This morning, I met with a management consultant who works for The Big Two Point Five. Back before the recent “unpleasantness,” Ford’s top brass engaged the consultant to tackle a marketing issue crucial to FoMoCo’s future. Department heads assembled. Despite overlapping fiefdoms and wildly different ideas for progress, the execs hammered out an innovative four-point strategic plan. Consensus was achieved. And then… nothing. Not one of the points was ever implemented. “These guys are scared to death of change,” he sighed. “Ford’s culture is always working against them.”

Although pundits recognize FoMoCo’s corporate culture as a bad, bad thing, they fail to identify the Blue Oval’s underlying take-no-chances, pass-the-buck, cover-your-ass management philosophy as the root of all evil. Reverse engineer all the decisions that lead to the Ford Focus’ interior, or the existence of the Freestar, or the plan to market a six-cylinder Lincoln crossover, or the general lack of killer cars, and it’s clear that the company’s corporate culture is slow, fat, lazy and stupid.

At the moment, Ford’s busy trimming the fat from the equation. At the top of the food chain, several of The Blue Oval’s biggest big shots are floating out the door on their golden parachutes: Steve Hamp, Chief of Staff; A J Wagner, Vice President of Ford Motor Credit Company; Dave Szczupak, Group Vice President; and Anne “Push Push Hug” Stevens, COO of the Americas. Upon her resignation, the last executive on the list left a love letter with The Detroit Free Press indicating the full extent of the ossification within FoMoCo: “The company has too many layers, the company is too bureaucratic, and it takes too long to get things done."

Note: this comment comes from the woman ranked number 22 on Fortune magazine's list of the “50 Most Powerful Women in Business” and number 41 on Motor Trend’s “Power List” of the industry’s top 50 execs. Meanwhile, further down the food chain, Ford is slicing 14k white collar workers from its North American payroll. That’s one-third of FoMoCo’s entire white collar staff. At the end of this process, Nicole Richie will have more fat than Ford’s management structure– leaving them with lazy, slow and stupid.

The Machiavellians amongst you might disagree, imagining the bloody hand of freshly-minted Ford CEO Alan Mulally behind all this, taking comfort in the carnage, predicting that a new, more market responsive corporate regime will follow. It’s certainly true that the best way to “cure” a diseased corporate culture is to knife as many slackers/potential enemies as possible, erring on the side of excess. But one need only consider the timing of the cuts and look at the top of the pyramid to conclude that it’s business as usual down in Dearborn.

The latest round of white collar cuts was announced prior to Alan Mulally’s arrival. That’s just plain dumb; even if Mulally didn’t swing the axe, he should have at least looked as if he was swinging the axe. Does the executive who appointed Ford's thirty-five million dollar man care? Obviously not. And what does that tell you about Billy Ford? My take: Bad Billy’s inability to walk away from the family firm he’s been running into the ground makes him part of the problem, not the solution. The fact that Baby Face Mark Fields– original architect of The Way Fordward and twenty-minute heir apparent– is still wandering the corridors of power is equally troubling.

All of which raises the single most important question for Ford’s future: who’s in charge? I Don’t Know is on his second executive savior and third way forward. Someone’s at FoMoCo’s got to sort out who does what first. The second they figure that out, the country’s third largest automaker can stop making so many product decisions that come straight from left field. Then they’d have a chance to sort out their corporate culture and start building desirable products in a timely fashion. Which is why Detroit's chattering class is waiting for Alan Mulally to step up to the plate and knock someone's head off.  

He better. Not to put too fine a point on it, the only way to motivate people is fear and greed. God knows Ford’s tried greed. For decades, they’ve paid off the unions. For decades, executives have failed upwards. For decades, the top dogs have enjoyed gold-plated pay packages and plenty o’ perks– regardless of their performance or lack thereof. Greed’s done. It’s time for fear. It’s time for a ruthless leader to step forward who’s ready, willing and able to excise the weak-willed in his ranks. When you hear Billy Ford mumble the words “Et tu, Brute?” on his way to a comfortable retirement in, say, the Maldives, THEN you will know that Ford is truly ready to move forward.     

Auto industry analysts have cast their beady eyes on The Blue Oval's third turnaround plan, and they don’t like what they see. Despite the fact that Billy and Alan and Mark have mashed the gas on Ford’s downsizing, there are ominous rumblings that the cuts aren’t deep enough. The assertion is almost as shocking as the cuts themselves. If asking all of your 75k union workers to piss off isn’t enough, if shuttering sixteen plants doesn’t cut the financial mustard, well, is there any end to this death spiral?  Only the obvious one.

