wanted a flatter, more graceful front-end face. Il Duece was so pissed at Lido, that he insisted upon the 8 inch proboscis extension on the front grill and hood. So, Hank’s chops notwithstanding, his ego gave Ford one of the most misbegotten and ugliest vehicles they ever made, as well as denying FoMoCo the services of arguably one of the most capable auto executives in the industry’s history.
I believe that Ford (not GM) is now the economy’s mythical canary in the coalmine. GM and Chrysler have each thrown credibility and their business overboard and are not recoverable. Ford has a plan. If the economy starts to recover, Ford has a viable chance. If.
@RunfromCheney: love the underpants gnomes reference!
Mark MacInnis: Iacocca wanted a flatter, more graceful front-end face. Il Duece was so pissed at Lido, that he insisted upon the 8 inch proboscis extension on the front grill and hood. So, Hank’s chops notwithstanding, his ego gave Ford one of the most misbegotten and ugliest vehicles they ever made, as well as denying FoMoCo the services of arguably one of the most capable auto executives in the industry’s history.
The 1970 Thunderbird’s ugly nose was the result of Bunkie Knudsen’s influence. The nose on the 1970 Thunderbird is still referred to as the “Bunkie Beak” for that reason.
Iacocca undermined Knudsen, who had been personally recruited from GM by Henry Ford II, and that was one big reason that he soured on Iacocca. Knudsen, who had led Pontiac from near-oblivion to third place in sales during the late 1950s and early 1960s, was supposed to bring all of those GM secrets to Ford.
Iacocca went from success to success in the 1960s – the Mustang, the Cougar, the Continental Mark III and the Mercury Marquis – but he was ill-equipped to handle the challenges of the 1970s, namely declining quality, rising sales of imports and the need to meet government emission and safety standards. Iacocca was ineffective in improving Ford’s quality during the 1970s, and his response to the imports – the Pinto – was rushed to market and too flimsy, thanks to his insistence that price and weight be kept low. He also rushed the Pinto’s development.
All of these factors led to the infamous fuel-tank fiasco that literally burst into flames during the mid-1970s and gave Ford a huge black eye. A big, unspoken reason for Henry Ford II firing Iacocca was the entire Pinto fiasco.
Iacocca was a good MARKETING and SALES person, but the challenges of the 1970s required a different set of talents, and Henry Ford II realized this. It’s noteworthy that his rescue of Chrysler revolved around his flair for salesmanship; I doubt that anyone will say that he really improved either the cars or quality during his tenure at Chrysler.
As for William Clay Ford, Jr. – he was smart enough to realize that he needed an outsider to change Ford’s corporate culture, and he took the initiative to recruit him. And he implemented the programs that have helped improve Ford’s quality (Mullaly hasn’t been around long enough to affect Ford’s quality one way or another).
Give William Clay Ford, Jr., credit for realizing that Ford’s corporate culture was killing the company, and bringing in an outsider to change it. Contrast this with Wagoner of GM, who brought in Lutz to improve the cars, but really hasn’t done all that much to change GM’s corporate culture.