Thanks to strangely prescient asset mortgaging, Ford has not yet joined Bailout Nation. Providing, of course, you discount its forthcoming share of the Department of Energy’s $25b no- to low-cost “retooling” loans (remember them?). But don’t get to thinking that FoMoCo doesn’t have its eye on the prize (federal succor). The Detroit News reports this morning that Ford’s lobbyists are hard at work in the teat suckling department. “Ford Motor Co. is calling on Washington to do more to stimulate the economy and get consumers back into its showrooms, after posting a record loss of nearly $14.6 billion for 2008 on Thursday.” Ready? “Anything that can incentivize the consumer, especially with regard to automobiles, would be great, because it’s such an important part of the economy,” CEO Alan Mulally told The Detroit News. “I know that they know how important the automotive sector is.” Cue “I’d do anything” from Oliver, substituting the word “money” for “love.” Anything? But what, exactly?
Unspecified. (There’s a lot of that going around these days.) The DetN’s Hoffman intimates that we’re talking about Ford’s backing of bailout bucks for Chrysler and GM. Methinks there’s more in play—clunker credits, battery grants, Ford Credit help, etc. And, eventually, their turn on the bridge loan to nowhere, uh, bridge.
“Auto analyst Rebecca Lindland of IHS Global Insight said Ford is playing a risky game by asking the federal government to help bail out the rest of the industry while trumpeting the relative strength of its cash position.
“It certainly helps Ford indirectly if the consumer can get some help and suppliers can get some help and, to some extent, it helps Ford if the industry as a whole starts doing better,” she said. “It’s an interesting strategy, because we’re not 100 percent convinced that they won’t need money at some point in time.”
This consumer would be “incentivized” if he could buy a front engine, rear-wheel-drive sports sedan that was the modern incarnation of a Datsun 510 or BMW 2002. Roll up windows. A/C. Decent suspension.
That’s all the “incentivization” I need.
“Auto analyst Rebecca Lindland of IHS Global Insight said Ford is playing a risky game by asking the federal government to help bail out the rest of the industry while trumpeting the relative strength of its cash position.”
I have had this though as well – do any of TTAC’s best & brightest care to brainstorm on the potential failures of this strategy?
Ford did take a bailout…back in 2006…to the tune of 20+ BILLION dollars. They even mortgaged their logo to get it.
But what needs work at Ford…is their product. Rather than sell the lackluster appliances that they sell to us, they would be much better off if they were to sell their European, Australian, and Mexican models here.
Kuga (EU), Mondeo (EU), Focus (MX), Falcon (AU), etc.
It is a slap in the fact to have an American company sell their best products to everyone but Americans.
Ford borrowed money from private lenders in 2006. That is different from a government bailout.
Companies do what Ford did – borrow money from private lenders to finance important projects – all the time. Only the scope of what Ford did (i.e, even using its logos as collateral) makes it unique.
The one big problem with Ford is there quality control and tons of Factory defects that the average buyer has to contend with!
In the latest “LemonAid” book the Ford 150 is rated not recommended, ie 2009 model and below average 1990-2008 so this says a lot of the lack of quality coming out of Ford all together, these Trucks can haul a lot of material but its the small things that can screw up buyers! Just think of the Tie Rod problems on all Ford Trucks!
Don’t be surprised to see some form of a so called “clunker scraping” federal incentives in the Senate’s upcoming version of the stimulus bill. Detroit is lobbying hard for it. A sticking point is how to exclude foreign made cars from the deal, which would probably be illegal … if anyone cares.
This is Buzz hargrove on the CBC’s Drago Den making his case for an auto bailout. They chew him up and spit him out. Quite funny. Buzz should have quit while he was behind.
http://www.cbc.ca/national/blog/special_feature/the_dragons_decide/pitch_auto_sector.html
I think Ford is playing this brilliantly. Most taxpayers (I use that term loosely) can stomach a bailout if it directly benefits them (ie cash for clunkers) but have a hard time seeing money going directly to a corporation (GM, Chrysler, TARP, etc). Now they can loudly proclaim that they don’t need help while getting it other ways.