To review: Ford wants to jettison 30k members of the United Auto Workers (UAW). The analysts are saying it ain’t gonna happen dot bomb. FoMoCo’s assembly liners are younger than GM’s. Ford’s $140k lump sum payoff offer matches The General’s, but Ford workers’ relative immaturity means their pensions would be significantly smaller. Some analysts are predicting that Ford will fall short of its workers-out-the-door goal by 10k union members– raising the specter of yet more deposits into Ford’s infamous money-for-nothing jobs bank.  

But that’s not what’s preoccupying prognosticating pundits. They’re concerned that Ford hasn’t named the final two factories they plan on shuttering. While this website has attributed Ford’s secrecy on this matter to political concerns (i.e. not pissing off friendly pols in whose districts the axe will fall), the rest of the crystal ball set see it differently. They consider the mystery a reflection of confusion, indecision and poor product planning (i.e. business as usual). In other words, if you don’t know what you need to build, you don’t know what not to build and where you shouldn’t be building it.

Addressing the topic in Automotive News, Catherine Madden, senior analyst at Global Insight, left her word mincer at home. "This indicates that Ford doesn't have a clear handle on what their product plan strategy is beyond 2008." Analyst Glenn Mercer was equally forthright: "The implication is that they haven't really figured this out yet, and if that's the case, one has to wonder what they have been doing for the past six months — or six years."

These number crunchers reckon that Ford’s production cutbacks will peg the company’s capacity utilization (actual output vs. potential output) at 84%. That would leave The Blue Oval Boys with excess production capacity equal to 500k units. That’s not good; Ford has to pay for this unused, unprofitable potential. Ford spokesman Oscar Suris’ counter: we’re getting there. In fact, if we hit 100% capacity utilization any sooner than our new new 2010 target date, we’ll have to surrender sales and/or invest in costly retooling.

Surrender sales, indeed. The industry analysts' calculations are based on Ford’s projection that it’ll capture 14% of next year’s domestic car market. If they don’t hit that target, even the 84% utilization figure will look like wishful thinking, and the automaker's profitability by '09 pledge will have as much credibility as cold fusion.

Obviously, it all comes down to product. According to Ford execs, the company’s got the goods to hold the fort, and maybe even fight a skirmish or two. They put tremendous stock in the $26k Edge. But back when the Mercury Montego (a badge engineered Ford 500) was launched, John Fitzpatrick predicted "We expect to conquest about 40 percent, meaning 40 percent of our Montego customers will be people who are outside the Ford family right now." 

It didn't happen, but it must, and soon. In order to survive, Ford must lure non-Ford buyers into the fold. Although the media quite rightly focuses on the need for Ford to build gotta have products, the window of opportunity may already be shut. Think of it this way: Toyota, Honda, Nissan et al. didn’t establish segment dominance simply by building good products. They built good products in segments where American cars sucked. Now that the shoe is on the other foot, it’s worth noting that the so-called imports’ products don’t suck.

Perhaps there is merit to this whole “Bold Moves” thing. It seems pretty clear that Ford no longer has enough cash/time to make the incremental changes that could gradually win it enough business to stay in business. Maybe it’s time for the Blue Oval to do a Walt Disney: bet the whole company on a radical new product. Ford has a long history of creating exciting concept cars; cars that could legitimately be called segment busters. Who was it that said history is bunk? Screw the past. Build some weird shit. If we heard about some bold moves on the new product front, we’d have reason to hope. But we don’t, so we don’t.    

The idea that Ford and GM will merge or, as they say these days, “form an alliance” is yet another sign that we’re reaching the End of Days, Detroit style. Sorry, haven’t you heard? This morning’s Automotive News quotes proverbial “senior executives” and “sources familiar with the talks” as saying GM contacted Ford shortly after GM investor Kirk Kerkorian invited Nissan to crash The General’s going away party. Or was it the other way around?  Automotive News is wildly, absurdly, irresponsibly vague on the whole story. Suffice it to say, any merger between America’s Number One and Number Two automakers would kill both of them.

Throughout this Death Watch series, commentators have insisted that a GM bankruptcy defies contemplation. The US economy would be plunged into chaos. OK, with so many foreign-owned automakers plying their domestically-constructed wares, a kind of mini-chaos. But there’s no doubt the knock-on effects of a GM Chapter 11 will be on the major side of major— from tens of thousands of jobs destroyed to millions of GM warranties rendered worthless (ironically enough). Now, imagine if that bankruptcy involved both GM and Ford at the same time. The mind boggles.

Aside from the obvious downside, who in their right mind believes that GM and Ford would benefit from a hook-up (other than some Wall Street Journal fantasists back in July)? The two companies suffer from chronic obesity. As this year’s massive cuts show, both The General and The Blue Oval have too many factories, assembly workers, executives, health care costs, pension costs, brands, models and dealers. At the same time, both carmakers face financial anorexia. They have too few attractive products to generate sufficient operating capital to stay in business—at least in the longer term. In the short term, they’re both failing companies.

