From an industrial standpoint, few companies symbolize the United States' decade of descent more aptly than Ford. Ford. The mere name conjures up images of deeply-flawed auto market assumptions, an inability to cope with intense foreign auto manufacturer competition, inertia, and an inability to identify what's considered 'cool' among young adults.
As an example: how many young professionals do you know who want to 'run out and buy a Ford today?' These are the main reasons Ford's (NYSE: F) shares have plunged to about $2 per share. Its market cap is down to about $4.55 billion. In 2000, Ford's shares traded above $30.
Ford: it can't get any worse
Well, to paraphrase a song by The Beatles, Ford's stakeholders, including parties who are sitting on large blocs of stock, 'have to believe it's getting better, because it can't get any worse.'
Ford said it will re-hire 1,000 laid-off workers to assemble the company's most important product, the F-150 pickup, The New York Times reported Friday, with the company adding that it expects consumer demand to increase for the product. As a result, Ford says it doesn't need to merge with anyone to survive.
Further, the company said it is in the midst of a new product blitz that will replace 40% of its production with fresh models by next year, The Times reported. Stock Analyst C. Leonard Bauer said the model launches and improvements can not occur soon enough.
"Ford's sales will decline by double digits in 2009, due to the recession, and tighter credit, which will generate another year of large losses, after a very difficult 2008," Bauer said. "Absent a major private equity investment, Ford most likely will need a cash infusion from the U.S. Treasury or Congress to get through the next 12-18 months." Bauer added that he does not have a rating on or own shares in any auto manufacturer.
Can Ford survive, in Bauer's view? "If one of its new fuel-efficient cars is a standout, and if a bailout package is approved, Ford has about a 50-50 chance of surviving," Bauer said.
Auto Sector Analysis: A stern, but realistic, assessment from analyst Bauer. The view from here argues that the new U.S. Congress should approve a recovery / assistance package for all U.S. auto manufacturers, as part of a national industrialization policy.











Reader Comments (Page 1 of 3)
10-31-2008 @ 12:32PM
ekrabs said...
I hope Ford is not over-estimating their own position. I agree the F-150 is one of their crowning achievements, but I have to wonder if truck sales will indeed pick up in this economy. I suppose it helps that the oil prices have dropped.
10-31-2008 @ 2:45PM
lj said...
Yea for Ford! being close to retirement age, I've owned a lot of different cars and am driving my 2nd Ford now, an Escape. I love it, the service at my dealership is great, they honor their warranties, go out of their way to keep their customers happy, even after the purchase. This is only the 2nd one I've owned and I loved my other Ford, a '72 model too!.
11-02-2008 @ 9:08PM
Gordon Liebenthal said...
Good for Ford. Nobody likes to be out of a job. The real issue is our incoherent trade policy that allows basically unlimited numbers of imports and the arrogant laziness of the US manufacturers. Their products were so unreliable, at one time, that it was easy for imports to gain market share. We've been allowing huge numbers of imports for decades, allowed job outsourcing for the last forty years all the while trade representatives and lobbyists buy our government officials. Boy, do we look stupid among the world's nations.
10-31-2008 @ 3:19PM
KS said...
It is too bad Ford (and others) cannot come out with fuel efficient cars that look like the ones we had back in the Classic days. OK maybe a little smaller though! I still have my 1964 Ford Galaxie 500! It's big, but still looks perfect. And I miss my '80's T-Bird too. Wish I could afford a new T Bird! Anyway, I wish them luck! All I can say is BUY AMERICAN!
10-31-2008 @ 3:42PM
Jack Schitt said...
Become a non-union company or go under.
10-31-2008 @ 3:50PM
Sheryl said...
I have owned only 10 cars in the last 31 yrs, and 5 of them have been Mustangs. I own an '04 Mustang now. They've all gotten just average gas mileage, but I've had no trouble with them, I just like upgrading. Ford is A-OK with me!
10-31-2008 @ 3:51PM
fortesque said...
It might time for the major stockholders to look at the Bored of Directors. Could be that many have just been there too long.
Sometimes senior management decays into a culture incompetence and it's the job of the directors to shake things up.
If senior managers feel threatened by younger more agressive subordinates and force them out to protect themselves then you know the company is on the down slope.
10-31-2008 @ 4:21PM
hl said...
