Back in ’98, the BBC aired a fly-on-the-wall documentary series called “Back to the Floor.” A camera crew followed five British bosses who left the relative safety of the executive suite for a week's labor with downtrodden workers at the sharp end. When the show migrated to America’s PBS, it lacked the undercurrent of class warfare that gave Auntie Beeb’s original its zing. When Ford CEO Alan Mulally recently revived this scenario by playing car salesman, the results were equally dire.

Of course, Alan didn’t sell cars for a week. He “worked” for an afternoon at Village Ford in Dearborn, Michigan and Galpin Ford in L.A. Hanging with the Village people, Ford’s top dog supposedly set a blistering sales pace: four cars in forty minutes. Wow! Assuming Ford needs to sell 5.3m cars for a turnaround, Mulally should train 375 salesmen to repeat his voodoo. Working ten hour days, six days a week, they’d return Ford to ’05 sales levels by the end of the fiscal year.

Anyway, Nancy Miner was one of Big Al’s scalps. After a bad dealership service experience in New York (which Big Al didn’t investigate), Ms. Miner decided to go car shopping in Ford's home patch. That said, the main reason behind her journey was a visit with her son Kevin, a longtime Ford employee. Now don’t get to thinking Ms. Miner was a Ford family ringer, carefully prepped for purchase. At least, not according to the debrief provided by the divine Mr. M.

"She was down pretty much to a Camry and the Fusion,” Al said, displaying a car salesman’s knack for data capture. ”So I told her all about the Camry because I've had every Camry, I've had Lexus cars, I know all about Japan. I told her about the [Fusion], asked what her needs were. The Fusion was really for her."

It's a shame Ms. Miner didn’t ask Ford’s CEO why he chose Toyotas and Lexi over Fords and Lincolns for all those years, and whether this sudden change in brand loyalty had anything to do with his FoMoCo-sponsored $35m compensation package (plus unlimited G5 air miles). As opposed to, say, a recent, radical shift in Ford's comparative product quality.

Ms. Miner might also have enquired if Mulally’s all-encompassing knowledge of Japan includes insight into that country's automakers' ability to generate millions of sedan sales without relying on rental, taxi, livery and/or law enforcement fleets. While we're at it, readers with sales experience might like to know why “call me Alan” switched the qualify (ask about the customer’s needs) and present (tell her about the car) parts of the official Ford sales process. Never mind. I guess Mulally is more of a closer. 

Big Al put this proposition to the test at Galpin Ford. Needless to say, the L.A. Ford franchise isn’t one of those Midwestern stores where the tumbleweeds blow across the sales floor and the dealer principal can’t afford to even think about divorcing his second wife. Galpin is, in fact, the world's top-selling Ford dealership. Suffice it to say: fish, barrel, Ford, Mulally.

Once again, “Call me Alan” sold four vehicles. Once gain, little was left to chance. Longtime customer Danny Harrington— 15 vehicles and counting– was teed-up. The general contractor was “warned” in advance that FoMoCo’s top dog would be on site, and took full advantage of the opportunity.

Herrington sat in the room where small pens sign big checks with Ford’s CEO and Galpin Sales GM Terry Miller. The Associated Press reports that Herrington wanted more money for his 2000 F-250. M&M did some pencil pushing and reduced the builder's payment to his target of $600 per month– for six years. Oh, and Big Al clinched the deal by throwing in a set of floor mats (I kid you not).

"There were a couple of things that were in question as to be part of the deal," Herrington said post facto. "I think because of him [Mulally] it went my way."

While the word “think” doesn’t indicate that everything went Herrington’s way, there’s a more important question: what did Alan Mulally learn from this exercise?

Call Me Al didn’t face any of the drudgery association with car sales: waiting hours for “ups,” filling out reams of tedious paperwork, making sales calls to old customers, etc. Nor was he subject to any of the psychological pressures facing salesmen and women: depending on a sale to make ends meet, facing down the GM, competing for bonuses, etc. Nor did he get a taste for a “real” customer interaction; all the prospects knew Big Al was Ford’s CEO. In short, The Blue Oval's Big Boss learned more about PR than people.

In the “Back to the Floor” doc series, the egghead CEO always gained an appreciation for his street smart employees’ difficulties— many of which were the direct result of company policies. The basic idea: something will change. In contrast, Mulally’s flying visit to the front line was a cynical move that changed nothing and fooled no one– except maybe Mulally himself.

February’s sales figures are in. Ford continues to sing the blues. While FoMoCo’s spinmeisters invite us to savor the consistency of their domestic market share and clock their lessening fleet business, The Blue Oval’s retail sales are still slumping. The situation hovers somewhere between serious and six feet under. What’s worse, the domestic automaker’s execs seem bound and determined to shoot themselves in the feet, repeatedly. First, the numbers…

Ford has maintained a 13% U.S. market share average since June 2006. Meanwhile, Dearborn’s dealers moved just over 211k vehicles in the previous four weeks. That’s some 33k less than a year ago. While Ford’s PR flacks blame this [steady] decline on lower fleet sales, the sector accounts for less than half of February’s foibles.

Checking the dealer lots, some 603k FoMoCo vehicular orphans are still left looking for homes. Clearly, The Blue Oval Boyz need motor-city March madness to start now. Unfortunately, even if March sales come in and go out like a lion, Ford’s revenues will still be quiet as a lamb. 

As the crossover twins (Edge, MKX) and Mexican troika (Fusion, Milan, MKZ) continue to lead the way Fordward, the gravy-train known as F-Series is spinning its wheels. F-Series sales are down twelve percentage points. Worse still, production of Ford’s most profitable of profitables, the diesel-powered F-Series Super Duty pickup, hit a bump in the road due to “supplier issues.” 

Back in January, Mulally’s legal beagles filed a lawsuit against Navistar International Corp. for warranty claims. The engine maker threatened to cut supplies quicker than locks at the Spears’ household. The threat was realized Monday, when Navistar halted production of Dearborn’s 6.4-liter diesel, claiming short payments by the Glass House Gang. 

Despite a court order putting those oil-burners back on the front burner (and forcing Ford to pay up), Navistar won’t be bothering their logistics teams any time soon. Getting the glow plugs glowing again will take time. When the lines were halted, Navistar cut back their blue collar workforce and kyboshed some parts orders needed to pound out the PowerStrokes.  Even with a backlogged supply at the ready, when Louisville fires back up next week Navistar, Ford and their dealers will all be playing catch-up. 

Truth be told, the Super Duty was already late to the party; Ford was scrambling to fill the near 37k diesel-equipped dealer orders when the production lines fell silent. Peter Nesvold of Bear, Stearns & Co. prices a one month lag at $1b in lost revenues. Even if Louisville gets back on track today, sidestepping this supplier drama won’t be enough to dodge some bigger bullets.

The credit raters at Fitch Inc. report that Ford’s former health care woes are back, and they’re bad. The 2005 union health care “concessions” have been outrun by rising costs. Ford’s health care tab now accounts for $490 to $705 per vehicle produced. While that amount will slide slightly next year, Fitch says costs will recommence their rapid escalation in ’09– and beyond!

No question: health care costs will take center stage at this year’s UAW contract talks. Ford (and the other 1.5) will “ask” the United Auto Workers (UAW) to follow the United Steelworkers example and pick up the tab on their retiree health care costs. Ford’s reportedly looking for a 25% reduction in their employees’ medical costs. Also no question: the UAW will tell Ford to go sing.