With no immediate prospect of relief. If fact, GM and Ford are headed for the massive coronary known as the United Auto Workers (UAW). As it has for the last thirty years, the 800-pound gorilla in the room calls the shots. And it's feeding time at the zoo; their contract is up for “negotiation.” Any merger between the two automakers would require the tacit approval of the unions, who are no more likely to make concessions to a new “Big Red One” than organize Chinese labor.

And what of corporate cultures? Ford is a family firm whose stultifying bureaucracy and deeply entrenched corporate fiefdoms have rendered their business commercially impotent. GM is a confederacy of business school dunces whose stultifying bureaucracy and deeply entrenched corporate fiefdoms have rendered their business commercially impotent. Put them together and what have you got? What’s the opposite of synergy? Overlap, on a scale so epic it makes Ben Hur look like a home movie.

Can you imagine trying to create a single, effective dealer network with a coherent range of products that incorporates both company’s eight brands and [well] over a hundred models? If you think that GM’s product range makes no sense, A) you’re right and B) combining Ford and GM’s products lines would define the word “farrago” for all time. On the dealer level, well, if GM and Ford can’t cut down/amalgamate their retail “partners” as they are, what are the chances the two of them could do it together? Would it even be legal?

Perhaps the most bizarre part of this bizarre unsubstantiated rumor is the fact that anyone gives it credence. The mere existence of this merger idea in the intellectual space normally reserved for turnaround talk and BM’s (Bold Moves) indicates just how desperate things have become. If Wall Street reacts positively to this non-news, you’ll know that the world has gone insane. Of course, they’re been reacting to GM’s obfuscation and Ford’s Jump Down Turnaround (pick a bail of debt) with good cheer, ignoring the broken business basics that are dragging– have been dragging– both companies into oblivion. So, I suppose anything is possible.

But not desirable. Yes, a GM / Ford merger would “reinvent” the American automotive scene, creating a behemoth that we haven’t seen since, um, GM was healthy. But its success would depend entirely on wholesale slaughter— something neither company has been able to achieve on its own. And that’s because the only way they could affect the requisite root-and-branch change is… bankruptcy. You first?  No, after you. No after you. I know; let’s go together! No, after you. No, after you.

Another day, another turnaround plan. For those of you keeping score, Ford’s “Way Forward 2.0” is actually the third version in four years. In terms of strategy, the new, new plan holds few surprises; FoMoCo is simply super sizing their right-sizing program. On the credit side of the ledger… nothing much. New models still won’t hit the streets anytime soon. But the Street has hit Ford. On “Blue Friday,” Ford’s stock shed nearly 12% or $2b of its value. Investors and pundits alike are finally waking up to the fact that America’s number three automaker is in triage, with the crash cart standing by.

The latest round of surgery brings new meaning to the word “invasive.” The United Auto Workers (UAW) rank and file face the deepest cuts: all of union leader Bob King’s 75k plus brothers and sisters will be optioned. Ford hopes that between twenty-five and thirty thousand punch card people will accept one of eight offerings— involving various combinations of lump sum payouts, tuition breaks and health insurance. Employees have until November 27 to sign-up and sign out. All takers must be out the door by September.

The cuts reflect an increase in plant closings and “idlings,” from 14 to 16. The company has identified nine plants it’ll axe in 2008: Atlanta Assembly (Ford Taurus, 2028 workers), Batavia Transmission (1445 workers), Essex Engine Plant (695 workers), Maumee Stamping Plant (680 workers), Norfolk Assembly (F-150, 2433 workers), St. Louis Assembly (Explorer, Aviator, Mountaineer, 1445 workers), Twin Cities Assembly (Ranger, B-Series, 1866 workers), Windsor Casting (522 workers) and Wixom Assembly (Lincoln Town Car, 1259 workers). Sensitive to upcoming elections, Ford refuses to name the five other plants set for closure.

At the same time, fourteen thousand white collar Glass House inhabitants are due for defenestration. Ford figures all the cuts will save the company $5b annually. For now, the buyouts will burn through roughly $7b– in ‘07 alone. At the end of this, Ford reckons it will produce 3.6m units. That would slice FoMoCo’s share of the domestic auto industry pie to somewhere between 14 and 15 percent. Even at this new sub-Toyota size, even with lowered overheads, Ford will still have to score some major new product homeruns to meet their new goal: profitability by ‘09.