You are SO WRONG, Jack S hitt!! The problem is not the unions, Most unions in all industries have give-backs or members have to pay more and more for their medical and other benefits. The problem is with the CEO's of these companies, who have golden parachutes that guarantee them big money whether they help or further ruin a company. You obviously are one of them, or live in a cave.
10-31-2008 @ 4:40PM
Deanna said...
Not to politicize this story, but I'm curious, wasn't it a Ford employee, that was featured in Obama's 30-minute infomercial, who was portrayed as one of the down-and-out who are struggling?
10-31-2008 @ 4:55PM
doogie9654 said...
I own a Ford Fusion and I love it. It is too bad that Ford can't see the real reason that they are failing. "If one of its new fuel-efficient cars is a standout.." That sums it up. For too long they have had a shared interest with the oil companies. In addition, their profit margin per SUV or truck sold is much more than each sedan sold. But the demand for an ultra fuel efficient or totally electric vehicle is definately high, and the technology exists. If the executives at Ford would realize this they could seriously compete with Toyota and Honda. If they do not then they are destined to fail because of their own hubris. I hope that congress does not bail them out if they do.
10-31-2008 @ 4:58PM
daniel herschman said...
deanna said that the people in the infomercial were struggling Ford employees, it's a differentg plant in a different state with a different product.
and jack schitt has obviously never had to work in factory environment where line speed-ups are common and you can't even get a bathroom when break when you need one. not to mention the noise, dirt and even poor ventilation.
10-31-2008 @ 5:27PM
Lou said...
The F150 is expected to pick up sales because the new 2009 F150 is expected to get much better gas mileage. If im not mistaken about 17 city 22 hwy
10-31-2008 @ 6:10PM
Richard said...
I hope the Government doesn't bail any Auto Manufactuer out. I was never bailed out when I bought my home ,30 years ago at 7 % interest. I worked 2 -3 jobs and was married. I still drive my 1985 Ford -F-150- Straight 6 cyclinder/ one barrel carbureator and over 200,000 miles. I get about 16 miles in city and when cruiseing down the interstate I 've got 18-20 miles per gallon on !-95 towards Florida. Ford need to keep building trucks like mine.Charlotte,N.C.
10-31-2008 @ 7:40PM
Steve said...
I own a 2008 Ford Escape Hybrid SUV that gets better city and highway gas mileage than my little Ford Focus sedan, so Ford does make one highly fuel efficient vehicle. I never had a problem with either vehicle, nor my Ford Freestar minivan. Ford also is bringing out the Fusion Hybrid and the small European Ford Fiesta, so things are looking better for Ford.
Richard, maybe it's time to go out and help the economy and the domestic auto manufacturers by buying a new Ford truck to replace your old Ford. I checked out the new 2009 F-150, and it's pretty amazing.
10-31-2008 @ 7:28PM
Steve March said...
I buy nothing but FORD, and have no problems. Buy American!
10-31-2008 @ 7:58PM
r said...
I would rather walk than by foreign. Living abroad opened my eyes to understanding how important this industry is to our culture - let alone our economy.
I lived in Setagaya-ku - Higashi Kitazawa, downtown Tokyo - not one American car company.... this is why were are not doing as well as other foreign car companies... not product.. our own country-men coming up with every reason in the book to justify the foreign purchase domestically- yet every foreign country has no problem saying NO American here.
10-31-2008 @ 9:33PM
tim said...
ford has had a lot of good years. To many autos on being made.Just like everything houses boats planes & trains.Get it. No jobs No buy. car lots or packed. no buyers No jobs.Bring jobs back. And have Fair trade Act fair.Perry much everything I have came from china.How much Of our own goods ships over seas? Is It about like the paceo 1 to 10 . 10 for them & one for us?Help AMERICAN GET JOBS BACK.
10-31-2008 @ 9:54PM
john said...
Good for Ford... I love American made Cars... 1969 Ford Mustang is one of my number one cars. Keep American People Working...
10-31-2008 @ 11:00PM
Tom said...
I suspect Ford will be owned by Toyota within ten years.
10-31-2008 @ 10:00PM
Don said...
We love our ford product, an 07 merc grand marquis. on a trip last year we averaged 29.1 mpg with all the luxaries, and driving at 65,70mph Hope they keep building these cars