Geo. Levecque – lol The new F-150 has been out for, what, a month or two and they’re already denouncing it’s quality in a printed book? I’ll wait until a reputable source (true delta, CR, JD Power, etc) before I come to any conclusions. Quality is one of the few things Ford has going for it these days. CR recently said that Ford cars are on par with Toyota and Honda in terms of quality.
So far Ford’s strategy seems to be working from a marketing perspective. Most people I talk with casually about the bailouts immediately cite Ford as ‘one of the best companies out there’. However, they are currently getting killed by GM’s 0% financing for everybody and they are running out of money fast. There is absolutely no doubt Ford will exercise that $9B line of credit and have Ford Credit turned into a bank holding company. Of course, there is also a good chance that most people won’t notice.
:P71_CrownVic:
It is a slap in the fact to have an American company sell their best products to everyone but Americans.
AMEN! Mexico gets the 225HP 6 speed Focus ST for the equivalent of around $21K, and the 150hp Fiesta ST for around $12K! They would blow away the Fit with something like that at that price point! What is wrong with Ford that those products are not here!!!! Arrrrggghhh
There, I’m better now.
Ford is dazzling everyone with their fancy footwork. They need to take the high moral ground as the anti-bailout baby but still keep a spot at the table open.
Their biggest problem and fear is that the gov’t will push through policies that favour the bailout twins and leave Ford twisting in the wind. As long as they can influence the gov and head these things off at the pass, they can also keep the gov’t out of the henhouse which is where the exec suite of both Chrysler and GM have lost and will pay a heavy price in the not so distant future.
It is not a question of IF Ford will need MORE bailout money…it is when.
I asked Mark Fields about TARP assistance to GMAC and he said that Ford doesn’t want to be “disadvantaged”. Recent steps regarding Ford Credit make that clear.
Right now Ford isn’t taking any money. If they get some kind of consumer buzz over it, that’s great for them. If they ultimately take money, in Bailout Nation, they’ll at least get points for holding out. While Ford is handling their PR regarding gov’t money well, GM didn’t get any bounce at all from turning down $ from Canada. Putting aside the fact that the money would have tied their hands regarding plant closures GM should have at least tried to spin the story in the US press and online.
Frankly, I don’t think it would hurt the domestics if they actually started participating on sites like TTAC. If you’re confident about your message, you can take it into a hostile venue. You may not convince anyone but you at least show a little spine.
BTW, I’m sure that IP address logs show a fair amount of traffic on this post from Ford computers. I have a question for any Ford employees that may want to answer: Has Alan Mulally really changed the corporate culture at Ford?
Ford used to have a reputation as a company filled with corporate politics and fiefdoms. Has that changed? How has Mulally changed it?
Any responses can be emailed to rokem@netzero.net.
Thanks.
AMEN! Mexico gets the 225HP 6 speed Focus ST for the equivalent of around $21K, and the 150hp Fiesta ST for around $12K! They would blow away the Fit with something like that at that price point! What is wrong with Ford that those products are not here!!!! Arrrrggghhh
Should have asked that about the Ford Contour (nee Mondeo), and for that matter, the Astra, G8, GTO and countless others.
Ronnie Schreiber:
Yes he has. Prior to Mulally, Ford generally had an “every man for himself” attitude. Many of the good eggs from that time expressed utter frustration at what went on around them. The end result was a collection of corporate fiefdoms that fought amongst themselves constantly, at the expense of the customer.
Mr. Mulally has forced the managers to abandon long-standing habits (don’t EVER tell him you can’t make money on small cars) and focus on the product. He concentrates on short-term issues (e.g. profits), but also on setting up a sustainable long-term business. Obviously I can’t speak for every employee, but Ford is a much more product- and customer-centric company than we’ve been for a long time.