That’s going to be tough. The lost market share has gone to the competition. Despite announcing that 70% of Ford, Lincoln and Mercury “products by volume” will soon be new or upgraded, other than the cross boarder crossovers already on their way, Ford’s product pipeline looks decidedly dry. More Mustang variants, re-dubbed F-150’s, a V6 Lincoln flagship and a full-size people-carrying CUV are the only short term prospects. Two of these erstwhile saviors are niche vehicles and another contributes to the shrinking market that led to this debacle. The boxy (bold?) people mover will have its work cut out for it; Honda and DCX’s refreshed minivans are just around the corner.

Despite assurances that Ford will finish the year with $20b in the hopper, roughly half of those funds go to daily operating expenses. Just like GM, cash crunch time is coming. Blue Friday’s revelation that the formerly flush company is eliminating its stock dividend, saving $400m, indicates that liquidity has become a worry. Although Ford insists that none of the members of the Premium Automotive Group are up for sale, they are. Although the company claims it won’t sell a stake in Ford Motor Credit Co., it will. Bailed out parts supplier Visteon is also being cut loose.  And FoMoCo will try to off-load 23 pieces of real estate it acquired last year.

It’s no wonder Billy's Boyz are still in surgery. Their previous doctoring was either too little, too late or too little too late. With the UAW’s inflexibility over at Chrysler and contract negotiations starting next year, it will be a long time before the patient will be stabilized– never mind cured. But the really scary part is that Billy Ford is still large and in charge, leading the Way Fordward. CEO Alan Mulally, who started collecting his gigantic paycheck last week, took a back seat during the press briefings. Mulally's contribution: "They are really trying to look through clear glasses and deal with our industry's reality." Oy they.

There is but one bright spark of hope in all this. Ford has decided not to kill the venerable, well-loved Lincoln Town Car. Could it be that someone in the increasingly-less-vast Ford Empire realized that if so many good products hadn’t been left to whither on the vine (Town Car, Focus, Taurus), if there had been some genuine fordward thinking, FoMoCo wouldn’t be desperately chasing lost market share in crowded segments? It may be a piercing glimpse into the obvious, but when you’re chasing anything, you’re always playing catch-up.

Thirty-five million dollars, the keys to the corporate jet and a Detroit McMansion is a pretty good compensation package for any aspiring executive. Obviously, if freshly-minted Ford CEO Alan Mulally reverses The Blue Oval’s declining fortunes, it will be shareholder money well spent. If, however, Mulally turns out to be too little CEO too late, his paycheck and parachute will mark the final chapter in a sad story of Ford family interference and/or mismanagement. So what say you Billy Ford? The “biggest problem facing Ford today is a lack of confidence.”

On the face of it, hiring an aerospace engineer to run a car company isn’t exactly what you’d call confidence inspiring. The auto industry in general, and Ford in specific, has a history of betting on outsiders– and losing. Robert McNamara’s tenure at Ford is only one example where “the smartest guy in the room” was hoisted by his own retard. Mulally supporters point to Sergio Marchionne, the Canadian lawyer who runs FIAT, and Jean-Martin Folz, a French businessman helming Peugeot. These are not, as yet, success stories. Mulally’s challenges are at least as daunting, even without considering Billy Ford’s refusal to surrender power to his well-paid minion CEO.

When Mulally stepped up to the microphone on Wednesday, he emphasized efforts to crank up the heat on new cars and to concentrate on fuel efficient vehicles to “complement the position Ford has with trucks." In the meantime, someone’s calling the shots, and they’re coming quick. The Detroit News reports that FoMoCo will attempt to bribe more than four thousand white collar workers and at least twice as many UAW members to leave the company's employ. Clearly, Billy's boys are downsizing as fast as they can.

And more cuts are coming. Roughly 25% of the 82k United Auto Workers (UAW) members will be jettisoned, whether through more plant idling, shuttering or buyouts. At that rate, Union locals stand to lose about $4.9m a month in lost dues contributions. That’s a big whack, but the union isn’t likely to stop the rats from leaving the sinking ship. They may even believe that letting their people go is in their remaining members’– and Ford’s– best interest.

At the same time, it’s no longer a question of “if” Ford will cut loose brands from its Premium Automotive Group, but which ones for how much. Wall Street Whiz Kid Kenneth Leet is looking to pimp Aston, Jaguar and Land Rover. Ford values Aston at $2b; industry experts peg it at $750m. Jaguar is virtually worthless, but a sale would make it someone else’s problem. Thanks to the Range Rover Sport, Land Rover is back from the brink– and priced to go, for another couple of billion or so.

Will it be enough?  Should it be enough? Despite Ford’s platform perfidy of its Japanese subsidiary, Maryann Keller reckons Mazda may be the next brand to be cut adrift. In fact, the straight-talking auto industry analyst believes Volvo and Ford are The Blue Oval’s only viable brands. Her comments suggest the long-anticipated shuttering of Mercury, and the termination of once-proud Lincoln, a luxury brand without a V8, profits or a strong, independent identity.

