OOPS! FORD MOTOR COMPANY MADE A PROFIT (SORT OF).
Just as Ford Motor Company’s pivotal negotiations with the United Auto Workers union began, Ford inconveniently made a profit. For the first time in a couple of years, Ford (F) knocked down a profitable quarter, ending up $750 million ahead in the Second quarter.
Ford honcho Alan Mulally, however, predicted that Ford would still end up losing money and market share for the entire 2007 year. More importantly, Ford’s sinking North American operations leaked out a negative $378 million in the second quarter of 2007. Mulally still expects Ford to immolate about almost half of its available cash and credit reserves by 2009 as it struggles to cut $5 Billion in costs. Twelve Thousand salaried workers and thirteen thousand hourly workers have already been canned in the belt-tightening campaign. FoMoCo is also still on track to have 26% less manufacturing capacity and nine fewer plants than in 2005. And analysts in the know suggest that Ford may be a bankruptcy candidate if the UAW refuses to give Ford a “deal” more in tune with what the “scabs” receive at the non-union Japanese auto plants.
FoMoCo’s retail share of the North American market is now a paltry 10.2% and is down almost half a percent this year. Notwithstanding FoMoCo’s noisy reduction in its residual and reliability-sapping sales to daily rental fleets, FoMoCo’s fleet business still comprises more than one-third of its shrinking 15.6% market share.
Not much to celebrate there. Of course, all of this is in the greater context of imports at the threshold of cresting the 50% market share milestone.
Given FoMoCo’s continuing disaster in the North American sector, a significant portion of FoMoCo’s “surprising” profit came from the much-maligned Premium Automotive Group (PAG). PAG reversed course from a $162 million loss in the second quarter of 2006 to a $140 million gain. But analysts say the historically weak U.S. dollar (and not FoMoCo) gets much of the credit. Moreover, Aston Martin is already mostly gone, with the mangy cat Jaguar and the gasoholic Land Rover on the block. Repeated rumors even suggest that Volvo may be dumped for more cash. So even if PAG has FINALLY turned around, its apparently pending dismantlement suggests that this “profit center” won’t be long term.
As to enthusiast-oriented products, Ford isn’t generating much excitement. Shelby GT500s are still few and far between (and trading at prices above what 90% of the interested potential buyers could bear). Mustang sales continue to slump (even with cash on the hood and real competitors still several months away). The performance gap between the weak-sister Mustang GT (of hypereutectic piston/doorstop infame) and the GT500 still exists with no end in sight. Ford still has no competitive sport compact performance car (or meaningful youth market presence for that matter). It still has no RWD sport sedan plan. No word on the upcoming “Boss/Hurricane” engine. Nothing but empty speculation on whether the “Twin Force” turbo engine will find a suitable sporting home. While the return of the Taurus has somewhat corrected the most prominent defect with the boring, slow Five Hundred (the abysmal power-to-weight ratio), Mulally’s super-safe sedan is hardly a class-leading hot rod. And who’s seen anything from SVT lately.
Ford is also absent from much of the world of motorsports, lacking any presence in Formula One, CART, IRL, and the American LeMans Series. While the Roush-Fenway team has marginally improved Ford’s competitiveness in NASCAR from the dismal start of the 2007 season, the “Chase for the (last) Nextel Cup” will still be predominantly a (yawn) Chevy show. Ford apparently had no shot at NASCAR’s most celebrated driver (Dale Earnhardt Jr.) and is still paying the steep price for its (and Bill Davis’) failure to lock in Jeff Gordon in 1992. At least it appears the Robert Yates operation will not flip to Toyota next year as some wags had predicted. Thank Dearborn for small victories.
Ford Racing Performance Parts (FRPP) has made some recent gains (notably the long-overdue switch to the “four bolt main” “Boss” block for many of its (overpriced) pushrod small-block crate engines). But GMPP and the legions of Chevy-oriented suppliers are still dominating the repower and street rod markets. FRPP still hasn’t figured out how to take advantage of Modular power. For example, despite fifteen years to figure it out, FRPP still hasn’t developed a kit to convert two-valve Modulars to production four-valve heads. Nor has FRPP developed any high-efficiency turbo kit or affordable answers to the headline-grabbing Mopar Hemi and GMPP LS7 powerplants. Neither has FRPP leveraged the Ford GT parts bin for the benefit of grassroots enthusiasts and racers who will never own a hand-built $150,000 mid-engined super car, but want/need the power and flash of GT-developed parts for their ordinary, mass-produced Mustangs and RWD Fords. Meanwhile, GMPP’s low-tech LSX engines are quickly becoming the “new standard.” FRPP still hasn’t sensed the need for more competitive BIG BLOCK crate engines -- instead depending on remanufactured two-bolt blocks and cast cranks, while GMPP and Mopar continue to flood the markets with heavy-duty four-bolt main big blocks and bulletproof forged reciprocating assemblies.
In short, although this may be the second “gilded age” for automobility and high performance, Ford is increasingly becoming a marginal player. If the UAW doesn’t wake up to the realities of the international automobile market and its abysmal failure to unionize the Japanese invader plants, FoMoCo is in deep, long-term “doo-doo.” Thankfully, the old FoMoCo managed to build a number of exciting vehicles in happier times that will have to tide Ford enthusiasts over for what looks to be a long, grim while.