The Wall Street Journal reports that the UAW has begun accepting changes to its restrictive working practices. But any chance of pay conciliation pretty much disappeared when Ford’s Board of Directors suddenly decided that their $35m CEO and his minions deserved a raise. An SEC filing revealed that they’re bumping up Alan Mulally’s stock options by a cool million.

In a stunning move (considering the brouhaha surrounding Prez Del America’s Mark Field’s weekend Florida commute via company jet), the Board bestowed Big Al with a second set of keys for the corporate plane, so his family and guests can jet set without him. 

But wait, there’s more! FoMoCo’s BOD also decided Mulally isn’t the only executive who deserves a little something extra in their pay packet. Mulally’s “one nation under a groove” approach means top ranking team members can now collect up to eight times their annual salary in compensatory bonuses. To balance out the old program, envelopes stuffed with undisclosed amount of cash were delivered to joyful execs.

Speaking of spondoolies, let’s finish this sucker with a quick update on the total tally for Mulally’s turnaround (you know, should the company’s planned return to black stay on track). I make it $11.18b. That’s up $2b since the last time we looked.

As thousands of Ford’s white collar workers collect their payouts and leave their “Knowledge Retention Toolkits” behind, as the UAW [rightly] sneers at Ford executives’ greed, the line between tragedy and farce is growing thinner. The final chapter in this sad saga is on its way.

Sin City’s casinos are designed to create the illusion of chance. Vegas’ neon lights, chiming bells and piped-in oxygen keep hopefuls dazed, confused and distracted while their dollars are vacuumed from their wallets. And yet all the neon in Nevada couldn’t distract the Ford floggers at the recent National Automobile Dealers Association (NADA) convention. The Blue Oval’s metal movers and shakers hit town looking for one thing: assurances that FoMoCo’s new, new turnaround will work. They got nada.

That said, Big Al Mulally’s first tète-a-tète with his dealers garnered mixed reviews. Although Al won kudos for his straight talking style— promising to dial back Ford’s dealer dissing corporate culture and a pledge to play car salesman for a day— his audience was far from convinced. The mood remains… tense.

“This is it for them,” Wisconsin dealer Steve Marshall pronounced. “Their last shot.” Ford's NADA members are well aware that their immediate future depends on FoMoCo’s ability to implement their new, new Way Fordward. They’re skittish, and no wonder: the dealers are looking at Ford’s “new” models for ’08 and thinking pigs and lipstick shades.

This year, Ford’s offering a refreshed Five Hundred, Montego (which is, let's face it, a refreshed Five Hundred) and Freestyle. The models are scheduled to receive a new three bar grill nose, a larger 3.5-liter six cylinder engine, more safety kit and an as-yet-unspecified interior upgrade. Given the troika's modest sales, the rejigged pigs might not fly.

Last year, Ford sold 165,152 Five Hundreds, Freestyles and Montegos, down 22 percent from 2005. The $23,785 Five Hundred SEL and $26,670 Freestyle SEL currently have $2k customer cash on the hood, while the $24,585 Montego comes with a choice of $2k or 0% financing. They may not be lame ducks, but neither are they what you’d call high flyers.

As of January first, Ford/Mercury dealers harbored an 89-day supply of Five Hundreds, a 115-day supply of Freestyles and a 105-day supply of Montegos. Getting rid of these “old” models is Job 1, and it ain’t gonna be easy, or particularly profitable, for anyone concerned. Sensibly enough Mulally waited for NADA members to return to their car-choked car lots to unveil his biggest product news: the Taurus lives! And the Sable! Well, at least in name.

Mulally hinted as much at the start of his tenure; dissing the ancien regime for killing off storied monikers in favor of a farrago of “F” names and alphanumerics. In an announcement at the windy city auto show, Mulally formally resurrected Ford’s last chart topping automobile. The Five Hundred now becomes the Taurus, the Freestyle becomes the Taurus X and the Montego becomes the Sable.

As you read this, auto writers around the world are trotting-out the old “rose by any other name” shtick. The more charitable amongst them are already claiming that Ford’s retro-moniker machinations represent some kind of “back to basics” movement by Ford’s Glass House Gang. Writing in the Detroit Free Press, Mark Phelan says “Reviving the Taurus name is a small correction, but it shows Ford customers, dealers and employees that the captain is awake at the wheel.”

Or not. In a profound sense, the name changes are the most cynical examples of badge engineering yet inflicted on Ford’s dwindling (if gullible) customer base. What’s old is new, and new for you! Even if they’re not true, rumors that Ford may retrofit unsold Five Hundreds, Montegos and Freestyles with three-bar body kits and new badges shows the creative bankruptcy behind the “re-christening.”

Indeed the Captain may be fast asleep. Last month, Big Al proclaimed that he liked “the Taurus brand; everybody has such fond feelings for it." First, the Taurus was a model, not a brand (Big Al should be forced to watch re-runs of the Taurus-era TV show Eight is Enough). Second, “everybody” doesn’t share Alan’s enthusiasm for the model– especially those who, unlike a chauffeur-driven Boeing executive with a Lexus in his private parking space, experienced the Taurus at the end of its long, sad decline, courtesy of Hertz.

Perhaps Ford should give Mrs. Mulally a randomly selected Taurus fresh off the assembly line for a year’s driving and see how that turns out. Meanwhile, Joe Phillippi, president of AutoTrends Consulting Inc. shares our skepticism. “Its laughable that they take a brand that they just killed that was so damaged and then put it on a car that’s been struggling, and assume that the face-lift will work some sales magic.” 

So the model that saved Ford and inspired a book that inspired an airplane guy whose success inspired a Ford scion to hire the guy to save Ford, lives. It remains to be seen if the carmaker that made the model that conquered the market that faded into mediocrity can use such blatant sleight of hand to hold on long enough to ante up to win the pot and play again. 

Once upon a time, a dapper German auto exec named Wolfgang Rietzle dreamed of running BMW. When the Bavarians gave Wolfie the cold shoulder (twice), he left their employ to build his own, even larger fiefdom: the Premier Automotive Group (PAG). Technically, Ford owned Wolfie’s farrago of upmarket car brands. But as far as Wolfie was concerned, “his” five luxury marques vould vun day rule ze vorld! Three years later, Bill Ford tried to fail Wolfie upwards. The mad professor banked his bucks and blew town, leaving a Frankensteinian monster for Ford to fix. Yesterday, Ford said it lives! I say, grab your pitchforks!

According to Ford’s Chief Financial Officer Don Leclair, the Premier Automotive Group will make a profit in ’07. Although the Jaguar brand is drowning in a sea of red ink and Land Rover is treading water, Leclair sees Volvo’s bank balance as a rising tide, lifting PAG's financial results. He predicts Volvo’s gains will cancel out Jaguar’s epic losses, and them some.

At the same time, Aston’s upcoming sale will generate $1b or so, making the whole PAG bottom line thing look mmmmighty fine. For a company that’s seen its U.S. market share melt like a popsicle in a sauna, a carmaker that’s hocked everything up to and including its own logo, a multinational enterprise that dropped $27b last year, this is extremely welcome news. OK, “informed speculation.”

If Ford gets Jaguar back on track and into the black, the automaker can serve some major humble pie to all those analysts who told them to deep six Jag (and Aston, Land Rover, Mazda and Mercury) and build a few nice Fords, for Christ’s sake. There’s only one problem: it ain’t gonna happen.

