Future of Ford

[auggie]

I am sure stangers are watching developments with Ford closely. Unfortunately, the deep seated problems with GM are certain to affect Chrysler and Ford as well. These are complex issues: the need to preserve American jobs, contagion effects on suppliers / related industries, bloated labor costs, large healthcare and pension liabilities, a truly difficult sales environment and a growing realization among the political class that throwing money at automakers is difficult to reconcile from a ROI perspective.

I dont think Ford would let Mustang go, however owners of other Ford brands may concerned about spare parts if their brands were jettisoned in a savage restructuring of the Ford Motor company.

This weekends Barrons does a decent job of covering the latest news. What thoughts do other stangers have? I would be interested to find out.

[MarcInJapan]

I still on plan on buying stock in Ford. Hopefully this week. The Big 3 won't go under.

[jthorn9]

Personally I feel just let the companies go under, because the changes needed to keep them aloft, well, I gurantee you they will not due. Here's just a list of things they need to fix:

*) Eliminate unions (a good portion of their losses/cost come in at union expenses. same person that makes $15 an hour at Nissan which cost the customer $20 an hour or so after all expenses is equivilant to an $80 an hour person at Ford/GM that makes the same $15, but union cost really jack up the fees)

*) CUT EXECUTIVES (plain and simple, Ford/GM has grown too large for their own good, they need to can some of the executives that rake in unneeded millions of dollars a year and let that money go direct to their bottom line which will boost retained earnings, and stock)

*) CUT EXECUTIVE PAY (again, there is no need to have an executive make as much money as they do with an otherwise failing company)

*) CUT OUT MIDDLE MEN AND UNNEEDED POSITIONS (eliminate the middle men as it were and people who really only have a job to fill a slot that somebody else doesn't really want to do, drop that labor off on other managers and allow that money to go to employee hours, wages, research, etc.)

*) Become more innovative (Ford and GM are generally way behind the curve when it comes to innovations, it seems as if they're always the last to get out a "new" product, and it's not always been the best)

*) Find new buyers for materials/goods to cut beggining cost, which will affect the end price, or can use that added bonus towards ending gross margin/profit - as stated, cut beggining material cost, not quality, will allow for more money down the road

In short, here's a follow up of the effects of the listed above:

Gross margin will rise - more money for expenses, stocks, net profit/retained earnings, etc.
Operation expenses will fall - more money for stocks, net profit/retained earnings, research, etc.
Taxes will fall - spend less, make better use of expenses, taxes will be less = more money in retained earnings or net profit

[auggie]

Jeremy, I think Ford should hire you as opposed to the high consultants from McKinsey or whereever they are from. These are very thoughtful ideas on how to restructure the business and make it profitable. It hard to accept politically, but it will be difficult to save Ford jobs with making difficult decisions.

Marc, I am glad to hear a patriot putting their money in their convictions of a company owning a major franchise, that is the iconic Mustang and F-150 brands. I agree with you, 10 years out this will probably be seen as the mother of all entry points for long term investors. A safer way to play it is with the convertible bonds that more senior than the common stock and pay you while you wait.

[jthorn9]

Well being a manager myself of a profitable business, Home Depot, I understand the basics extremely well, and unfortunately, Ford's CEOs either don't care, or can't open up their mind enough to just get back to the basics. It's amazing how the basics are what can make or break some managers or companies. Now there are way more things that need to be changed, but I gurantee you that changing the things I listed would save the companies. They may not be as big as they were, but they would be profitable for the first time in a long time. Hell, pay me just $250000 a year flat rate, and I'll be the CEO Ford/GM with no problem, that would save them the other 2-5 million they spend a year on a single CEO.