Ford needs the cash; Mulally’s new control tower is losing Dreamliner loads of the stuff. August SUV and truck sales fell a further 20.8% compared to last year, and the fourth quarter won’t get much better. While production cuts ensure that there’ll be less “new” metal to move, the pileup won’t deplete. There are already enough F-150’s to keep 3000 customers a day busy until the end of 2006 (and in debt until 2012).

Mulally and his generous employer need market share, and they need it fast. Mulally-inspired metal won’t appear until the 61-year-old CEO is eligible for retirement. Meanwhile, the Ford Edge and Lincoln MKX (Em-Kay-Ex) are FoMoCo’s Obi wan Kenobi. Early buzz indicates that the 150K units (slated for annual production in Ford’s Oakville plant) won’t be left longing for custody. But even if sales are double, the crossover’s profit margins are still small SUV’s. Add to that the upcoming loss of FoMoCo’s dismal minvan(s) and the importance of the cross border crossover becomes alarmingly apparent.

The arrival of Alan Mulally marks the fourth time in four years that the Blue Oval has made Bold Moves at the top. Will anything change? Not for some time.  Ford is still struggling to move the metal; the new product cycle is still vapid; the union straightjacket (though roomier) is still on. And despite invitations to bow out gracefully, and the pressing need to jettison brands, Ford’s bloated dealer network will remain desperately obese for many moons to come. The only difference is that shareholders have someone new from which to seek answers– or blame.

Was he pushed or did he jump? Either way, Billy Ford’s resignation as CEO of the family firm is yet more proof that The Blue Oval’s in big trouble. Not that he’s been trying to hide the fact. In his Newsweek interview, Billy telegraphed his intention to fall on his sword: “I've always said that titles are not important to me… What's important is getting this company headed in the right direction." And the new man is… Alan Mulally, Boeing’s now former Executive Vice President. Not to coin a phrase, one wonders if Billy told the board, “If it’s not Boeing, I’m not going.”

Billy’s press release hails FoMoCo’s new President and CEO and explains the choice: “Alan has deep experience in customer satisfaction, manufacturing, supplier relations and labor relations, all of which have applications to the challenges of Ford. He also has the personality and team-building skills that will help guide our Company in the right direction.” The aeronautical and astronautical engineer joined Boeing straight out of college in '69. Mulally's “customer experience” is limited to convincing airlines to buy jets. Not to put too fine a point on it, the Kansas native sure ain’t no car guy.

Still, point taken on the manufacturing and labor relations side of things. An assembly line is an assembly line, whether you're building lumbering behemoths that can or can not fly. And a good chunk of Mulally’s Boeing career was spent investigating jet crashes caused by weather– a situation not a million miles away from the effect of gas prices on Ford’s SUV business. And he’s certainly familiar with Ford-sized executive salaries. Forbes reports that Mulally drew down $9,961,985 last year, with $6,362,599 in stock options taxiing for takeoff.

One of the main reasons Billy Ford likes Mulally is that Mulally likes Ford. In his book “Working Together,” author James P. Lewis chronicled Mulally’s success at Boeing, from the depths of post-911 to the launch of the new 787. Lewis reports that Mulally was inspired by Ford’s last turnaround, starring… the Ford Taurus. In their statements to the press, both Billy and Alan referred to this appointment as karmic payback: “Just as I thought it was appropriate to apply lessons learned from Ford to Boeing,” Mulally said. “I believe the reverse is true as well.”

In case you were wondering how Mulally pulled Boeing out its nosedive to earn himself the top slot at America’s number three automaker, it’s all about the product, stupid. Despite the post-911 crash in airplane sales, Mulally’s team pushed forward on streamlining the company’s Byzantine production process and developing new planes. When the market eventually bounced back, Boeing was ready. You could argue that a rising tide lifts all Executive Veeps, and what else could Boeing have done anyway, but there’s no doubt that Mulally helped the Seattle-based company make better, faster and cheaper jets.

There’s also no question about Mulally’s leadership abilities. His “team-building skills” within and without Boeing are legendary. In a March ’06 article for Design News, Boeing’s Chief Engineer of the 777's interior design sang Mulally’s praises. "Alan exhibits every quality that you would want to see in a good leader–vision, trust, integrity, and, above all, an overwhelming enthusiasm.” George Brody also said, “He's just dynamic when it comes to getting people to pull together." Of course, a big part of Mulally’s confidence comes from his technical know-how. One wonders how long it will take Ford’s new CEO to get up to speed on the intricacies of car building.

