MM2004
05-29-2008, 09:20 AM
May 29, 2008 Detroit News
The speed is the most unnerving thing about Ford Motor Co.'s harsh new reality.
A month ago, it said Detroit's perennial corporate irritant, Las Vegas mogul Kirk Kerkorian, was on his way to acquiring 5.7 percent of the automaker. Last week it said skyrocketing gas prices essentially had destroyed its pledge to be profitable by '09.
Tuesday, word leaked that Ford is weighing plans to cut its 24,300-person North American salaried work force -- through involuntary layoffs -- 10 percent or more by Aug. 1.
Ford may not have yet reached a corporate tipping point, considering its $40.6 billion in liquidity. But an accelerating cash burn and a sharp deterioration in its U.S. business makes it feel like the Blue Oval is getting mighty close and CEO Alan Mulally is moving as fast as he can to keep that point from getting any closer.
"We're in challenging times," Edsel B. Ford II, a Ford director, told me Wednesday at the Detroit Regional Chamber's Mackinac Policy Conference. "This is the best management team we've had in years."
<!--startclickprintexclude-->Targets reset again, again
We'll see. As record oil prices and slumping consumer confidence gut business plans and hammer the shares of Ford and rival General Motors Corp., an amorphous chorus will renew calls to fire the CEO, kill brands, sell assets, cut jobs, close plants and seek foreign partners. Ford's $28 million man (or is it $36 mil?) won't be immune.
Goes with the territory. So do the inconvenient truths that Ford made and broke its pledge to deliver a $7 billion net profit by mid-decade; that it made and broke its pledge to be profitable by this year; that it made and last week broke its pledge to be profitable in '09, thanks in part to the gyrating oil prices gutting sales of Ford's cash cows -- F-Series pickups and SUVs.
The Blue Oval didn't manufacture in Dearborn all of the circumstances that brought it here: $4-a-gallon gas, the credit crunch, imploding home values, dismal consumer confidence, the prospect of footing a multibillion bill to meet stiff new fuel-economy rules.
But Mulally and the marketing whiz kid he imported from Toyota Motor Corp., Jim Farley, would tell you that more than a few of Ford's problems are homemade: The bias for trucks, downplaying fuel efficiency, conditioning dealers to sell trucks over cars, walking away from vast swaths of the car market, and perpetuating regional silos that essentially kept Ford's most promising products -- especially for these times -- off-shore.
Ford meets the edge
What doesn't go with the territory for the thousands of Ford salaried folks who find themselves again in the cross-hairs is the creeping realization that an unshakable corporate force is existing on the edge. Alongside are many of its suppliers, dealers and employees who can't know from one month to the next, partly because their bosses don't, whether their job or plant might be next.
And the truth is that some of them may not survive this Ford shakeout. Or the one after that. Or the one after that, because it's hard to discern bottom for companies as big as Ford and GM that are so easily buffeted when economic forces they cannot control co-mingle with their mixed corporate legacies.
Ford communities across the country will bear the brunt, too: Cleveland, Louisville, Ky., western Wayne County and, of course, Dearborn, already laden with a surfeit of foreclosed and empty homes, probably acres of vacant office space and the indignity of seeing Ford's more recent retail developments rising in neighboring Allen Park.
When Mulally, the Boeing Co. exec wooed to Ford in 2006 to engineer a turnaround, says the automaker must match costs (i.e., the size of Ford) with consumer demand, this is what he means and this is how painful and uncertain it can get.
So far.
The speed is the most unnerving thing about Ford Motor Co.'s harsh new reality.
A month ago, it said Detroit's perennial corporate irritant, Las Vegas mogul Kirk Kerkorian, was on his way to acquiring 5.7 percent of the automaker. Last week it said skyrocketing gas prices essentially had destroyed its pledge to be profitable by '09.
Tuesday, word leaked that Ford is weighing plans to cut its 24,300-person North American salaried work force -- through involuntary layoffs -- 10 percent or more by Aug. 1.
Ford may not have yet reached a corporate tipping point, considering its $40.6 billion in liquidity. But an accelerating cash burn and a sharp deterioration in its U.S. business makes it feel like the Blue Oval is getting mighty close and CEO Alan Mulally is moving as fast as he can to keep that point from getting any closer.
"We're in challenging times," Edsel B. Ford II, a Ford director, told me Wednesday at the Detroit Regional Chamber's Mackinac Policy Conference. "This is the best management team we've had in years."
<!--startclickprintexclude-->Targets reset again, again
We'll see. As record oil prices and slumping consumer confidence gut business plans and hammer the shares of Ford and rival General Motors Corp., an amorphous chorus will renew calls to fire the CEO, kill brands, sell assets, cut jobs, close plants and seek foreign partners. Ford's $28 million man (or is it $36 mil?) won't be immune.
Goes with the territory. So do the inconvenient truths that Ford made and broke its pledge to deliver a $7 billion net profit by mid-decade; that it made and broke its pledge to be profitable by this year; that it made and last week broke its pledge to be profitable in '09, thanks in part to the gyrating oil prices gutting sales of Ford's cash cows -- F-Series pickups and SUVs.
The Blue Oval didn't manufacture in Dearborn all of the circumstances that brought it here: $4-a-gallon gas, the credit crunch, imploding home values, dismal consumer confidence, the prospect of footing a multibillion bill to meet stiff new fuel-economy rules.
But Mulally and the marketing whiz kid he imported from Toyota Motor Corp., Jim Farley, would tell you that more than a few of Ford's problems are homemade: The bias for trucks, downplaying fuel efficiency, conditioning dealers to sell trucks over cars, walking away from vast swaths of the car market, and perpetuating regional silos that essentially kept Ford's most promising products -- especially for these times -- off-shore.
Ford meets the edge
What doesn't go with the territory for the thousands of Ford salaried folks who find themselves again in the cross-hairs is the creeping realization that an unshakable corporate force is existing on the edge. Alongside are many of its suppliers, dealers and employees who can't know from one month to the next, partly because their bosses don't, whether their job or plant might be next.
And the truth is that some of them may not survive this Ford shakeout. Or the one after that. Or the one after that, because it's hard to discern bottom for companies as big as Ford and GM that are so easily buffeted when economic forces they cannot control co-mingle with their mixed corporate legacies.
Ford communities across the country will bear the brunt, too: Cleveland, Louisville, Ky., western Wayne County and, of course, Dearborn, already laden with a surfeit of foreclosed and empty homes, probably acres of vacant office space and the indignity of seeing Ford's more recent retail developments rising in neighboring Allen Park.
When Mulally, the Boeing Co. exec wooed to Ford in 2006 to engineer a turnaround, says the automaker must match costs (i.e., the size of Ford) with consumer demand, this is what he means and this is how painful and uncertain it can get.
So far.