CPA ESTIMATES THAT FORD MOTOR COMPANY COULD RUN OUT OF CASH IN 2009!

Taking a break from promoting Mike Huckabee for president (and sounding the warning about the Gucci Chamelion, Bishop "Slick" Willard Mitt Romney), Pajamas media has posted an alarming article about Ford Motor Company's continuing losses. [In non-election years, this IS normally a pro-Ford blog, after all]

Certified Public Accountant Tom Blumer suggests that Ford's ill-advised showdown with the American Family Association and 30 other conservative groups over FoMoCo's active promotion of the homosexual rights agenda is placing the company at grave financial risk.

"For those who doubt the AFA boycott’s relevance, consider this — Assuming there are 17 million boycott participants [extrapolated from the number of known AFA supporters times a factor of five, assuming that each AFA "true believer" influences five others not to buy Ford products (a reasonable assumption based on Speedzzter's observations)], and that only 1/2 of 1% of them (85,000) had bought a Ford vehicle during the fourth quarter, the margin earned on those additional sales (assuming a product mix and incremental profit margins before fixed costs consistent with those identified at this July 2007 Forbes article on the auto industry) would have turned that $620 million fourth-quarter loss from continuing operations into a $63 million gain . . . ."


"That’s an awfully high price to pay for political correctness."

"Now consider this: Last September, Ford had $27.4 billion in cash. The Truth About Cars blog, bringing back a nearly forgotten term from the late-1990s bubble, estimates that the company’s cash “burn rate” is $12-$14 billion per year. At that rate (excluding possible sales of assets, etc.), the company, which has already utterly mortgaged itself, could run out of money by the end of 2009."

A group of Ford's dealers (who are closer to the customers than the Glass House Gang) tried to avert this disaster a couple of years ago by working a deal for FoMoCo to stay neutral in the culture war. But Bill Ford decided instead to gamble with the investments and the lives of the millions who depend on Ford.

History may yet prove this as Bill Ford's biggest mistake of all.

At least FoMoCo hasn't abandoned motorsports. At the Rolex 24, Ford-powered Daytona prototypes made a strong showing, grabbing the front row and leading much of the event (until non-powerplant issues deprived Ford of the win). FoMoCo has also taken some of Speedzzter's advice and begun aggressive advertising of the "Aluminator" crate engine.

And on the 2008 NASCAR Media Tour, Edsel B. Ford II (the Ford heir that should have gotten tapped to run FoMoCo) appeared and gave strong support for Ford's motorsports efforts.
"There's been a lot of talk in the Ford Motor Company in the media in the past year, much of it negative," Ford said. "People have wanted to write us off, to say we couldn't compete in the marketplace or on the race track.

"I'm here to tell you one thing today: don't underestimate our resolve."

It would be tragic if FoMoCo's "resolve" to offend social conservatives and champion political correctness outstrips its "resolve" to win motor races, sell more vehicles (i.e. "Win on Sunday, Sell on Monday"), provide good jobs for thousands, and reasonable shareholder returns.

But if Tom Blumer, C.P.A., is right, Ford is needlessly racing to the poorhouse.