Just as Ford Motor Company’s pivotal negotiations with the United Auto Workers union began, Ford inconveniently made a profit. For the first time in a couple of years, Ford (F) knocked down a profitable quarter, ending up $750 million ahead in the Second quarter.
Ford honcho Alan Mulally, however, predicted that Ford would still end up losing money and market share for the entire 2007 year. More importantly, Ford’s sinking North American operations leaked out a negative $378 million in the second quarter of 2007. Mulally still expects Ford to immolate about almost half of its available cash and credit reserves by 2009 as it struggles to cut $5 Billion in costs. Twelve Thousand salaried workers and thirteen thousand hourly workers have already been canned in the belt-tightening campaign. FoMoCo is also still on track to have 26% less manufacturing capacity and nine fewer plants than in 2005. And analysts in the know suggest that Ford may be a bankruptcy candidate if the UAW refuses to give Ford a “deal” more in tune with what the “scabs” receive at the non-union Japanese auto plants.
FoMoCo’s retail share of the North American market is now a paltry 10.2% and is down almost half a percent this year. Notwithstanding FoMoCo’s noisy reduction in its residual and reliability-sapping sales to daily rental fleets, FoMoCo’s fleet business still comprises more than one-third of its shrinking 15.6% market share.
Not much to celebrate there. Of course, all of this is in the greater context of imports at the threshold of cresting the 50% market share milestone.
Given FoMoCo’s continuing disaster in the North American sector, a significant portion of FoMoCo’s “surprising” profit came from the much-maligned Premium Automotive Group (PAG). PAG reversed course from a $162 million loss in the second quarter of 2006 to a $140 million gain. But analysts say the historically weak U.S. dollar (and not FoMoCo) gets much of the credit. Moreover, Aston Martin is already mostly gone, with the mangy cat Jaguar and the gasoholic Land Rover on the block. Repeated rumors even suggest that Volvo may be dumped for more cash. So even if PAG has FINALLY turned around, its apparently pending dismantlement suggests that this “profit center” won’t be long term.
As to enthusiast-oriented products, Ford isn’t generating much excitement. Shelby GT500s are still few and far between (and trading at prices above what 90% of the interested potential buyers could bear). Mustang sales continue to slump (even with cash on the hood and real competitors still several months away). The performance gap between the weak-sister Mustang GT (of hypereutectic piston/doorstop infame) and the GT500 still exists with no end in sight. Ford still has no competitive sport compact performance car (or meaningful youth market presence for that matter). It still has no RWD sport sedan plan. No word on the upcoming “Boss/Hurricane” engine. Nothing but empty speculation on whether the “Twin Force” turbo engine will find a suitable sporting home. While the return of the Taurus has somewhat corrected the most prominent defect with the boring, slow Five Hundred (the abysmal power-to-weight ratio), Mulally’s super-safe sedan is hardly a class-leading hot rod. And who’s seen anything from SVT lately.
Ford is also absent from much of the world of motorsports, lacking any presence in Formula One, CART, IRL, and the American LeMans Series. While the Roush-Fenway team has marginally improved Ford’s competitiveness in NASCAR from the dismal start of the 2007 season, the “Chase for the (last) Nextel Cup” will still be predominantly a (yawn) Chevy show. Ford apparently had no shot at NASCAR’s most celebrated driver (Dale Earnhardt Jr.) and is still paying the steep price for its (and Bill Davis’) failure to lock in Jeff Gordon in 1992. At least it appears the Robert Yates operation will not flip to Toyota next year as some wags had predicted. Thank Dearborn for small victories.
Ford Racing Performance Parts (FRPP) has made some recent gains (notably the long-overdue switch to the “four bolt main” “Boss” block for many of its (overpriced) pushrod small-block crate engines). But GMPP and the legions of Chevy-oriented suppliers are still dominating the repower and street rod markets. FRPP still hasn’t figured out how to take advantage of Modular power. For example, despite fifteen years to figure it out, FRPP still hasn’t developed a kit to convert two-valve Modulars to production four-valve heads. Nor has FRPP developed any high-efficiency turbo kit or affordable answers to the headline-grabbing Mopar Hemi and GMPP LS7 powerplants. Neither has FRPP leveraged the Ford GT parts bin for the benefit of grassroots enthusiasts and racers who will never own a hand-built $150,000 mid-engined super car, but want/need the power and flash of GT-developed parts for their ordinary, mass-produced Mustangs and RWD Fords. Meanwhile, GMPP’s low-tech LSX engines are quickly becoming the “new standard.” FRPP still hasn’t sensed the need for more competitive BIG BLOCK crate engines -- instead depending on remanufactured two-bolt blocks and cast cranks, while GMPP and Mopar continue to flood the markets with heavy-duty four-bolt main big blocks and bulletproof forged reciprocating assemblies.
In short, although this may be the second “gilded age” for automobility and high performance, Ford is increasingly becoming a marginal player. If the UAW doesn’t wake up to the realities of the international automobile market and its abysmal failure to unionize the Japanese invader plants, FoMoCo is in deep, long-term “doo-doo.” Thankfully, the old FoMoCo managed to build a number of exciting vehicles in happier times that will have to tide Ford enthusiasts over for what looks to be a long, grim while.
posted by Editor at 07:51
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