Ford (NYSE: F) management continues to be a little rash by saying it will not require government bailout money. It does have the strongest balance sheet of the Big Three and holds the most cash.
According to Reuters, "Ford Motor Co. has enough liquidity to fund its restructuring plan and despite the deep downturn in auto sales still sees no need to ask for government loans, Chief Executive Alan Mulally said."
Ford is making the mistake of creating a plan based on what it can control and refusing to admit the the most important element of an improved U.S. car market is beyond the power of management decisions.
Ford has proved adroit at cutting costs and may be able to get its expenses down to a point where its North American operations can break even if total U.S. vehicles sales in 2009 are 11 million or 12 million units. But, what if the recession bites harder and that figure moves to 10 million or below? Every million vehicle sales counts for about $25 billion. Expense reduction at America's car companies may not be able to make up for that level of devastation in demand.
Ford has also avoided a discussion of whether the large Japanese car companies can continue to take market share, something they have been able to do for most years over the last two decades.
Ford may need federal funds. Management is better off keeping its mouth shut and hoping for the best.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
1-25-2009 @ 1:24PM
Matt said...
Isn't it worth mentioning that in 2008, even with the downturn, Ford's market share increased.
1-25-2009 @ 2:44PM
ddswyrick said...
Just so you know....Their cutting costs includes eliminating several thousand jobs here in the states and sending them overseas to EL Salvador. Just ask my son...that is where his job is heading. Big cut coming Wed.
Kudos to FORD! Hope you can sell your cars in EL Salvador also.
1-26-2009 @ 10:25AM
Randy said...
I'm sorry! Where is the newsworthy writing here? This seems like the author wishes that Ford needed the money and because it doesn't, he tries to paint a "mis-management" painting of Ford when anyone who's anyone in the entire news and auto industry knows that Ford Motor Company is being run very well!
Sounds like someone has a chip or two on their shoulder! Bet the Author drives an import!
Can you say biased undertone?
Now that's NOT reporting! Horrible!
Oh, check out the 2010 Ford Taurus folks. It's worth the look and then some...
1-26-2009 @ 11:58AM
Jobu37 said...
@randy
Obviously you have never read a post by Doug on Ford. His anti-american slant against all domestic manufacturers, especially Ford, is almost a forgone conclusion before he even starts a blog.
Of course, he ignores the fact that Ford has been picking up marketshare for the last three months in the U.S. and for even a longer period in Europe.
He has never acknowledged the fact that Ford is ascending to the top of all quality charts while Toyota is no longer improving their quality they are desperately struggling to maintain prior year levels.
Doug has not heard of the Fusion, soon to be the best in class mid-size sedan using any metric possible in rating a car.
Nor has heard of the new Taurus that will bring luxury appointments at mainstream pricing in the full-size category.
Obviously the global sensation known as the Fiesta has not been brought to his attention. It's introduction has solidified Ford as the #2 player in Europe and in weeks it will catapult Ford's presence in China and other parts of Asia. And in a year it will give the U.S. market the first desirable B-segment offering.
Maybe Doug should tone down his comments because the fact of the matter is that if the economy does deteriate to lower levels Ford may in fact need to tap a credit line from the government. But by the time that happens it is very likely that the commercial market will be more prone to extend additional credit to Ford based on the extremely strong lineup I just described above. Ford is going to have to fend off the fire-sale that is inevtiably going to take place at Chrysler in the coming months but once the remainder of Chryslers inventory is gone Ford has the product to take big chunks of marketshare throughout the year. Most susceptible to losing share is Doug's goldenboy known as Toyota. Their lineup is even more stale than it usually is.
Perhaps Doug should take some of his own advice and "keep his mouth shut". At least until he takes the time to investigate a company before bashing it.
Pre