Ford Death Watch 19: Ford By Name, Four'd By Nature

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.