Automotive News reports that Volvo has generated about $1b a year since Ford created PAG back at the turn of the century. Unfortunately, the winning streak ended last year, in the second and third financial quarters. Automotive News attributes Volvo’s declining sales to its “aging product line;” which is only kinda true.

Yes, the S60’s ’01 roots are showing. But the XC90 was da bomb back in ’03, the S40 and S50 are box fresh (’05), and the C70 refresh is in da house. Looking ahead, the S80 and XC70 are scheduled for an ’08 update. Volvo’s stalwart V70 is up for renewal early next year. Whatever bounce Volvo gains from these models may restore their bank balance, but it won’t send it into the stratosphere.

To really stoke-up the financial furnace, Volvo’s called brand extenders (we ain’t afraid of no ghost). In the late summer, the funky chunky C30 hatchback appears. Next year, the XC90’s mini-me, the XC60, checks in. Yes, but– to iron out all the bugs, Volvo will be “soft launching” these models in Europe. In other words, even if they’re a hit, it’ll be a couple of years before they’ll make any significant contribution to Volvo’s bottom line.

Meanwhile, Jaguar is busy dying. TTAC has obtained Jag’s final worldwide numbers for ’06 (ironically enough, the American department responsible for collating the data was recently cut back). Last year, Jaguar sold 75,013 vehicles, down from the previous year’s total of 89,802. 

In many ways, Jag’s ‘06 sales mix is even more depressing. In the American market, Jag dealers sold roughly five thousand examples of each of its four models. Abroad, Jag sales tilted heavily towards the British marque’s entry level whips. The X-Type generated 27,305 sales, while the S-Type clocked-up 13,222 (as compared to 7250 XJ’s and 6540 XK’s).

On one hand, the relatively strong sales of Jag’s cheaper models may indicate that the brand’s finally gaining traction amongst younger buyers– at least overseas. On the other hand, it may not. Anyway, last year, Jag lost $750m– just over $10k per car.

Ford claims Jag’s losses will fall to $500m this year, $300m next. How? Either the company is about to cut production big style or… what? The new fish-faced XK is pretty much dead in the water. The X, XJ and S are long in the tooth; only the S is close to emerging from reconstructive surgery (Spring ’08).

What’s more, 4Car reports that Jaguar’s bosses have yet to sign-off on a new model range. And no wonder. While there’s talk of axing the XJ in favor of a crossover or resurrecting the F-type, Jaguar’s current product mix has trapped the upmarket brand in down-market Hell. Taking the X and S out of the portfolio would be catastrophic.

All of which leaves Jaguar where it’s been for the last seven years: an open wound draining Ford’s precious bodily fluids. It’s time– past time– for the pain to stop. Ford’s not-so-freshly- minted CEO Alan Mulally continues to talk about his company’s need to “face reality.” The reality is that Jaguar is a lost cause Ford can no longer afford.  

[This piece replaces an editorial based on factual inaccuracies. I apologize to Jaguar, and to those of you whose comments disappeared along with the previous piece. Please feel free to repeat your remarks below. RF]

Enthusiasts don’t tend to wax eloquent about seat tracks. They’re the automotive equivalent of the sliding rails that support file cabinet drawers when you pull them all the way out. A vehicle’s front (and occasionally rear) seats slide forward on them, they slide backwards. Done. No surprise then that seat tracks aren’t mentioned in commercials. They’re never part of a car salesman’s spiel. And there’s no seat track website or blog. Yet seat tracks are a key part of any car, pickup, minivan, SUV or CUV. 

In the early twenties, The Hudson Motor Car Company was the first automaker to implement sliding seat technology, making their products safer and more comfortable for a wide range of drivers. Not to belabor the obvious, Hudson’s adjustable seats helped height-challenged drivers reach the pedals and hold the steering wheel. They also allowed tall people to slide the seat backwards, to get enough room to operate the foot pedals effectively. They were an instant hit from the start; virtually every modern vehicle made uses seat tracks.

From a safety point-of-view, seat tracks hold the driver in place during a crash. Some cars (e.g. Mercedes SL) now have the entire seat belt and shoulder harness connected directly to the seat, adding additional weight to the mass the seat track must arrest. And, lest we forget, seat tracks must also be user-friendly, cheap, quiet, smooth, durable and reliable.

The Ford Motor Company hasn’t made a seat track in decades. Like roughly two thirds of the parts in an average Ford, seat tracks are provided by the automaker’s suppliers. For decades, Ford engineers designed the tracks, made blueprints, and then sent the drawings to likely suppliers for a price quote. The lowest price got the job.

In the late ‘80’s into the early ‘90’s, this subcontracting process changed. Ford cut back on its body engineering staff. They asked their suppliers to step up and do more of the design and engineering work. Many of their suppliers agreed. After all, the design process offered more work and increased control over product quality and price. The fact that the supplier base simply didn’t have all the engineering resources required to effectively realize this commitment didn’t seem to bother Ford, and it certainly didn’t bother the suppliers.

Not surprisingly, there were problems. Ford’s customers complained, warranty rates soared and some embarrassing failures ensued. Ford also discovered that they paid more for their seat tracks than most of their competitors.

Ford re-built their seat engineering department. A budget was appropriated. A dozen new engineers and managers were hired. Unfortunately, most of the new hires had worked at Ford’s seat track suppliers. They were, in fact, responsible for the original seat track quality “issues.” The problems persisted.

So Ford fired all their existing domestic suppliers and brought in a new one from abroad. This supplier had been supplying seat tracks to some of the world’s finest cars. They’d never triggered a single recall. Their engineering staff was well respected, their manufacturing facilities top-flight. And, perhaps best of all, they promised to find ways to save Ford money.

It didn’t take them long to solve the problem. All seat tracks do the same job, yet the new supplier soon discovered that Ford had well over a dozen seat tracks in different cars and trucks. Using the same tracks would save big money in manufacturing and inventory. More importantly, it would allow the engineers to spend their time developing the world’s best seat tracks– instead of spending time, energy and money on a dozen second-rate tracks.

The outside supplier also learned that every Ford car and truck had different mounting brackets or “feet.” Sometimes the differences in mounting points were as little as a quarter inch. Sometimes different sized bolts were used. Other feet were excessively heavy, far stronger than either the tracks or the floor to which they were attached. Occasionally the feet were too weak. The supplier calculated savings in the many millions by recommending parts commonality to many, if not all, of Ford’s products.

Common feet would mean that the engineers could apply all of their efforts to optimizing the design of one set of feet. Dollars and pounds would be saved. Naturally, the supplier expected Ford to be pleased when they presented their findings and recommendations. Who could argue with changes that saved money and improved quality?

It didn’t take long for Ford to respond. In no uncertain terms, the supplier was told never again to interfere with Ford’s engineering process. “Make the parts that we specify. Nothing more, nothing less.”

Although Ford CEO Alan Mulally hasn't turned his attention to seat rails, news reports reveal that he's taken-up the parts commonality crusade. It remains to be seen if Ford's $35m man can get there before the financial well runs dry, and if the vehicles made from these parts will capture the public imagination. One thing is for sure: the "bad old days" aren't over yet, and they can't end soon enough. 

The Detroit News recently enlisted J.D. Power and Associates to help explain Detroit's pressure drop, and figure out how Ford and the other 1.5 can stop the rot. After gathering data from 500 survey takers registered on an opinions-for-cash website called Opinion Outpost, The Power That Is concluded that the domestics have their work cut out for them. (Surprise!) Only 40% of this infinitesimal sample of alleged intenders (‘cause if they weren’t intenders they wouldn’t get paid for the survey) would consider buying a domestic car, due to concerns about reliability, quality and fuel economy. 

