Ford Scion Looks Beyond Bailout to Green Agenda
[Poor choice of words on the New York Times' part. Did your copy editors not know Scion is another car brand, or did they just think that was a quaint play on words?]
Bill Ford Jr. wasn't viewed as an effective manager when he was CEO of his family's company, but the guy has vision the other players in town could learn a lot from. Ford clearly has a powerful design team in J. Mays and Freeman Thomas [who penned the Audi TT and New Beetle while together at Volkswagen AG,] Peter Horbury [who accomplished the no-small-task of making Volvos sexy,] and major league talent like Anthony Prozzi and Camilo Pardo. Even with arguably the best design staff in the business, Ford is in similar hot water as GM and Chrysler right now. The two things Ford Motor Company have going for them is 1) enough liquidity to survive the next year, and 2) [more importantly] an aggressive plan to make products which are relevant to not only consumers, but to the next president's vision for energy independence and start-up mentality leadership.
Mr. Ford has been working behind the scenes, meeting one-on-one with Mr. Obama in August, conferring with his senior economic advisers, and teaming up with Gov. Jennifer Granholm of Michigan to push a vision of a leaner, greener auto industry.
With Detroit on the brink of disaster, the great-grandson of Henry Ford could play a critical role in how the Obama administration decides to assist the companies financially and shape broader energy policies.
“One of the things that I feel very encouraged about is the president-elect and where he’d like to take this country in terms of energy, and I completely buy into his vision,” Mr. Ford said in an interview, his first since the Big Three approached Washington lawmakers about a rescue plan.
He can afford to take a longer view because Ford, unlike G.M. and Chrysler, does not need an immediate infusion of government aid to stay in business.
While Ford’s chief executive, Alan R. Mulally, joined his counterparts from G.M. and Chrysler in testifying before Congress last week, Ford is not asking for an immediate bailout from Washington for now.
The company has enough cash on hand — $18.9 billion, as well as a $10.7 billion line of credit with private lenders — that will keep it running through 2009 without cutting development of its next generation of more fuel-efficient cars.
While Ford cannot continue to burn cash indefinitely, it is also not on the verge of bankruptcy like G.M. and Chrysler. And the health of the company presents a unique opportunity for Mr. Ford, 51, who has been chairman of the company since 1999 and served five years as its chief executive.
“We have a plan that is high-tech, product-driven, which is a fuel economy plan,” he said. “And we have kept that plan in place under these tough conditions.”
In August, Mr. Ford shared those plans with Mr. Obama, then candidate for president, when he was in Lansing, Mich., for a speech on energy policy.
“We talked about the electrification of our industry and other fuel-economy issues,” Mr. Ford said. “He’s a great listener and he asked all the right questions.”
Mr. Ford said they focused on a few specific, industrywide issues. One was government help to put more electric cars on the road.
“One of the things we need to sort out as a country is batteries,” Mr. Ford said. “We really don’t want to trade one foreign dependency, oil, for another foreign dependency, batteries.” The main producers of batteries are Asian manufacturers.
He does not profess to have Mr. Obama’s ear yet on the how to save Detroit. But Mr. Ford is keeping close contact through Governor Granholm, a member of the president-elect’s economic advisory team.
“I think he is a key player,” she said of Mr. Ford. “He has tremendous credibility with respect to the serious issues related to renewable energy and energy security for this nation.”
Mr. Ford has been Detroit’s most vocal environmentalist since becoming the first family member to run Ford since his uncle, Henry Ford II.
Even when Ford was living off profits from its big sport utility vehicles, he was pushing to take the company in a greener direction. Ford was the first automaker to bring to market a hybrid version of an S.U.V., the Ford Escape, and it is introducing a new line of Ecoboost engines next year that will cut fuel consumption by up to 20 percent.
The Ford family controls the automaker by virtue of its 70.85 million shares of Class B stock, which carry 40 percent voting rights for the entire company.
But the family’s wealth has taken a drastic hit as losses have mounted at Ford and its stock price has plunged.
The family’s Class B shares were worth $101 million at Friday’s closing price of $1.43 a share, down 81 percent from a year ago when the shares had a value of $532 million.
Mr. Ford also owns 5.2 million shares individually, which have dropped in value to $7.4 million from $39 million.
“The family clearly has taken an enormous financial beating,” Mr. Ford said. “But the family still is here and standing behind the company.”
The company is in better shape than G.M. and Chrysler, but just barely. Ford has lost $24 billion since 2006, and it reduced its cash cushion by $7.9 billion in the third quarter this year.
Two years ago, Ford was seen as the riskiest bet in the industry to survive when it mortgaged nearly all its assets, even its blue Ford oval trademark, to secure a huge line of credit.
Now, with the collapse of the credit market, G.M. and Chrysler cannot borrow money on their assets and could face insolvency by the end of the year without federal assistance.
Mr. Ford said his company was interested in being able to access government loans only if the economy continues to deteriorate. “We’re trying very hard not to need it,” he said. “Our plan is to have our own liquidity and get through without it.”
Ford has already undergone an extensive revamping at the direction of Mr. Mulally, who succeeded Mr. Ford as the automaker’s chief executive in 2006.
Since then, the company has cut 40,000 jobs, sold off three of its brands and begun an effort to transform its truck-heavy vehicle fleet with an influx of smaller, more fuel-efficient cars.
Mr. Ford remained in Detroit last week as Mr. Mulally endured two days of harsh criticism by lawmakers over Detroit’s financial plight, along with G.M.’s chairman, Rick Wagoner, and Chrysler’s chairman, Robert L. Nardelli.
In the interview, Mr. Ford said that some of the skepticism from Congress about the industry’s future was justified. “I completely understand the frustration that Americans feel and it came out loud and clear this week,” he said. “I don’t think we told our story terribly well.”