"Ford family said to consider partial sale of ailing automaker"

http://www.iht.com/articles/2007/05/14/business/bxford.php

Moneyquote: "The younger Fords don't believe the family should be so involved in managing the company since it leads to bad decisions,"

Ford has already sold off most of the corporate jewels and mortgaged remaining assets. You can’t continue to eat cash forever.

And I tend to forget that unions in the USA are quite different from the europeans one…

But I still think that if Ford had better products (and it seems that in Europe they are already better than the US ones), a better management and a long-term view there would be no need for a death watch.

Anyway, as you wrote, some new ideas must come from all of this…

Yeah – I know. That’s ancient history. I’m sure the new trucks are much better. Except for the highway speed vibration that can’t be fixed, and spark plugs that can’t be removed, and the fact that they porked it out by 400 lbs. or so, etc.

This ain’t au revoir, Ford. It’s goodbye.

TTAC’s not Consumer Reports, but I doubt you’ll get a flood of commentors agreeing with you there.

There are entire product categories Ford could exit — at least from an engineering perspective — where they show little expertise. Like minivans, small pickups, small cars, powertrains, luxury anything,…

I’m not sure what’s left. The Camaro and Challenger crowd the market for middle aged men looking to revive a childhood they never had, and the livery companies are starting to catch on to Chargers and Odysseys.

I guess the new Detroit 3 are GM, Ford, and Cerberus for the time being until Chrysler gets parted out.

Ford’s one advantage visa-vis GM right now is that they don’t have near the brand and nameplate proliferation problem. Mercury hardly counts since none of the Mercury products have unique sheetmetal or powertrains. Current Mercury products are simply trim-package options on Ford products. GM is trying to put out unique products for Chevy, Buick, Pontiac & Saturn and it simply isn’t working.

Ford’s relationships with Volvo, Jaguar, Land Rover and Mazda are certainly in better shape than GM’s with Saab, Fiat, Isuzu and Subaru . At least Ford’s Premier Group assets are saleable businesses as is the Mazda stake.

Reports are that Cerberus is close to a deal to buy Chrysler from Daimler. Perhaps this is the first step in a major restructuring of the US auto industry, which even with all the noise hasn’t happened yet. Look for the Ford family to see the value of their shares go down a lot more, perhaps to zero. Of course so what, not a one of them worked for it. They are living off the momentum of generations long dead.

Of all the blunders the 2.5 made, I think the most serious was converting a variable expense, direct labor, into a fixed cost. The auto industry is a cyclical business, but the UAW contract made layoffs difficult and expensive. So for too long the 2.5 kept running unneeded factories and non-competitive in-house sourcing of parts.

I think Brock Yates did a piece 8+ years ago regarding Detroit’s irrational sales and production strategies that were necessary to keep the factories going. He wondered how long it could continue – now we know. The wheels are about to come off.

HOWEVER, from my vantage point in UAW-land, I’m really not sure WHAT management could have done. Provoking a strike late last decade or early this decade would have just resulted in a quicker filing. (GM actually had a few wildcat strikes in the late ’90s which they had to settle to keep things running.)

But does anyone here think the judicial/law-enforcement system in Michigan (or Ohio/Indiana/Upstate NY/PA) would have allowed GM or Ford to move factories or hire replacement workers (without them getting shivved)?!?!!) During the last contract with W and a GOP congress it MAY have been possible with gutsy leadership.

Look at the airline companies. Non-flexible unions KILL companies that face non-union competition. It happens all the time. I don’t think there was a solution to this.

Of all the blunders the 2.5 made, I think the most serious was converting a variable expense, direct labor, into a fixed cost. The auto industry is a cyclical business, but the UAW contract made layoffs difficult and expensive. So for too long the 2.5 kept running unneeded factories and non-competitive in-house sourcing of parts.

And while market share and profits declined, the number of retirees and burden of handsome pensions and lavish health insurance steadily grew. As did expectations of the recipients. I suspect that Mullaly privately fully recognizes that bankruptcy is looming. But does the UAW? Once my wife was in her OB/GYN’s waiting room and heard a conversation between two women sitting nearby. One woman said she and her husband decided to have another child because he worked at the GM assembly plant and having a baby “would be free.” Free? Not to GM.

Ford will have a hard time just covering the interest payment on that 23.5B loan even if they can turn the company around in NA. A turn around in the US will require much lower profit margins per vehicle since competition in Ford’s most profitable segments is heating up…Not to mention the repeal of the 25% tariff on imported trucks.

Ford should concentrate on profitable markets outside the US and move production to more business-friendly regions that uphold property rights. Why burn *large* sums of precious capital dicking around in the US when every market outside NA is profitable? I would concentrate on India, China, Middle-East, Europe, Russia, and South America.

But no man, no person, is a miracle worker. There’s a bunch of things going on with the global economy, and sadly, Ford’s time as an auto maker, at least within the United States, may indeed be coming to an end.

That almost happened in the early Eighties and the Taurus turned that around in 1985. Today, they need a new “Taurus,” so to speak, and not just a name slapped on the 500.

For what it is worth, I think they need to bring some of those Fords over here that the Aussies get – and build the Ford Falcon (concept) wagon.

As for the USA’s ability to handle high fuel prices relative to Europe (and Japan), I think the USA will be at a significant disadvantage. The nation has spent the last 30 years with low prices, and that has promoted a fuel-intensive lifestyle: long commutes through suburban sprawl, inefficient vehicles, huge houses that aren’t well insulated, entire cities in 105-degree deserts needing year-round air conditioning, etc. About the only big befit the USA enjoys is a large amount of natural resources per person; that advantage, too, is eroding quickly as the population continues to grow exponentially over time.

The EU is in a good position in the economic cycle right now, but reforms have also led to a general improvement.

“Spring economic forecast 2007-2008: unemployment and public accounts to improve further as growth stays solid. The European Union economy is expected to grow by 2.9% in 2007 and 2.7% in 2008 (2.6% and 2.5%, respectively, in the euro area) on the back of solid investment and stronger private consumption, according to the Commission’s spring economic forecasts. The EU as a whole is predicted to create almost 9 million new jobs over the period 2006-2008, 6 million of which for the euro area alone. This will help to reduce EU unemployment to less than 7% in 2008 from 8¾% in 2005. The economic recovery will continue to improve public finances, with the general government deficit forecast to fall to around 1% in both the EU and the euro area – a level not seen in many years.”
Source: http://europa.eu