Ford's (NYSE: F) negotiations with the UAW should be over soon. If it gets a deal that looks like the ones the union put together with Chrysler and General Motors (NYSE: GM), the No.2 car company should have labor costs much closer to its Japanese rivals. It may have to put $20 billion into a healthcare fund for the union, but the firm has almost twice that much cash on its balance sheet.
The New York Times has pointed out that the sale of Ford unit Jaguar is going much slower than expected. The paper says: "Ford's bidding date is now Oct. 30, a person involved in the process said Thursday. That is a month later than bidders originally thought they would be making offers." Several private equity firms and India's Tata Motors are rumored to be interested in the British car company and another Ford unit, Rover.
But, taking a step back for a moment, Ford may not sell the Jaguar unit at all. The US company may have needed the money if the UAW payment was going to be onerous. But, the funding of a union benefit plan now seems within Ford's means. It is entirely possible that the car units were being shopped in case Ford needed the money. Now, it does not.
Ford management should have a look at the fact that if a private equity firm can turn Jaguar around, then a big car company should be able to do just as well. If Ford can't get a premium price for Jag, it should not sell it.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
10-12-2007 @ 1:32PM
V.S. said...
GM shares will reach $55 to $58 by the end of the year. The MACD is above the "signal line" and Merrill Lynch has up-graded GM to a "buy" from here on out....Goldman & Sachs is buying GM on the sides also. Russian investors have bought the stock for profit investment which should be purchased by the average investor now to get in on the "long term" bullish trend" of this stock.
10-12-2007 @ 2:34PM
Rick S said...
In the auto business 40 billion dollars is not a lot of money; especially considering that Ford has mortgaged all of its assets. Considering that Jaguar has never made any money for Ford and has been a drag on capital, I'm not sure why you think that Ford would want to keep it. The big three has rarely been successful at making a profit on speciality cars and I'm sure they would love to sell it at most any price. Jaguar will not bring a premium. Your article would have been more relevant had you written about the Volvo brand. Volvo is the only line in their (former) Premier Automotive Group that ever made money.
10-15-2007 @ 11:06PM
David Emanuel said...
It would sadden me that Jaguar Cars Ltd would fall out of the hands of British/American industry. The current XJ model continues to endure on the market with high customer satisfaction , innovation, and quality. To loose this make would be a folly. Concerted efforts by the British/American Allies involved in Jaguar continue to stand in the face of German and Japanese products. Jaguar is original and in my opinion hands -down defeats the pseudo-artificial high technology nonsense which the competitors hide behind. The Boar of Directors at Ford-Jaguar must not give up!
Best regards, David