It is an odd company that says its turnaround is "on track" when market share in its home company and largest market is falling like a rock. But, so say Ford Motor Co. (NYSE: F) management.
"The closures and the employment reductions to size the capacity to the real demand -- we're a little bit ahead," Ford's CEO told reporters. "But generally (we're) on plan."
Ford has a couple of other cards in the hole. It will probably improve its balance sheet by several billion if it can sell its Jaguar and Land Rover units. And, upcoming UAW contract negotiations may give Ford the chance to beg off pension and benefits cost cuts. But, the point will come when Ford's recovery is measured by a need to spend more money to help improve production for rising sales.
But, a turnaround is not a turnaround without some stability in revenue, and Ford has been unable to show that. Its most profitable vehicles are its SUVs and pick-ups, and the sales of those are running down by double digits most months.
Measuring progress by cost cutting is generally a Faustian bargain. The Devil eventually comes for the whole company.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
6-25-2007 @ 7:57AM
Michael Schneider said...
More troubles down the road?
Item in China Briefing section at http://www.Barreloworld.com suggests Chinese may soon be exporting pickups to the US from plants in Mexico. Not good for US car makers if they can meet quality standards.
6-25-2007 @ 9:57AM
Wolf said...
I don't think Mr. McIntyre has any idea what is really happening at Ford. He kneeds to study the mix of sales, the amount of fleet business discontinued and the sales trends of their lines. Also he needs to study worldwide sales, not just the United States. If I am correct the monthly deficit from prior year has decreased in the last several months each month. Then he needs to survey the dealership to find out what is the pricing strategy, given away versus prior, etc. His broad comment that sales are sinking like a rock is meaningless without significant analysis. I believe that Ford is right on track by reducing give away business and eliminating the fleet sales. Then by holding the line on pricing and getting quality awards as just received you build a bases for future quality business. All of this appears to be on a well thought out plan. Analysis like this could be very costly to someone following an expert.