FORD: Salude México!
December 8, 2006
Anyone who reads the newspaper, watches the news, or listens to the radio, will know that the three American automakers are hurting. It seems that for as long as I can remember one or another has had financial trouble, the flavor of this month is Ford. Ford (which in my opinion is one of the most innovative automakers) has fallen on hard times. During it’s 3rd financial quarter, Ford Motor Company lost over $5.8 billion, for a total of $7.2 billion, since the beginning of 2006. That is an amazing amount of cash-burn. Since, Ford has one of the highest cash reserves of any of the automakers ($23 billion) it will take some time to run-out of money, but not that long. Ford’s CEO, Alan Mulally, says that the company is losing $25,000,000 a day and at this rate would have no money left by 2010. The main crux for FoMoCo (as with all the Big 3) is its American operations, which lose the majority of the money. Ford makes money in Europe, where it is a highly valued brand, South American, Africa, the Middle East and in Asia. Its American operations need to be severely overhauled. To revamp its lineup, Ford has borrowed $18 billion from a consortium of financial institutions; However, to secure the line Ford had to promise everything (including the kitchen-skin) if they defaulted including: factories, auto-brands like Mazda and Volvo, and even the rights to Ford’s blue oval! With $41 billion dollars to overhaul the company its time to get to work! Here is a list of things I’d except the company to restructure:
1- Fire American Autoworkers/ Engineers/ White-collared workers: While its harsh (considering this problem was not their fault) it must be done given the automakers global footprint. In-fact Ford has made great progress with its 75,000 American autoworker, by offering buy-out programs which encourages the company’s peons to jump ship- currently 34,000 workers have.
2.Hire Mexican Autoworkers/ Engineers/ White-collared workers: In Ford’s secret Way-Forward report. It recommended to the Board of Directors to heavy invest in Mexico. With the United States and Mexico all signed up for NAFTA, its time to take advantage! The report recommended investing $9.2 billion dollars in Mexico, from 2006-2012, building huge new auto-assembly facilities, distribution centers, research and engineering facilities, as-well as recommending auto-part companies to move to Mexico. It would be Mexico’s largest direct-foreign investment for the next 6 years and would create 150,000! new Mexican jobs ( making Ford one of the largest private employers in the country). I like this idea, because giving Mexicans jobs, over the Chinese or Koreans, will make our neighbor a little more wealthy and thus fewer will illegally cross the border; Ford will also save lots of money on its new 3rd world/ non-unionized workers.
3. Sell-off Jaguar/LandRover/AstonMartin units: Ford hasn’t made money on them and it is just a distraction, let the German’s buy it up and deal with it.
4. Buy more Mazda stock: Ford currently only owns 33% of Mazda, with the money earned from selling the British units, Ford should buy at least a controlling stake in Mazda (51%). With Mazda under full control, Mazda can become Fords sports divisions. The Japanese unit would also give Ford more access to the large Japanese auto-market and Mazda could be given full control to engineer all of Ford’s I-4 engines and manual transmissions, which seems to be their strong points.
5. Destroy Mercury: Enough said
6. Make all Ford designs across the world the same: European Ford’s are good, why waste the money making them cheaper for Americans? To keep the cost down build them in Mexico!
7. Invest what ever it takes in making global biodisel technology and biodisel-hybrid technology: If you want to dominate a market in America, having a full line up of diesel cars couldn’t hurt. They get good gas mileage, biodiesel weens our dependence off of the Arabs, and the hybrid/diesel/plug-in combo would give you the greatest possible mileage gain.
8. Invest what ever it takes into making Lincoln a truly global luxury brand: With Jaguar and Land Rover gone, Ford will need to make Lincoln more competitive. Without any other sister-brands holding it back, Lincoln could compete with the best, without treading on Jaguars toes. By committing Lincoln to an all RWD line-up of cars, upgraded interiors and truly capable SUV’s (aka Neo- Land Rover’s) Lincoln could become a global dynamo.
This is my wishlist and most of it won’t happen. What ever Ford does it needs to build attractive and desirable cars!
