Originally posted by M5Power
Okay: In 2001, Ford lost $3.8 billion. Lincoln-Mercury lost $1.0 billion. Land Rover lost $250 million. Only Volvo and Aston/Jaguar gained money, but in total, their gains were only $800 million.
First of all, everyone's losing money, especially in the auto industry. It's hard times everywhere. If you've got a car that works, why spend money on a new one if you're not sure you'll still have a job?
GM:
www.businessweek.com/magazine/content/02_12/b3775089.htm
Chrysler:
www.usatoday.com/money/autos/2001-04-25-dcx-earns.htm
Ford still has high margins, especially compared to Chrysler, so any increase in sales results in a faster increase in income. Ford also ran into problems later than most other companies; its roller-coaster ride is simply delayed (others are starting to pick up already).
The Firestone tyre problem (which I'm sure you've all heard about) has already lost Ford $3 billion, and I won't even estimate as to how much money they may lose after they settle all lawsuits on the topic. The Firestone tyre problem also linked 271 deaths (!) to Ford. Consumer confidence, anyone?
*ahem*
money.cnn.com/2000/09/15/companies/ford/
money.cnn.com/2001/11/01/companies/carsales/
(The second link tells about a 45% growth in sales...for the Explorer.)
Ford's new (I'll get into that later) boss, William Ford, has decided on a 'restructuring program' which sounds more like brutal cost-cutting. He cut four factories [...]
There are factory closings all through Japan and Taiwan in the semiconductor industry. Is Samsung in danger of going out of business? (Hint: DC and GM closed quite a number of factories last year; they're doing much better
this year.)
If you had lousy factories churning out lousy cars in a lousy financial market, you'd probably close them, too...and feel lousy about it, no doubt.
Recalls! The Focus has been recalled four times,
[...]
Ford's biggest problem, actually, is product cuts. Due to the loss of these factories, nearly 900 million less products will be produced
[...]
When Bill Ford took over from Nasser, Nasser had purchased several companies around the world. Bill Ford is now trying to sell them (or has sold them). Fairlane Credit (based in Denver), Kwik-Fit (UK), and Hertz Equipment Rental (Canada) all fall into this category.
I'd clump this with the previous paragraph. Old factories, old Q/A. Not that Ford will ever be nose-to-nose with RR, though. As for selling off Hertz, etc.: To make your company more profitable, it is often a good idea to focus on what you do best (or on what you
should do best). In Ford's case, close some bad factories, sell some non-core divisions to drum up capital, and use that cash to build better factories and spark-up the other ones. Basic Management 101...well, 403...or maybe 415...depending on your MBA program.
Internally, Jac Nasser (CEO) and Wolfgang Reitzle (CEO of Premier Auto Group, holding Jag, Aston, Lincoln, Land Rover, and Volvo) have both resigned or been fired along with Ford's number one treasurer and their director of investor relations.
There's reasons for those two departures. Nasser was ousted by Billy Ford; he didn't resign on his own. As for Reitzle, he'd rather stay in Europe and not have to report to someone he considers his inferior (Nick Scheele). There's also the rumour he's biding his time for an opening at the top of DaimlerChrylser. (No, none of these are truly my own ideas, but they make sense, don't they?)
I'll miss Reitzle. He could have brought some interesting designs to Ford (if they'd have let him). Much better than re-hashing your own history in literal form.
Finally, Ford is involved in an investor lawsuit (due to something about the precious metal prices?)
Well, I'll give you this one. And it's Ford's own fault. Ford stockpiled palladium (for the catalytic converters). It also invested in it. Then its own engineers figured out a way to get by without it. Suddenly a major buyer of palladium no longer needed it. (A case of the left hand not knowing what the right hand is doing...more Basic Marketing 101). So someone sued based on the lack of information from Ford's engineering department. Chances are the lawsuit will go nowhere, but Ford still loses out on US$1 billion due to the fact that their huge store of palladium is worth jack squat.
Ford will either cease to exist or be bailed out by the government (like it did Chrysler) in five years.
Bailed out? Yes, if it comes to that point. Cease to exist? I doubt it. People said that of IBM 15+ years ago. Truth is, they never really went anywhere. "Blue Chip" companies are called "blue chip"s for a reason: they're pretty darn stable in the best and worst of times. Ford is big...no,
huge. They're not really going anywhere. It'll take a lot more than a few billion in losses to knock them out for good. They've also got a lot going for them in the future: Aston Martin and Jaguar are looking for doubled sales (with high margins on that). Volvo is it's ever-steady self. Mazda is making a serious run on the import scene, redefining how fun an affordable car (or van) should be. Ford is also learning the theory of platform sharing, rather than just badge replacing (Escape/Tribute, rather than Explorer/Mountaineer).
In a nutshell (and it'd have to be a big nutshell after this post), Ford will be just fine.
