U.S.A.:Bill Ford Jr. makes case for automaker
By Daniel Howes / The Detroit News
DEARBORN -- Bill Ford Jr. is fighting back, 25 months after becoming chief executive of Ford Motor Co.
Stung by doubts in some quarters that the automaker's turnaround may be faltering, Bill Ford is using the run up to January's Detroit auto show to make the case that the No. 2 automaker is in better shape than many of the so-called experts seem to think.
Here's his spiel:
Ford has $9 billion more cash than it did two years ago. Net costs are on pace to be cut by $3 billion this year, and non-product costs were trimmed $2 billion in 2002. Amid the toughest business conditions in a decade, pre-tax profits swung from a $2 billion loss in 2001 to an estimated $3 billion pre-tax profit this year. And Ford's bellwether North American business is showing signs of what he calls "a stunning turnaround."
His management team, assembled from the remnants of those left after the ouster of Jacques Nasser, has beaten Wall Street estimates in each of the past seven quarters. The boss says Ford's earnings-per-share for the year could be as high as $1.05, up from an estimated 70 cents at the beginning of the year.
A turnaround? Not yet. Progress? Absolutely.
"We're ahead of the curve," Bill Ford said Tuesday, countering the skepticism some hold about his management team with a list of encouraging signs: increasing revenue-per-vehicle sold, rising product quality and customer satisfaction scores and improved product launches. "I'd rather be the guys who under-promise and over-deliver."
For Bill Ford, making his case, doing it publicly and doing it often is becoming almost as important as the results themselves. With two years as chief executive and the hardest work of managing a turnaround now passed, Bill Ford is moving to answer complaints that he is less accessible than rival CEOs and too reticent to talk about where Ford is headed and how he plans to get it there.
Ford's slide into red ink and management disarray was one of the swiftest corporate implosions the global auto industry has seen in years.
The plan to revive Ford still fails to impress some like Standard & Poor's, which recently downgraded Ford's debt to one notch above junk-bond status even as rivals Fitch and Moody's reaffirmed their ratings on the automaker.
The S&P move stung Ford, which offered a sharply worded response. It will take more than that. How Bill Ford leads the company out of its most recent crisis and the course he charts for the future will define his legacy.
In a wide-ranging interview with reporters and columnists, Bill Ford talked about the automaker's improving operations, the need to cut costs further, Ford's plans for China and the prospects -- or need -- for a national solution to the burgeoning health-care crisis.
Beating earnings estimates helps, indirectly validating an incentive strategy that strives to pair incentives with sagging demand instead of match the competition dollar-for-dollar. Banking cash, launching products on time, a nearly 100-percent gain in Ford shares since March and a general improvement in the national economy help, too.
But Ford is far from complete recovery. Ford of Europe remains unprofitable and unsettled, despite having the strongest product lineup in memory. Ford's Premier Automotive Group, including Volvo, Jaguar, Land Rover and Aston Martin, has moderated its aspirations and now is only beginning to deliver the profitability promised at its founding.
Ford is playing catch-up in Asia, a fact Bill Ford readily concedes. And Ford's storied Lincoln brand suffers by comparison to General Motors Corp.'s renaissance of Cadillac, easily Detroit's biggest revitalization story in the past five years.
On balance and where it really matters to the bottom line -- that is, in North America -- more is going right at Ford than going wrong.
To criticism that Ford relies too heavily on profits from full-size pickups and SUVs sold to Americans, Bill Ford said: "You can't retreat geographically and you can't retreat to any product segment. Therefore, every product has to make money. We can't rely on home runs. We need every product to carry its weight."
To criticism that Ford's cost-cutting relies too heavily on accounting gimmicks and one-time fixes, he said: "In a company this size there is always more to come. Look at the revenue base" of $163 billion. "There's cost throughout this entire company and we have a mindset of attacking cost wherever we find it."
To surprise that he recently called for some form of national health-care plan, Bill Ford said: "I don't know what the answer is, but we do need a new approach. The current model is broken and it is driving investment away from the country, and that's wrong."
Ford figures health-care costs for retirees and active employees consume about $1,200 of every car and truck sold in the United States -- more than the automaker spends on steel. Ford and GM estimate their Japanese and German rivals, by contrast, spend roughly $200 per vehicle on health care because their U.S. workers are younger, they carry virtually no U.S. retirees and their health-care spending back home is subsidized by the government.
That's partly why Bill Ford has asked Vice Chairman Alan Gilmour, past chairman of Henry Ford Health System, to head a task force studying the alternatives for easing the burden of health-care costs on Ford and the auto industry.
Good luck. An auto industry call for some sort of "national solution" for skyrocketing health-care costs isn't likely to garner much sympathy from politicians and interest groups. They see the industry seeking relief to be the same one that for decades has lavished top-shelf benefits on workers and retirees and now wants taxpayers to pay the bill.
More important in the near term, however, is whether Ford under Bill Ford can deliver the results it needs to fund new cars and trucks, invest in growing markets in Asia and Eastern Europe and muster the discipline needed to control its historic boom-and-bust cycle.
"We can be profitable -- and nicely profitable -- in this tough environment," Bill Ford said. "There is no magic. It's attention to detail. It's hard work."
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.....