Or if Mulally can readjust his internal clock to the car industry’s three year product cycles. For 37 years, the Boeing man was attuned to a two decade gap between a new product’s conception and customer deliveries. (You can count the number of planes he’s worked on with one hand.) And that’s on top of strategic thinking that extends out 40 years or more (a modern aircraft can stay in service 60 years). Ford has eight brands and dozens of models, each of which require some form of design, engineering and marketing right now– in addition to the models on the drawing boards or in development.

Again, Mulally ain’t no car guy. In fact, his appointment is reminiscent of John Sculley’s ascension to the top post at Apple Computer. The Pepsi Prez was also a hugely successful, gregarious outsider charged with turning around a failing multinational with a deeply entrenched corporate culture, that enjoyed tremendous customer loyalty. Sculley was also overseen by the same man who used to run the joint. Suffice it to say, Sculley’s tenure did nothing to help Apple, and plenty to hurt it. It remains to be seen if Mulally can win friends and influence people who are already clinging to their jobs by the skin of their teeth.

Mulally’s first test will be overseeing the deal or no deal happening or not happening at Aston, Land Rover and Jaguar. And then, it’s union time. Then we’ll see if Mullaly’s got what it takes to pull the yoke and save Ford from a death spiral into Chapter 11.

It’s been said that walking on quicksand with helium balloons will keep you from going under. Now that The Blue Oval has finally realized that the sands have shifted beneath its feet, there are plenty of people selling the automaker balloons. The United Auto Workers (UAW) has publicly pledged to help Billy’s Ford’s boys “any way they can.” Michigan Governor Jennifer Granholm has proclaimed her willingness to sacrifice voters’ taxes to keep the Wolverine State’s assembly lines rolling. At the same time, Ford is contemplating radical solutions: cutting dealers, selling assets, forming alliances. Is Ford finding buoyancy or grasping at straws?

The UAW’s Koala Brothers’ announcement (“We’re here to help!”) stems from a general acknowledgement that Ford’s Way Forward has lost traction– if indeed it ever had any. At the same time, the union’s faux altruism seeks to overturn the common perception that “if you’re not part of the problem, you’re not part of the UAW.” To that end, Ford Division UAW Vice President Bob King recently signaled that Ford’s talk of inter-company alliances and another round of worker buyouts would “not be out of the question” provided they ensure “mutual survival.”

Of course, King’s statement reveals the obvious (if overlooked) fact that the UAW would have to approve any hook-up between Ford and another automaker. Which they would– provided Ford’s new partner agrees to maintain current salaries, pensions, working practices and benefits. (File that one under “Not Very Likely.”) As for the UAW’s willingness to accept further blue collar buyouts, the UAW’s members have a history of “helping” Ford by taking money for not working. Perhaps Mr. King would like to extend his assistance to closing Ford’s infamous, expensive and still not fully disclosed “jobs bank.”

In short, don’t look for the UAW to make any bold moves (a.k.a. “historic givebacks”) beyond pocketing Mr. Ford’s cash to leave the building. Why would they? Ford’s buyout offers only extend to high-seniority workers. Workers without a parachute won't entertain “short term” cuts to their compensation knowing that a new four-year contract with The Big Two Point Five is under negotiation for fall ’07.

Michigan Governor Jennifer Granholm’s relief plan is also a lot less than it seems– but in a nice way. Gov. Granholm and Michigan Economic Development Corporation (MEDC) President and CEO James Epolito want to save 56k Ford jobs (their estimate) by granting FoMoCo $151m worth of tax credits. Ford’s part of the bargain: invest a billion dollars in its Michigan facilities over the next 20 years. A billion bucks shared amongst nine major facilities is a laughably small amount. Unless Ford’s pulls the plug, the company will invest that much money in its Michigan plants as a normal part of doing business. When that inconvenient truth emerged, Granholm’s plan submerged, taking a lot of good will towards Ford with it.

And then there’s the real deal: Ford’s plan to trim its 4300 member dealer network. According to press reports, metropolitan dealers in 18 urban areas will close or merge with successful locales to streamline sales, increase margins and free-up overhead. This is a much needed, long overdue move; Detroit is home to 31 Ford peddlers and 14 Lincoln floggers. But the maneuver’s mechanics are murky. Ford spinmeister Jim Cain claimed "It's totally voluntary… We'll handle this in private and in a very collaborative way." Voluntary? Private? Collaborative? That sounds an awful lot like "cha-ching" to me.

Just like Ford’s plan to slice 30k jobs and close 14 plants, the dealer downsizing program will not be cheap. But hey, you gotta spend money to save money. As Ford has already dropped $10b on Jaguar, many have come to believe that selling the British brand will be Ford’s next great leap forward. Despite last week’s frantic comments by Ford CEO Mark Fields– “We will sell the furniture if it helps fund new products”– Ford’s not going to not let the Cat out of the PAG. As revealed on a recent TTAC podcast, Ford’s brand management has rendered Jaguar virtually worthless. They’d have to give it away. So Ford’s decided to [re]reposition Jaguar as a “niche” luxury brand, to give Jaguar buyers more of what they love: Ford Five Hundred switchgear.