Todd Wilson, J.D. Power’s Director of Automotive Research pegged the blame on a simple misunderstanding or, to use the phrase currently in vogue within Ford et al., a “perception gap.” “The perception of quality is the point,” Wilson opined. Apparently, “Asians just have a better image of building a better product.” This despite the fact that many of Ford's cars and trucks are nestling at the top of J.D.'s reliability and customer satisfaction surveys.

To tackle these PR issues, Ford's ad agency (JWT) commissioned Car and Driver to test the Fusion SEL AWD V6 against the Honda Accord EX-L V6 and Toyota Camry XLE V6. At Ford's behest, the buff book invited 600 C&D subs to FedEx Field in Washington, DC to drive the trio of mid-sized motors. In a nationwide ad campaign launched yesterday (look for a "Special Advertising Section" inside next month's C&D), Ford claimed the participants rated the Fusion tops in “Styling,” “Handling,” “Performance,” and “Fun to Drive."

[NB: Ford PR declined to provide TTAC with the test data or methodology. Sources who attended the event report that one of the test Accords' radio and VSA (Variable Stability Assist) were non-operational, and Ford 'aides' touted the Fusion’s features, but not the Toyota or Honda's.]  

Although inherently flawed (AWD vs. FWD?), the campaign reveals a new, feistier Ford. If only the general public shared the spinmeisters' optimism. The Detroit News' survey flagged one reason for a lack of consumer confidence in the Blue Oval: resale values. Now that the Taurus is ground chuck and the Freestar has been sucked into a black hole, the Blue Oval’s fleet of fleet-oriented vehicles is growing smaller, which will help restore used car values. On the other hand, FoMoCo has promised to fill Freestar fleet orders with an as-yet-unnamed product, and the Fusion, the muy picante Ford Escape and selected F-Series pickups are being dolled-up with attractive lease and finance offers. That's good for buyers, bad for sellers. 

In any case, with roughly 530k current year units in U.S. inventories, Big Al needs more metal moved. Looking backwards, 2.6% fewer American consumers cruised from showrooms with new whips this year, and Ford was hit hardest. Mulally’s minions managed to move a mere 2.9m units. That’s 250k less than last year’s slumping results. December’s 13 point slide resulted in more Blue Oval blues, as ToMoCo outsold Ford for the third month last year. To add insult to injury, Toyota ate all of Ford’s lost 8% of annual sales, and then some.

The cost of freedom from debt will be high for Ford. But for whom? United Auto Workers (UAW) President Ron Gettelfinger and Mulally have begun negotiations on the union's '07 contract. FoMoCo’s main mofo is optimistic, declaring that “nobody cares more about Ford than Ron Gettelfinger.” Translation: Big Al reckons the UAW’s survival depends on these negotiations as much as the Blue Oval’s. Unfortunately, with the corporate coffers at capacity, FoMoCo will be hard pressed to convince the UAW to do all the giving. 

Failure to succeed in ANY of these areas in ‘07 will hurt Ford’s chances for profitable operations within the next four years. With all eyes on Mulally, his motivation to succeed is personal, not just business. According to Casesa Strategic Advisors LLC, Ford’s $35m dollar man has hedged his bets. John Casesa says “if Mulally fails, then the [Ford] family will have to consider all options, including giving up the company.” If the family throws up its hands and surrenders, Mulally’s $3.6m stock options (and restricted units) would vest immediately; he would also line his pockets with twice his salary and projected bonus. Get ready for an interesting year.

The average American car buyer is completely unaware of Ford’s financial troubles. They don’t know Alan Mulally from Bertie Ahern. They don’t know that Ford’s taken out The Mother of All Bank Loans, mortgaging everything up to and including the company logo. They don’t know the automaker’s got three years to avoid annihilation. But the day Toyota overtakes Ford as America’s number two carmaker, the U.S. consumer will get a multi-media wake-up call. The psychological damage will be profound. Not that Ford sees it that way.

“Our focus is on getting our business back on a solid footing to return to profitability,” George Pipas pronounced. “Any talk about sales ranking is little more than a distraction." That’s a strange comment coming from a man holding the title “Chief Sales Statistician, Ford Motor Company.” But Pipas has a point. Why worry about Toyota’s rise to the top when you’re fighting to stay alive?  

Seven years ago, Dearborn’s Darlings were worth just over $80b. This year, Ford’s market cap stands at $13b. Although the company has topped-up its cash reserves with $26b of newly leveraged liquidity, it's set to toss $17b of that into the fire over the next three years. Will it be enough? Ford Flack Oscar Suris claims the more fully funded Blue Oval is perfectly positioned to handle the day-to-day challenges of being number three. Suris insists that neither a recession nor “any other event” (wind, sleet and snow?) could force the freshly flush Ford to flounder. 

John Novak of Morningstar Inc., ain’t buying it. Like any sensible auto industry analyst, Novak insists that Ford’s survival depends entirely on its ability to generate cash through improved sales and profit ratios. Without a new cost-cutting UAW contract and substantial regrowth in its market share, Billy Ford's mob will be hard pressed to service the family firm's debt, never mind pay off the principal.

To keep the bankers at bay and the coffers at capacity, Ford is staking its short term future on the new Edge. The Blue Oval’s blitzing the American public with $100m in edgy Edge advertising. And why not? The sharp-looking crossover is FoMoCo's only shot at much-needed, long-overdue new product buzz. To add timbre to that tone, Dearborn is cranking up its marketing machine to new heights.

This latest advertising onslaught owes its genesis (genius?) to The Way Fordward Version 1.0. Flying in the face of all the badge-engineered inbreeding polluting the gene pool of Ford's extended family of products, the company has decided it’s all about "Brand DNA." They're going to (re)define their soon-to-be-decided number of divisions, create products that embody these new, more coherent brand values, and then sell the vehicles to people who, um, want them. The Edge campaign is designed to build on– OK, "initiate" this not-so-novel concept. 

The Glass House Gang are pitching the cross border crossover in every conceivable medium, to every imaginable market, in every possible language (even “Spanglish”). Rolling Stone gets a centerfold, NBC’s Las Vegas gets product [out-of-]placement, urban skyscrapers get hallucinatory projections and Edmunds gets richer. Despite the ubiquity, Ford has some human DNA in its sights: single men and women in their mid-thirties with an active lifestyle (codenamed "Phil" and “Mia”).

Celebrities ranging from Korean soap star Ahn Jae Wook to Beyonce Knowles will pocket large checks to push their fan base over– I mean into an Edge. Ballers n’ playas tuning into to the Steve Harvey show will hear Grammy nominee Kelis’ (pronounced “Kuh-Leese”) musical campaign contribution: “Push it to the Edge.” Jeri Ward, Ford Edge Marketing Manager, sees the hip hop artist as “the perfect spokesperson for the urban Edge campaign… she has a bold style that breaks the rules.” Apparently, the lady whose milkshake brought all the boys to the yard “prefers bold designs.” So sending them to a Ford dealer should be a piece of cake.

Whether or not Phil, Mia and their hip-hop lovin' friends elevate the not-so-bling Ford Edge to stuntin' 'Sclade status, FoMoCo's crossover is sailing straight into a consumer headwind. The U.S. housing market is in its first full year decline since the Great Depression. After years of cash-on-the-hood and no interest loans for anyone with a pulse, the demand for new vehicle financing is drying up– even as Ford’s middle class mid-market buyer finds that expendable income is becoming as scarce as storage space on Ford dealers’ lots. Industry mavens CSM Worldwide predict that Billy's Boyz will bear the brunt of a nine-year, 16.2m unit low in auto sales.

