Ford takes on the skeptics
Execs to naysayers: The turnaround effort is working
By Mary Connelly
Automotive News / October 21, 2002
DETROIT - Ford Motor Co. is going on the offensive to battle skepticism about its turnaround plan.
The automaker - which spoke with an almost apologetic tone last spring - is beginning to argue its case more forcefully.
Last week Ford Motor carried its message to the automotive press corps in Detroit. This week, CEO Bill Ford and other top executives hit Wall Street.
Ten months into a four-to-five-year turnaround, Ford Motor has an uphill fight. The automaker expects to earn only a slight profit in the fourth quarter. It is trying to carve $2 billion from its nonproduct costs this year and $3 billion in product-related costs by mid-decade.
"Our main message is that the plan is working, and we are gaining momentum," Bill Ford said last week. "We know there is a lot more work to do."
But on Wednesday, Oct. 16, Standard & Poor's, the credit rating agency, placed Ford Motor and Ford Credit on credit watch with negative implications, citing concern about Ford's ability to revive its core automotive operations. The move will raise Ford's borrowing costs and add another hurdle to its recovery efforts.
While showing slides, Ford Motor executives are arguing that the company already has notched measurable improvements in cost, quality and efficiency. Tattered relationships with employees, dealers and suppliers are being patched.
For example, the number of safety recalls on all Ford Motor vehicles in North America improved 62 percent in calendar 2002 through September compared with the same period a year ago, Jim Padilla, Ford group vice president of North America, told the Automotive Press Association in Detroit last week.
Allan Gilmour, Ford Motor CFO, said net revenue per Ford Motor vehicle worldwide increased $600 in the third quarter of 2002 compared with 2001. The increase was driven chiefly by a richer product mix and a consumer preference for pricier options such as DVD players and third-row seats.
But last week, Bill Ford said the automaker will accelerate efforts to cut nonproduct costs. One huge question facing the industry is whether the robust volume of 2002 has pulled sales forward.
"Is there going to be a payback yet to come?" Bill Ford asked.
The automaker has not given a 2003 industry sales forecast.
But Bill Ford said the company expects volumes to fall below this year's strong performance.
"There is a big concern macroeconomically - (if) there is a war (with Iraq), what that will do to oil prices and oil supplies."
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.
My next Ford.....