Seriously, there is no newfound cash flow at FoMoCo, nor is there likely to be any in the near future. If things get bad, Ford will sell Volvo and team-up with anyone with deep enough pockets to bail it out. But we’re not there… yet.

President Kennedy once said “The great enemy of the truth is very often not the lie–deliberate, contrived, and dishonest— but the myth– persistent, persuasive, and realistic”.  The myth is that Ford is a can-do company can turn itself by sheer force of will. The truth is that Ford is at least three years too late and a few billion dollars short, wearing a union-made straight jacket, slowly sinking into bankruptcy.

Last month, Toyota sold more vehicles in North America than Ford. Understandably, The Blue Oval Boys have refrained from public hand-wringing over their displacement in the US sale charts. But there is no underestimating the development’s damage to Ford’s corporate psyche. Newbie CEO Mark Fields was already deep into crisis management. Now, suddenly, it’s obvious that Ford’s turnaround cannot rely on pushing (deeply discounted) products and hoping and waiting for a Hail Mary pass. A brand new plan is set to be hatched at the end of the third quarter. The way forward is now in fast forward.

Like GM, Ford is downsizing to match market share. According to Harbour Consulting, Ford used 79% of its production capacity in 2005 (FYI: Toyota’s plants ran at 106%). Originally, Ford planned to close fourteen plants (including seven vehicle manufacturing facilities) and “cut” (a.k.a. buy out) 30k union jobs within six years.  The new plan: lop a couple of years off the timeline. Speaking to industry analysts yesterday, Ford manufacturing chief David Szczupak promised that FoMoCo will use 100% of its production capacity by 2008.

The clock is ticking. Although Ford has a $23b cash hoard (Health Care fund included), the company needs $16b to keep the assembly lines rolling until the next product cycle. No wonder Ford is thinking outside the Oval. The sale of parts bin diva Jaguar and reliability krypton Land Rover is reportedly only a buyer away from happening. [As Mazda and Volvo account for some 75% of Ford’s current value and provide mission critical product integration, their sale is highly unlikely.] Ford Motor Credit and bailed-out parts supplier Visteon may also be in play.

With so many cards on the table, Ford has followed GM’s lead and turned to a high profile consultant for advice: Kenneth Leet. In 2003, President Bush asked the 18-year Goldman Sachs vet to be his undersecretary for domestic finances. That gig didn’t pan out. But when Billy Ford called Leet for similar guidance, Leet showed why bullshit walks (exact contract unknown). The mergers and acquisitions guru is reported to be on the prowl for alliance(s) with other automakers.

Nissan is the most likely target. Despite the initial rise in stock prices prompted by a possible partnership with GM, a Ford – Nissan alliance makes more sense. (Not much, but more.) Although the UAW would rather accept the bubonic plague than see Carlos Ghosn prowling Ford’s HQ, his arrival on the scene would certainly shake up the joint, and give Blue Oval’s Brass insight into Le Cost Cutter’s management style. Renault and Nissan would gain access to Ford’s distribution networks.

Yes, well, the Ford family holds 40% of FoMoCo’s voting rights. With such an oligarchy at the tiller, any outsider seeking a merger or alliance would be extremely wary. The set-up has triggered some fanciful talk. Rumors have the Ford family purchasing 1.9b shares needed to take the company private. For roughly $13b, Ford could find the way forward without the hassles of the SEC, the press or interim profit reports. While FoMoCo stock may appear cheap at the moment, it’s highly unlikely that the Fords would want to raid their personal portfolios for such an enomrous gamble. What does that tell you? 

Well, listen to this from today’s Detroit News: "The market for subcompact autos in the United States could reach 600,000 units annually by the end of the decade, according to Mark Fields, president of Ford Motor Co.'s Americas group. But he says Ford will not enter this growing domestic segment until it has something different to offer consumers." At the very moment Toyota’ small cars are eating up the US market, at the very moment Ford should be rushing a killer B-segment car to market, Fields is publicly declaring a “wait and see” approach.

This from the same man who admitted that America’s bold move to more fuel-efficient vehicles is not a passing fad. "I'd rather be proactive than wish things would go back to where they were,” Fields told analysts and reporters. “Because I don't think they will.” Don’t look for much fuel conscious proactivity over the next six months. Yes, nine new Ford vehicles are set to hit the market in that time frame. But we’re talking about a Mustang variant (based on the Hertz edition GT-H), a four wheel drive Fusion and Milan (same car, different wrapper), an F-150 with greater towing capacity, the Edge crossover, a refreshed Ford Expedition (thirsty) and Expedition EL (extra thirsty). 