In short, the Edge has got to sell while the selling’s good. The New York Times predicts that Toyota will scoop America's number two sales slot next February. On that fateful day, American car buyers will know something’s very wrong over at Ford. Tipping point or no, selling a Ford is about to get a LOT harder. 

November’s sales figures are out, and FoMoCo’s treading unfamiliar waters. For the first time since, well, ever, Dearborn’s darlings find themselves off the sales podium. The General, Toyota and both parts of the DCX German-American hybrid surpassed last year’s sales totals. Despite pre-Christmas gains north of the border, Ford’s U.S. sales sank nearly 10%. Their declining market share dropped them into fourth place by total sales volume. “This is an area, frankly, of disappointment,” George Pipas, Sales Analysis Manager for Four’d pronounced. “We had our sights set higher.” 

On the heels of November’s results, CEO Alan Mulally’s mob announced that an additional 15k units aren’t going to see their way off of Ford’s leveraged lines. If the slowdown was due to the void left by 38k clock-punchers as they punched out permanently, hey, no problem. But these cuts were made this month; before Ford’s assembly liners leave the building. To justify the increased production reduction, Glass House representatives reiterated their Chrysler anti-matter approach: match supply to demand. Or: we ain't gonna go out and "chase sales simply to pump up [the] volume."

Yes, well, a dozen more FoMoCo models equipped with an additional thousand in Mulally minted bonus bucks beg to differ. In an effort to, uh, chase sales and pump up the volume, Dearborn is using the only sales strategy with a hope in Hell of moving the moribund metal. Buyers can now score up to $7k in cash rebates on nineteen different models. Ford’s hoping bribed consumers will blow the dust off the over 90-day inventory and end Ford’s decade long market decline.

There are plenty of reasons why the situation sucks. Now that the long forgotten (by Ford designers) Taurus has met its matador, fleet sales no longer offer a buffer against retail implosion. What’s more, sales of the profitable Explorer have rolled-over and died. November was the worst month for the former mainstay since the SUV’s introduction in 1990– down some 55k units from 2005. And to be blunt, the Edge is arriving a day (or 365) late and a dollar short.

Even with all that leveraged capital keeping the company coffers full (for now), Dearborn’s December needs to show some positive market share movement– even if the net result is a negative bottom line. Banc of America analyst Ronald Tadross and friends indicate that every point of market share Ford loses behind the couch sucks a billion bucks in operating profits away from Ford’s ‘09 return to profitability target.

According to small Ron, “Anybody can close some plants and fire some people… Right-sizing is almost self-defeating if you don’t fix the business.” Mulally’s movements, while dramatic and sweeping, have not lead to the Glass House re-org that is badly needed to meet its profit obligations. Analysts call for public deadlines for global product integration, transparency regarding reducing purchasing costs, and an abandonment of incentive based sales (that render resale values lower than Ford’s S&P rating). As if.

One item on the money men's to-do list that may actually occur: the long awaited deconstruction of Ford’s overseas imbroglio: the Premium Automotive Group (PAG). Recently released Wall Street whiz kid Kenneth Leet is rumored to still be on top of the sale of Bond’s favorite Q-toy provider (his pockets awaiting relining). So much for Aston Martin. But what of Jaguar? Hidden within the legalese of FoMoCo’s disclosure: a clause that lets the cat out of the PAG.

In fact, Jaguar and Land Rover were one of the few Ford “assets” exempted from their recent collateral catchall (which includes their logo and Bill’s bronze desk sign). In Jaguar's case, this could be due to the fact that mortgaging nothing generally renders nothing. Still, flogging the feline to anyone willing to take it off Ford's hands makes a lot of cents. As the Brits say, when you’re in a hole, stop digging. Besides, a Jaguar sell-off would send a clear and welcome signal to skeptical observers (i.e. Ford stockholders) that the automaker is finally serious about getting its house in order.

The sum of all fears seems to be $4b. Although that's a bit low for a multinational automaker's mission critical operating liquidity, Ford is bound and determined to keep its head above this level. To keep on truckin’, Dearborn is quite literally risking it all. Ford’s beancounters have increased the company’s collateralized credit facility from $18b to near as dammit $23b. At the same time, the year’s largest bulk of stock-bond hybrids have hit the trading room floor.

While these bold moves have bought The Blue Oval Boyz a bit more time, it doesn’t do anything to change the fundamental problems challenges besetting Henry Ford’s legacy: products, brands, dealers and unions. Especially product. If Ford doesn’t find some automotive magic bullets, if it can’t build some tangible, tantalizing new toys in double quick time, the company’s new-found leveraged life could prove to be nothing more than borrowed time.

To combat the commonly held (if accurate) belief that FoMoCo’s product pipeline is drier than a Vermouth-free martini, FoMoCo recently unveiled the “Showroom of the Future.” Ford ushered retirees, clock punchers and white collar grunts into the Cobo Arena for a glimpse at what may (or may not) be the “most important new Ford.” While they weren’t invited to sample Ford’s four-wheeled corporate Kool-Aid, the Detroit News reported that the attendees were suitably impressed. It may not have been enough to take the edge off the Edge’s delayed debut, but it did reveal a bit more about Ford’s immediate prospects.

The headline: Ford will [finally] re-enter the US small car market with a 1.8-liter four-door, four-pot B-segment vehicle. Amongst the sixteen other vehicles on display, notable Hail Mary passes included the not-so-secret Fairlane people mover, an in-yer-face F-150 refresh and an Explorer designed to not explore. Oh yeah, and some [more] pimped-out ponies.

Under product czar Derrick Kuzak, Ford’s new “global system” will ensure that these still wrapped presents make it to market faster than before. While that’s not saying as much as was perhaps intended, the Zephyr-driving twenty-eight year Blue Oval veteran revealed that the accelerated go-go gadget car process relied on CEO Alan Mulally’s global approach. By “eliminating redundancies, complexity and waste” the new system is set to shave eight to 14 months from the current gestation period.

Yes, well, this new system won’t be in place until the end of 2008. So Mark Fields’ year old promise of a bitchin’ B-car will come to fruition under a new US Prez. In fact, the hit of Ford’s secret show won’t grace population-reduced production lines until 2009 or 2010. It seems that learning (from the past or otherwise) is a slow and painful process for Blue Oval brass. With three to four more years of sales, the Japanese (and maybe even homegrown) competition will again have achieved– or, more precisely, cemented– segment dominance.

No surprise there. The Japanese have a long history of finding and then dominating markets their competition can’t see. For example, the transplants invented the CUV because they A) they lacked viable truck frames to create “proper” Gaijin SUV’s and B) Japan’s too damn small for them anyway. By the time the SUV-reliant domestics set their sites on the crossover market, the transplants had built a virtually unassailable lead in the hottest “new” segment.

SUV refugees currently have four dozen mostly Japanese cute-utes to choose from. Many more are on their way. As this segment is hitting its stride, Ford’s current most important new vehicle is the crossover-come-lately (in more ways than one). As before, while FoMoCo worldwide is re-tooling to become one nation under Al’s groove, the market will look to Japan, Korea or even China for the next big thing and leave Ford even closer to the Edge of bankruptcy.

