No car tsars for Ford
It's not that Ford's idea was better than that of General Motors or Chrysler -- it was different. Rather than humbly beseeching charity from the Democrat Congress, Ford opted for the opportunity to access money should its fiscal situation significantly deteriorate.
By doing so, Ford CEO Alan Mulally
side-stepped the immediate loss of corporate control to statist car tsars. As GM, Chrysler, creditors, and stockholders have learned, all those billions in bailout teem with sticky, webby, socialist strings attached.
Well. Time for Big Government and Big Labor to rake in the payola. Business is evil. Power to the proletariat. We will bleed the capitalist pigs white.
GM and Chrysler must now dance for their anti-business masters, restructure using plans approved by politicians and bureaucrats who know little or nothing about profit generation, and still meet all obligations to United Auto Workers retirement plans, health benefits, and perks.
Oh, by the way -- shareholders and creditors are not invited to the trough.
Risks abound
Ford's road to happiness is not without its share of potholes. Ford shares parts suppliers with GM and Chrysler; If their bankruptcies disrupt supply, it will also hurt Ford production. When parts suppliers lose orders, they in turn curtail production, employment, and re-investment -- and production delays equal profit loss.
It must also be mentioned that in a bankruptcy scenario, GM or Chrysler could request a renegotiation of UAW contracts and the forgiveness of billions in debts. This would adversely affect Ford's cost-per-unit structure compared to its competition.
But there are also rewards, and Mulally is wagering that potential investors agree.
Image, and a bit more
Opinion polls indicate that average Americans now think of Ford as standing alone, that it is different from GM and Chrysler, that it is savvier. It now appears that Wall Street thinks the same.
As they say, the proof is in the pudding: Ford's stock shares have been rising and now stand at their highest level since the Fourth Quarter of last year -- even with announced First Quarter losses this year.
What has Ford done and what is it doing to enhance its image and its solvency?
Well, for starters, Ford nixed the idea of bailout loans. That was huge, because it foiled Obama and company's raison d'etre to interfere in a business about which they know nothing.
Quietly off-stage, Ford also renegotiated its own union contracts, reducing labor costs. Ford and the UAW developed a shared company-union equity in its current cash obligations in order to maintain a trust fund to pay for retiree health care.
In the design department, Ford is unveiling a new line of cars that are engineered to provide stiff competition -- in quality, economy, and dependability -- with any model produced by Toyota, Nissan, or Honda.
Down the road
Mulally maintains that even if global automobile sales continue to slump this year, Ford can maintain liquidity by following the company's plan for corporate streamlining and cost-cutting.
Ford plans on cutting brands -- it sold Aston-Martin, Jaguar, and Land Rover -- and will soon sell Volvo while drawing down from its investment in Mazda. The company also plans to reduce the number of American dealerships while upgrading its service quality.
Oh, yes ... and while the company will retain Ford and Lincoln, some day the Mercury logo might be absent from the world's highways.
Of greater significance, however, is Ford's plan to develop a global manufacturing and distribution structure designed to sell the same models of cars everywhere in the world. The B2J offered a glimpse of what is in Ford's future with an article entitled Ford has a better idea ... in Brazil.
Although a fraction of what it once was, Ford's share price is modestly healthy. It is now ten times that of GM's -- so maybe they really do have a better idea.
Bully for Ford, because now that the operational controls of GM and Chrysler have been usurped by socialist bureaucrats and the unions, I know of at least one customer they lost forever.