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

by Neunelf

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.


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2 of 59 comments
  • ZoomZoom ZoomZoom on Dec 10, 2006

    Nope, not at all. I watched only an hour of television this week.

  • Middleagedbaldguy Middleagedbaldguy on Jan 25, 2007

    I was watching a Lincoln ad the other night. It featured a perfect late 20s "professional" woman driving her Lincoln. The ad was obviously trying to get middle aged fat soceer moms who imagine themselves to be hot 20 something professionals to buy more Lincolns. Great in concept, but in reality, who buys Lincolns? Fat, middle aged white guys, and by the way, their are millions of us in North America, and whether the brain trust at Ford likes it or not, WE ARE YOUR TARGET MARKET, period. There are only so many Black NBA stars, and probably even fewer women, who want a big Lincoln car. Ford seems to have two fundamental problems. Political Correctness has driven wasp male Engineers out of the Boardroom (and the company), only to be replaced by politically correct managers who spend their days dreaming up ads for customers who don't exist. Meanwhile, the company's engineering prowess has been destroyed, and it primary market (Middle aged Bald guys) are buying Toyotas & Hondas.

  • Cprescott This is what happens when you are an early adopter. You are a test subject. Why do Toyoduh (and Honduh) owners feel so entitled?
  • Kosmo Love it. Can I get one with something other than Subaru's flat four?
  • M B When the NorthStar happened, it was a part of GM's "rebuilding" of the Cadillac brand. Money to finance it was shuffled from Oldsmobile, which resulted in Olds having to only facelift its products, which BEGAN its slide down the mountain. Olds stagnated in product and appearances.First time I looked at the GM Parts illustration of a NorthStar V-8, I was impressed AND immediately saw the many things that were expensive, costly to produce, and could have been done less expensively. I saw it as an expensive disaster getting ready to happen. Way too much over-kill for the typical Cadillac owner of the time.Even so, there were a few areas where cost-cutting seemed to exist. The production gasket/seal between the main bearing plate and the block was not substantial enough to prevent seeps. At the time, about $1500.00 to fix.In many ways, the NS engine was designed to make far more power than it did. I ran across an article on a man who was building kits to put the NS in Chevy S-10 pickups. With his home-built 4bbl intake and a 600cfm Holley 4bbl, suddenly . . . 400 horsepower resulted. Seems the low hood line resulted in manifolding compromises which decreased the production power levels.GM was seeking to out-do its foreign competitors with the NS design and execution. In many ways they did, just that FEW people noticed.
  • Redapple2 Do Hybrids and be done with it.
  • Redapple2 Panamera = road porn.