In fact, segment leadership is becoming increasingly important to overall profitability. With slowing growth in the U.S. economy and the pinch of a housing slump being felt in mega-markets like California, automakers seeking a product led turnaround face a distinctly uphill battle. A Michigan based market research firm called IRN figures that 2007 could be the worst year for new car sales in a decade. They predict that roughly 300k less units will leave dealer lots, as the haves have less.

To combat slumping market trends, Ford recently introduced a massive buyout program, which expired Monday night. According to this morning's papers, 35k United Auto Workers (UAW) have decided to take Mr. Bill's money and run. This is excellent news. Trimming half of the company's active UAW workforce will bring FoMoCo's payroll in line with existing demand– provided the workers don't change their mind before the programs kick-in, and Ford's domestic market share doesn't [continue to] sink below their goal of a sub-Toyota 14%. 

Of course, that's down from 25%. And the mass exodus is an incontrovertible sign of just how bad things are down in Dearborn. While the departed (including as many as 10k white collar workers) will relieve much of the ongoing pressure on Ford's bottom line, the payouts will add legacy costs and still put a big old minus sign on Ford's corporate ledger– and soon. 

To bolster for this mega-hit and pay for the new “global system,” Ford done gone and bet the farm, using anything that was (or wasn’t) nailed down as collateral for $18b in new financing. While the severity of “all-in” asset restructuring indicates just how serious Dearborn’s darlings are about this turnaround, it’s still a huge gamble. Robert Barry of Goldman Sachs reminds us that most of these newly borrowed bucks will be burned by the Way Fordward.

Even with $38b in hand, Mulally’s Global Overhaul may prove to be too costly for a company that’s consistently late to the game. It’s entirely possible that the Ford showroom of the future will be a very empty place indeed.

As bad as Ford’s third quarter results (version 1.0) were for Dearborn’s darlings, the future doesn’t look much better. Ford’s Chief Financial Officer Don Leclair has publicly admitted that he expects the automaker’s fourth quarter to look like the one that crushed the Arizona Cardinals in week six: a complete and utter disaster. What’s more, Leclair has also acknowledged that Ford’s production cuts crush any hopes of financial rebound for at least the first half of 2008– no matter how their cross-border crossover fares in the marketplace. So, is it time to panic?

Ford PR flack Becky Sanch certainly jangled a few nerves when she agreed with a Detroit Free Press analysis that estimates FoMoCo’s year end losses could snowball to a staggering $12.5b. (For those of you keeping score, that’s another $5.3b in the hole.) Market mavens blame about $1.6b on normal operating losses for the Christmas season. Ford also let slip that somewhere between $1.5b and $2.5b more in “special pretax items” would show up on ‘06’s financial statement. Bruce Clark, a senior VP with Moody’s Investors Service, figures FoMoCo’s cash cushion will lose some significant padding in the coming 12 months. The fact is Ford will continue to lose liquidity even after that. 

Meanwhile, matching production to waning demand is job one. Ford’s across-the-board manufacturing cuts are designed to lead to 100% production efficiency (assuming Ford’s market share stabilizes at 13 to 14%). Short term, the reduced output should place less strain on Ford’s bloated dealer network, which is busy starving to death. Mike Jackson, CEO of AutoNation, points out that Ford's unsold inventory estimates include fleet sales. Jackson reckons Ford dealers are sitting on 105 days worth of unsold units– not the 75 that’s been reported. That’s a Hell of a lot of metal that needs moving. 

While the production cuts will help dealers “catch-up” with falling demand, without a drastic reduction of the 4400 national Ford dealer network, improvements will be… fleeting. Rumor has it that Ford’s looking to fork-out $300k cash incentives to stores willing to cut their losses and die. Even if true, a mass exodus is hardly likely; $300k wouldn’t even cover most Ford dealers' Reynolds and Reynolds software contract. Several dealers indicate privately that it would take about $2m to $4m in further “special pre-tax” cash financing to get them to fold up their Ford tent and go home. 

Analysts estimate that only 600 dealers can be bought out and closed down at the proposed rate. If so, Ford’s “new” market position means that the remaining Ford floggers will only move around 670 units each. That’s not what you’d call good news. To compete effectively with the vastly more efficient foreign-owned competition, to restore some of the lost luster to dealer profits, at least 1400 Ford dealerships need to get the axe. With just three thousand stores, each lot could conceivably push close to 1000 units out the door.

Again, it’s not likely that Ford will surrender the big bucks needed to make such a deep (and long overdue) cut to its dealer network. They may not have to. Given current estimates of about 616 units sold per dealer in ’06– “excess” dealerships may disappear through “natural attrition.” Without sufficient throughput, dealers lack the advertising dollars needed to lure the punters. And with less profit per unit to motivate sales staff, their ability to move the metal erodes. In increasing numbers, dealers are finding their margins bumping up against their overheads, until they take in less money than they spend and there’s no point carrying on.

While the dealer cancer spreads, freshly-minted Ford CEO Alan Mulally told the DTN that his employer needs to cut its costs: "It's all about competitiveness," he said. "You can't compete with a $3,400 disadvantage." Translation: Ford can’t afford its United Auto Workers (UAW) agreements. Mulally optimistically predicted that the UAW would see sense in their ’07 contract talks because A) it’s “Detroit’s defining moment” and B) if they don’t, by golly, he’ll take Ford’s case straight to the workers. Hi, I’m Alan. I made $35m this year and fly around in a Gulfstream. Here’s why you should work for less money, less benefits and a smaller pension.

If that wasn’t enough to rattle the bear cages on Wall Street, Mulally acknowledged that the Ford mothership faces a do-or-die cash crunch. "We have got to turn around North America and be profitable by 2009," Mulally said. "Because if not, you just keep losing cash and pretty soon you run out." Notice the change from “we” to “you.” It’s a classic example of disassociation; Mulally literally can’t face the possibility of a Ford bankruptcy. OK, now you can panic.

Last Friday, JWT invited me to the Big Apple to discuss their Bold Moves internet documentary series. The ad agency wanted to interview "one of Ford’s fiercest critics" about their client’s decision to “pull back the curtain” on their turnaround efforts. Although JWT was only paying my expenses, I was inspired to make the journey by Mark Fields’ parting words in the opening episode: “the American people love the truth.” This is perfectly true and completely beside the point. The question is, does Ford love the truth?

I knew the answer to that question even before I boarded the Acela Express. Back in June, the automaker commissioned me to write about the wisdom (or lack thereof) of the Bold Moves campaign. My no-holds-barred rant wasn’t a hit. I rewrote a few bits at their behest, but dug in my heels on the article’s main thrust: Ford’s campaign sucked because their products aren’t bold. Nor should they be. “The average Ford buyer hankers after a bold vehicle about as much as they crave purple hair extensions.” The piece never appeared.

As I walked through JWT’s white offices– lifted directly from the set of Woody Allen’s Sleeper– I surmised that my hosts had asked me down as part of a carefully coordinated effort to show how “real” they were, because, of course, “real” is all the rage these days. Yes but… the interview came with damage control as standard. JWT was free to use whatever digitized bits best suited its corporate purposes or, again, ditch the whole deal.

As soon as our chat commenced, I discovered that “transparency” was the name of JWT’s game. My bright eyed and tie-less adtagonist wanted to know if I– or anyone else– gave Ford props for letting JWT’s camera crew record, edit and post a “warts and all” look behind the scenes of the automaker’s recent struggles. The ad guy didn’t seem to care when I said nobody other than industry wonks and advertising execs was interested Ford’s bold new blog. He remained unperturbed when I declared that JWT's films had about as much edge as a beach ball, Ford employees were more concerned about losing their jobs than faux cinema verite and that The Blue Oval is doomed. Like I said: editing.

