From Bloomberg today.
May 20 (Bloomberg) -- Ford Motor Co. Executive Chairman Bill Ford, great-grandson of the company’s founder, said it is in the national interest that the automaker keep operating without federal aid.
“It’s in the country’s interest that Ford remain free of taxpayer money,” Ford said yesterday in an interview in his Dearborn, Michigan, office overlooking the 2,000-acre Rouge factory complex built by Henry Ford. “Anything we can do to minimize the amount of taxpayer money going into the private sector is probably a good thing.”
Ford, 52, said he has talked with members of the Obama administration to ensure the company isn’t hurt by being the only U.S. automaker to forgo federal funds. Chrysler LLC is restructuring in a U.S.-backed bankruptcy, and General Motors Corp. probably also will end up in Chapter 11 by June 1.
The discussions are aimed at “not being disadvantaged from the fact that we’re an independent company, not taking taxpayer money,” Ford said. “That’s in the national interest that that happens.”
His comments reinforced the company’s efforts to distance itself from Chrysler and GM, which received $19.4 billion in emergency loans to stave off collapse. While those automakers restructure in and out of court, Ford Motor has been showcasing projects such as factory investments to support new small cars.
Ford Motor’s strategy on a bailout evolved throughout late 2008, Ford said.
‘Go It Alone’
On Dec. 2, Chief Executive Officer Alan Mulally testified to Congress with the CEOs of GM and Chrysler and appealed for a $9 billion credit line. Within weeks, the second-largest U.S. automaker reversed the decision after deciding it had the cash to “go it alone,” said Ford, who served CEO before he hired Mulally in 2006.
“When we started seeing what the restrictions of taking government money would mean to our ability to operate quickly and strategically, we felt that wasn’t a position we wanted to be in,” Ford said. “We felt we could pull ourselves up by our bootstraps and make it on our own.”
While Ford Motor lost a record $14.7 billion in 2008 and remains at risk from the worst U.S. auto market in 27 years, it’s getting a public-image boost for not taking government aid, said Efraim Levy, a Standard & Poor’s equity analyst.
“Ford is benefiting from its independence,” said Levy, who is based in New York and advises holding the shares. “Consumers don’t resent them for taking their tax dollars to stay alive.”
Mulally’s Gambit
Mulally’s borrowing of $23 billion in late 2006, with all the company’s major assets pledged as collateral, positioned Ford Motor to shun a rescue, Levy said.
“Ford was fortunate enough to get those loans in advance of the credit markets freezing up,” he said. “Take away that liquidity, and Ford would be in the same boat as the other two.”
Ford Motor has more than doubled this year in New York Stock Exchange composite trading as it cut debt by $9.9 billion and won concessions from the United Auto Workers to pare annual labor costs by $500 million. The shares fell 7 cents, or 1.2 percent, to $5.56 at 11:45 a.m. in New York.
Bonds for Ford Motor’s lending arm, Ford Motor Credit, rallied today. Ford Credit’s 7 percent notes due October 2013 rose 3.3 cents to 81.1 cents on the dollar, the highest since June, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority. The yield was 12.8 percent.
With $21.3 billion in automotive cash at the end of March, Ford Motor is now working to add new, fuel-efficient models and retool factories to wean itself from dependence on fuel-thirsty trucks.
Opportunity, Caution
“This is a time of real opportunity for us, but also some real cautions as well,” Ford said. “We are spending a lot of time trying to figure out what this all means to us.”
Among the risks are lower costs and better financing for GM and Chrysler from a U.S.-backed restructuring, said Brian Johnson, a Chicago-based Barclays Capital analyst. He rates Ford as “underweight.”
More funding for those automakers and their credit arms would increase “their ability to offer discount financing and subsidize price wars,” Johnson said. “It will certainly put pressure on Ford’s strategy to improve their retail prices.”
Ford said the automaker is improving its prospects with new models like the Fiesta subcompact car coming from Europe and the Fusion hybrid, along with two battery-powered autos coming in the next two years and a plug-in hybrid due in 2012.
‘Competitive Position’
“I really like our competitive position,” Ford said. “Having said that, we are still speaking with the government to say, where possible, ‘Please don’t disadvantage us.’”
Besides his own contacts with administration officials, company executives talk frequently with President Barack Obama’s autos task force, Ford said.
He said he was pleased shareholders rejected a proposal at the May 14 annual meeting to strip Ford family members of a special class of stock that gives them 40 percent voting control of the 105-year-old company. Bill Ford and his cousin, Edsel Ford II, are directors.
“I would hope that shareholders would see that our interests are aligned with theirs,” Ford said. “It’s more than just a financial investment, it’s an emotional investment. It’s pride. I mean, our name is on the product. If it was just a financial investment, the family probably would have been out years and years ago.”