It’s two steps way forward, one step way back. Although Fields remains publicly committed to putting Ford back in the black by 2008, it’s hard to imagine how he could achieve the goal.  Ford will announce its accelerated restructuring plan by the end of the next month— at the same time its third quarter results hit the street. 

Although GM’s woes are increasingly well known, the House of Ford is also in dire straits. The Blue Oval’s credit has been downgraded almost as often and deeply as The General’s. FoMoCo’s products– a truck-heavy mix in a time of fuel conscious fervor– languish on dealers’ lots with equal abandon[ment]. Both companies have too many lackluster products, confused brands and mainline dealers. In fact, other than the size of their relative problems, the chief difference between GM and Ford has been the Blue Oval’s bluster, bold moves and all.

In the first half of ‘06, Ford's US market share slumped another four percentage points. In the first financial quarter, the company suffered a $457m loss. In the second, they took a $254m hit. No surprise there. Even the F150, America’s best selling pickup truck and Ford’s perennial cash cow, seems welded to dealer lots (down 46% in June). To move the metal, Ford has increased incentives and lowered prices on models both old and new. And even the ones that've moved out are coming back; the company has just recalled 1.2 million trucks, sport utility vehicles and vans for potential engine fires. Ford needs something to pull itself out of its corporate tailspin. As Taylor Hicks might say, what are the possibilities?

Nothing much. Even with accelerated product development, it will be two to three years before Ford can readjust its product line to match the new sales environment. Most of Ford’s ‘07 to ‘10 models will be SUVs and pickups. At the same time, Ford is pulling the plug on its big rear wheel-drive sedans and ill-fated minivans: the Mercury Monterey (down 40%) dies next month and the Freestar (down 20%) goes away in April. FoMoCo’s move to deep-six (rather than re-engineer) their big sedans and people carriers when the American market is flooding with SUV refugees reflects a lack of resources, imagination, will or all three.

Ford has also failed to refresh their fuel-sipping, dynamically superlative Focus– before it fades away like the once-great Taurus. And they've decided to shelve their well-publicized goal to build 250k hybrids by 2010, despite a huge jump in Escape Hybrid sales. Playing the flexible fuel card instead may earn Ford the environmental brownie points it seeks, but hyping vehicles that run on a fuel that’s not commonly available that gets worse mileage than “normal” gas will do nothing to cater to America’s changing vehicular tastes.

Fortunately, there are a few reasons to be cheerful.  In the short term, the Hecho en Mexico Fusion/Zephyr/Milan continues to depart dealer lots at around 19K units per month. Equally heartening, the Fusion and its badge engineered siblings are mining a rare vein of consumer loyalty; 93% of Fusion owners say they’d recommend the model to a friend. Yes but– the model isn’t generating enough sales activity for Ford to clamber back from the lowest market share since the Ford Pinto galloped onto the US sales chart.

To that end, Billy’s Boys have green-lighted three new 40mpg-plus B-segment vehicles based on the Mazda3 platform, two of which could arrive for the ’09 model year. There’s also a new small minivan slated for ’10 and the Fairlane box car.  In the medium term, Ford’s immediate future may well rest on the Edge/Lincoln MKX Crossover. The American automaker has set a sales target of 120k unit per year for the 265hp, all wheel-drive whip. If dealers fall short, Ford’s only bold move may be towards Chapter 11.

No wonder the Blue Oval is thinking the unthinkable. After spending some $10b trying to make Jaguar their upmarket brand (forgetting Lincoln), the British marque is now, finally, reportedly, up for sale. Industry wags also suggest that Volvo and Land Rover may be on the auction block. There’s also talk of Ford taking up GM’s offer to join the Nissan – Renault alliance– or marrying its fortunes VW, BMW, Honda, Toyota or Hyundai. And just in case you thought these options are the result of ill-informed conjecture, Bill Ford Jr. just hired former Goldman Sachs and Bank of America investment banker Kenneth Leet as his big picture guru.

Provided Ford has enough cash to see it through these dark days, Moray Callum is the more important man in this drama. Ford’s new Director of North American car design– the man credited for the RX8, Mazda3, Mazda6, Cx-7 and CX-8– has received carte blanche to create vehicles that inspire the American public to return to the Ford fold. The company has access to sixty-five thousand automotive R&D workers in Michigan alone and a $7.5b R&D budget. Like everyone else in the Ford Empire, Callum knows that his employer has to create at least one major hit, and soon. As always, a carmaker’s future ultimately depends on its ability to make the right cars at the right time.