Later, as I watched the sun set over Connecticut, I concluded that Ford and JWT just don’t get it. Using the internet as an alternative channel for corporate PR– no matter how “hard hitting”– isn’t a bold move. It’s the same old you-know-what in a different wrapper. In our Brave New e-World, interactvity is all. The only two-way section of the Bold Moves site– “Ford responds”– is a limp joke. An anonymous Ford rep– no name, title or email– answers a selected question. Surfers post their reactions. Then… nothing. It's a total disconnect between consumer passion and Ford reaction, a sop to electronic intercourse that highlights the automaker's ignorance, arrogance and intransigence.  

But it wasn’t until today that I realized how badly JWT and their Dearborn paymasters are fooling themselves. In Car and Driver’s letters section, Bud Green from Garland, Texas took C&D to task for describing a 4.9-liter Mustang when no such vehicle existed. “Hey, Bud,” the Ed responded. “you might want to review the trunkload of stories we’ve written about the “5.0” Mustang over its long run. The engine had a displacement of 4942cc.” The editor’s time shifted, mean-spirited, self-congratulatory response perfectly illustrates the old media’s gestalt, and the ethos of the automakers that help subsidize their efforts.

Car mags and carmakers simply don’t (or won’t) realize that the paradigm has shifted. The days when the high priests of automotive manufacturing and their journalistic acolytes could make products and pronouncements without concerning themselves with the opinions of people outside the industry (save an occasional interest in which vehicles or magazines consumers buy) are gone. The new model is an wired organization sans frontieres: a commercial enterprise with an instant, endless feedback loop between company and consumer that ultimately obliterates the difference between the two. Carmakers willing to make this leap– to surrender intellectual power to their customers– will thrive. 

The Bold Moves website demonstrates Ford's unwillingness to embrace the new template. It's nothing more than traditional top down corporate culture transposed into a new medium. If the guardians of "Crazy Henry's" legacy really wanted to be bold, they'd create a multiplicity of websites covering every aspect of their business: design, marketing, engineering, distribution, sales, etc. They'd configure these sub-sites to allow a frank, open and meaningful conversation with the outside world, including suppliers, dealers, mechanics, owners and potential consumers. Anything less is an enormous waste of time, money and credibility.

The new CEO of the company walked into the boardroom. The mood was grim. Recruited from another company in another industry just a few months previously, he carried bleak news. The automaker had just reported the largest third quarter loss in recent history. Their most profitable products, which had been flying off dealer lots, were dead in the water. Strikes at suppliers had crippled production of the few products that sold well. Market share was evaporating, and operations in Europe were drowning in red ink. Worst of all, recent downgrading of their bonds had hurt the profitability of their all-important finance unit, which had underwritten the car business for years. It was time for some bold moves.

The board of directors listened to the bad news as the patriarch of the founding family stared down at them from a portrait on the wall. When the CEO finished, the directors mulled over their options. No matter what course they chose, the lives of thousands of employees would be affected. The economic health of the company’s home town depended on them. It was a heavy burden.

The year was 1963. The company was Studebaker. The CEO was Sherwood Egbert, formerly of McCulloch Chainsaws. After due consideration, the directors decided that there was no economic justification for remaining in the car business. They initiated plans to ease the company out of the automobile industry and expand its portfolio of profitable businesses. When the last Studebaker eventually rolled off the assembly line, the company’s stock almost doubled. Studebaker went on to become a very profitable company, eventually merging with other conglomerates.

Four-and-a-half decades later, Ford stands at the same crossroads. The Blue Oval just reported the worst third quarter earnings in over a decade-and-a-half. Market share has dropped dramatically, by over a third. Consumers have deserted the profitable trucks and SUVs that drove Ford to the heights of profitability. In the meantime, buyers are lined up none deep for the Ford 500 and its clone, the Mercury Montego. Overseas losses continue, with the Premium Automotive Group losing an astounding $600m.

Wall Street’s lack of confidence in Ford’s automotive endeavors has resulted in the continued downgrading of Ford’s bonds. This raises the cost of capital to Ford Financial, which is the profit engine of the Ford Motor Company. Without profits from Financial, Ford would not be a financially tenable organization. This last quarter, profits from Ford Financial were off about $400m, mainly due to the higher cost of borrowing.

The solutions to Ford Financial’s profit problems leave Ford with a Hobson’s choice. If Ford sells a controlling share of Financial to an outside company (a la GM and Cerberus), the credit ratings of Financial’s bonds would rise dramatically. But Ford would then reap only half, or less, of the profits. And it’s entirely possible that the finance unit’s new owners might find better uses for those profits than propping up FoMoCo.

If, on the other hand, Ford allows the deficit-ridden automobile operations to continue to drag down the credit ratings of Ford Financial, less and less cash from Financial will be available to prop up Ford. Declining profits will decrease the value of Ford Financial. If and when Ford is forced to sell it off just to meet the payroll, the finance company will be worth a fraction of its current fair market value.

And then there’s Ford’s seriously deteriorating relationship with its suppliers. A large number of companies that Ford relies on for continued production of its automotive products are in bankruptcy: Delphi, Tower, Dana, Dura, Federal Mogul and Collins & Aikman; to name a few. A failure of any of these mission critical manufacturers would cause an immediate shutdown of one or more of Ford’s production plants. Ford’s relentless pressure on prices has weakened its supply base to the point where continued and reliable production is a tenuous supposition.

Recently, Ford had to shut down its Fusion/Milan/MKZ plant, when Collins and Aikman (C&A) refused (for one shift) to supply parts at a loss. C&A, bankrupt, felt they simply had to have more money to cover their costs. Widely but silently applauded in the supplier community, the move could well be the first in a series of similar supplier “strikes." Just when Ford needs more cost savings, their own supplier base, already destitute, will demand, and get, higher prices. Ford has already deplored the “serious harm to the relationship” caused by C&A’s actions, but it’s clear that relationships with Ford don’t pay the bills.

In response to these issues, Ford’s new CEO Alan Mulally is calling for "incremental continuous improvement.” Meanwhile, Ford’s board of directors is heading towards a sad recognition of the truth: the automaker doesn’t have a viable plan for making cars and trucks at a profit, or the time to devise one. At that point, it’s only a matter of time before Ford thinks the unthinkable: following Studebaker into becoming a multi-national financial company.  

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.

Star Trek based many of its best episodes on simple homilies. In “The Lights of Zetar” (Star date 5725.3), Memory Alpha is attacked. Creatures from the planet Zetar concoct an energy storm that ravages the planetoid. The Federation’s main computer database, containing all of the cultural and scientific data they’ve ever gathered, goes fubar, and with it, the Federation. What did they expect? To put a little Yoda spin on it, into one basket all eggs should not go. OK, now, Earth date October 16, 2006. Dearborn rolls out the Ford Edge. See what I mean?

It’s been a month since Ford's “Black and Blue Friday.” The product(s) driving the new new Way Fordward are rolling off assembly lines. The Ford Edge and Lincoln [Mary] EmKayEx carry FoMoCo's financial future in their five passenger hulls. Mark Fields is on record as stating that these are the Blue Oval’s halo cars, not the rarified Shelby Mustang variants. Halotosis or not, industry analysts and market mavens will keep keen eyes on the cross border crossovers, as their success or failure will no doubt foretell Ford’s.