To contact the reporter on this story: Keith Naughton in Dearborn, Michigan, at Knaughton3@bloomberg.net
May 20 (Bloomberg) -- Ford Motor Co. Executive Chairman Bill Ford, great-grandson of the company’s founder, said it is in the national interest that the automaker keep operating without federal aid.
“It’s in the country’s interest that Ford remain free of taxpayer money,” Ford said yesterday in an interview in his Dearborn, Michigan, office overlooking the 2,000-acre Rouge factory complex built by Henry Ford. “Anything we can do to minimize the amount of taxpayer money going into the private sector is probably a good thing.”
Ford, 52, said he has talked with members of the Obama administration to ensure the company isn’t hurt by being the only U.S. automaker to forgo federal funds. Chrysler LLC is restructuring in a U.S.-backed bankruptcy, and General Motors Corp. probably also will end up in Chapter 11 by June 1.
The discussions are aimed at “not being disadvantaged from the fact that we’re an independent company, not taking taxpayer money,” Ford said. “That’s in the national interest that that happens.”
His comments reinforced the company’s efforts to distance itself from Chrysler and GM, which received $19.4 billion in emergency loans to stave off collapse. While those automakers restructure in and out of court, Ford Motor has been showcasing projects such as factory investments to support new small cars.
Ford Motor’s strategy on a bailout evolved throughout late 2008, Ford said.
‘Go It Alone’
On Dec. 2, Chief Executive Officer Alan Mulally testified to Congress with the CEOs of GM and Chrysler and appealed for a $9 billion credit line. Within weeks, the second-largest U.S. automaker reversed the decision after deciding it had the cash to “go it alone,” said Ford, who served CEO before he hired Mulally in 2006.
“When we started seeing what the restrictions of taking government money would mean to our ability to operate quickly and strategically, we felt that wasn’t a position we wanted to be in,” Ford said. “We felt we could pull ourselves up by our bootstraps and make it on our own.”
While Ford Motor lost a record $14.7 billion in 2008 and remains at risk from the worst U.S. auto market in 27 years, it’s getting a public-image boost for not taking government aid, said Efraim Levy, a Standard & Poor’s equity analyst.
“Ford is benefiting from its independence,” said Levy, who is based in New York and advises holding the shares. “Consumers don’t resent them for taking their tax dollars to stay alive.”
Mulally’s Gambit
Mulally’s borrowing of $23 billion in late 2006, with all the company’s major assets pledged as collateral, positioned Ford Motor to shun a rescue, Levy said.
“Ford was fortunate enough to get those loans in advance of the credit markets freezing up,” he said. “Take away that liquidity, and Ford would be in the same boat as the other two.”
Ford Motor has more than doubled this year in New York Stock Exchange composite trading as it cut debt by $9.9 billion and won concessions from the United Auto Workers to pare annual labor costs by $500 million. The shares fell 7 cents, or 1.2 percent, to $5.56 at 11:45 a.m. in New York.
Bonds for Ford Motor’s lending arm, Ford Motor Credit, rallied today. Ford Credit’s 7 percent notes due October 2013 rose 3.3 cents to 81.1 cents on the dollar, the highest since June, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority. The yield was 12.8 percent.
With $21.3 billion in automotive cash at the end of March, Ford Motor is now working to add new, fuel-efficient models and retool factories to wean itself from dependence on fuel-thirsty trucks.
Opportunity, Caution
“This is a time of real opportunity for us, but also some real cautions as well,” Ford said. “We are spending a lot of time trying to figure out what this all means to us.”
Among the risks are lower costs and better financing for GM and Chrysler from a U.S.-backed restructuring, said Brian Johnson, a Chicago-based Barclays Capital analyst. He rates Ford as “underweight.”
More funding for those automakers and their credit arms would increase “their ability to offer discount financing and subsidize price wars,” Johnson said. “It will certainly put pressure on Ford’s strategy to improve their retail prices.”
Ford said the automaker is improving its prospects with new models like the Fiesta subcompact car coming from Europe and the Fusion hybrid, along with two battery-powered autos coming in the next two years and a plug-in hybrid due in 2012.
‘Competitive Position’
“I really like our competitive position,” Ford said. “Having said that, we are still speaking with the government to say, where possible, ‘Please don’t disadvantage us.’”
Besides his own contacts with administration officials, company executives talk frequently with President Barack Obama’s autos task force, Ford said.
He said he was pleased shareholders rejected a proposal at the May 14 annual meeting to strip Ford family members of a special class of stock that gives them 40 percent voting control of the 105-year-old company. Bill Ford and his cousin, Edsel Ford II, are directors.
“I would hope that shareholders would see that our interests are aligned with theirs,” Ford said. “It’s more than just a financial investment, it’s an emotional investment. It’s pride. I mean, our name is on the product. If it was just a financial investment, the family probably would have been out years and years ago.”
To contact the reporter on this story: Keith Naughton in Dearborn, Michigan, at Knaughton3@bloomberg.net