Early Edge opinions are favorable. While not personally sold on the CUV, TTAC’s resident west coast wheelman Jonny Lieberman was impressed with the Edge's interior, engine, ride and handling. The buzz sounds promising; Ford reports that some 50k webheads have specced-up virtual people movers. FoMoCo hopes this translates into 135k units annually: a razor’s edge shy of one percentage point of the entire United States automotive market. With base models starting at around $26k, that translates into about $3.2b in much needed revenue. Given estimates of a crossover boom to 3.2m sales by 2010, the promise of profits by ‘09 could boldly move onto the horizon. Of course, there are a few “challenges” to that theory.

The Edge’s CUV competition is already a whole product cycle ahead of Ford. An estimated 1.6m SUV refugees have upped stakes for Dearborn’s foreign competition. This year, Nissan has flogged over 62k Muranos to Ford’s “Phil” and 16k FXs to his more affluent buds. Honda has reached out to 116k CR-V customers. In September alone, ToMoCo moved over 11k RAV4s and Highlanders. Each. The General has badge engineered troops ready to invade the segment and DCX is already there. And speaking of a cloak on invisibility, Ford’s Freestyle is [still] floundering about in this genre.

The Edge must lure the public back to the Blue Oval fold. Assuming it does, that’s one segment, one basket. Mark “My Title is Huge” Fields told the press on Monday that The Blue Oval plans to ride out the current vehicle lineup until 2008. Product led turnaround indeed! With nothing new in the pipeline, with its history of model neglect, any FoMoCo interest generated by the cross-border crossover is bound to cool, and quick. And then… nothing much.

Don’t take my word for it. After spending “a lot of time looking at the where the market is going,” Marky Mark Fields publicly declared that “on a scale of 1-10, the revisions to the 2007-08 product program rate a 2.” In other words, the market may have changed, but those ships have sailed. As for the products arriving at the end of the decade, Fields rates the amount of revision as “something like a 6 or 7.” 

That's four years away. No wonder the company is feeling, as the Brits would say, at sixes and sevens. Ford projects its market share to continue its decline, bottoming out at around 14%. Given that drop, given dwindling sales of profitable SUV’s, expensive production cuts/buyouts and their models' inherent cost disadvantages vis-à-vis non-union competition, it’s difficult to see how the Darlings of Dearborn can generate sufficient profits to keep the lights on. Selling fewer quantities of the same less profitable vehicles is no recipe for enlightenment. Even if the Edge becomes the segment leader, it’s only one product, and simply not enough to cover the losses left in the third seating rows of big SUVs.

In his first company-wide email, in his second week at the helm of America's soon-to-be third largest automaker, CEO Alan Mulally warned his [remaining] troops that Ford needs more than an Edge to keep its edge. “Pockets of success aren't enough. Not today. Not in this competitive environment. We need success across our entire enterprise. To get there, we need to have a universally agreed to and understood business plan. It needs to be a single plan, and it needs to work for the entire company.” What? A new new new plan? Apparently so. According to Ford's Thirty Five Million Dollar Man, this one will be built (remember: it’s a work in progress) around PEOPLE, PRODUCTS and PRODUCTIVITY. 

While it’s nice to hear that Alan's minding his P’s, there’s a big Q hanging over the entire enterprise: can Ford find more baskets and make some better eggs? Or, if you prefer, it remains to be seen if Ford's got the starships needed to re-boot and scoot.

First the good news. For the first time in eight long months, George Pipas, Ford's man in the crosshairs Manager of Sales Analysis, could deliver glad tidings to anxious stockholders and stakeholders. September retail and fleet results reveal that sales of Ford’s cars and truck were up when compared against the same month in '05. Although FoMoCo’s sales increases didn’t come anywhere near Toyota’s dramatic advance, the Detroit-based automaker bested cross-town rivals GM and Chrysler by a considerable margin. And the hits keep happening. 

Ford’s Explorer explored territory it hasn’t seen since August of last year (up 22%), and the gargantuan Expedition enjoyed more attention too. Demand for the Hecho en Mexico Fusion fueled a sedan sized fiesta at the Blue Oval to the tune of a 5.3% gain.  These increases were enough to nudge Dearborn’s market share to 16.5%, more than a half point better than last September. With the cross border crossover poised to make its debut, FoMoCo enters the final quarter on an upturn with old metal moving and new metal buzz.

Now the bad news: Mulally’s much maligned motor company isn’t out of the woods yet. A closer look at the numbers indicates that little has changed. Fleet sales still bolster 26% of the movement. And while 74% retail composition is nothing to sneeze at, the fact that those sales are heavily incentive laden, is. Cash on the hood and no interest loans for anyone with a pulse continue to be the way fordward. October is truck month and as Toby Keith sings the praises of the venerable F-150, White Trash With(out) Money can drive the country star’s favorite whip off dealer lots and still have cash left to go “Get Drunk and Be Somebody”.

Inventory currently sits at around 650k units, and the fall season means model year closeouts. To make room for next year’s lot litter, 0% financing is being offered on all non truck vehicles, save Mustang and Fusion. While this will no doubt relieve dealer lots, it does little to help Ford, and will only cripple the profitable Ford Motor Credit unit. To have any chance of survival FoMoCo must deliver on its promise of profitability by the end of the decade. To do that, a “product lead turnaround” is going to need a healthy dose of cash flow. No matter how much metal is moved, virtual loss leaders are not the answer.

A study conducted by Harbour-Felax Group found that incentives and fleet sale discounts cost motor city manufactures an average of 11% in much needed profit. Japanese competition was able to generate an average of $24,289 per car, while homegrown products only put $21,597 back into the pot. Diluted profits translate directly into lost product development. In order to engineer and design market grabbing people movers, Dearborn must turn its knife to sticker play and maintain price points.

That’s not all though. Not only does Ford make less on each vehicle they produce, they also spend more doing so.  It’s no secret that FoMoCo faces incredible cost resistance to profitable production. Health care woes and the union straightjacket ensure that every lost work day results in a $70 per vehicle cost increase. Tack on another $70 each for the extra 16 minutes of break time that every blue collar gets during a shift. Assuming the best case/least likely scenario of perfect attendance by unionized workers, and steady annual sales of 3.1m vehicles, last year’s work breaks alone cost FoMoCo $217m. The money was literally pissed away.

Compared to Toyota, The Blue Oval coughs up an average of $2,165 more per vehicle produced.  Health care advantages, decreased warranty costs, cheaper labour and better use of flex manufacturing ensure that the megalomaniacal Japanese automaker has an immense $6.7b annual cost advantage over its competition in Dearborn. Note: Ford’s production capacity won’t reach 100% until 2008. Add to that the aforementioned 11% revenue lost from fleet sales and incentives and it becomes clear how difficult a job Alan Mulally has ahead of him.

Unfortunately, The Way Fordward 3.0 will fail. The cuts were too little too late. Despite the attempt to balance a projected 14% market share with right sizing production cuts, most analysts agree that Ford has a 0% chance of achieving profitability on three million annual units. Going Fordward, a product-led turnaround will require enormous amounts of cold hard cash. Given the current state of affairs and the fact that buyout packages will drain the corporate coffers throughout the first three quarters of next year, rising costs will eat the development cash, and take much of Ford’s hope with it.

In short, year-on-year post-Katrina and fire sale comparison aside, the mistakes of the past will continue to haunt FoMoCo for years to come.  The truth is in the numbers, and as we know, numbers don’t lie.