FORD, like GM is over with. While Toyota, Hyundai and Honda bulid $2bil factories here in the States GM and FORD can not close factories fast enough! Both are losing millions per day. FORD is releaseing Corporate bonds every quarter that pay 7.8-8.3%. This would indicate they are just about over. (I have credit cards in my wallet that charge a fixed rate of 9%). They are out of free cash flow. So is GM.
GM will be purchased by Toyota, IF, and only IF, they can get the pension plan through bankruptcy cleanly. GM is watching United and Delta and others to see how efficiently they can bankrupt their pension plans. If all goes well, as it is now, GM should take a shot at bankruptcy in late 2006. If the pension plan is divested Toyota will scoop up GM, and will immediatly kill off all its lines but the most profitable and lucritive. Toyota would love to get into the truck business and crush FORD. The Toyota trucks are now made at the Nummi plant in Fremont california, which is a joint venture GM/TOYOTA plant of sorts already.
Toyota is very careful not to push GM over the edge because they don't want a customer/loyalist backlash, or as they put it; "...an Americanism emotional backlash" when Toyota takes it over.
FORD on the other hand is betting the farm on three MASSIVE off-shore plants. And they are going with a 2 platform assembly line operation/facility like Toyota. As these plants startup, there will be many cars that have to be dropped from the lineup. Always think in groupings when you think of FORD in 2006 and beyond. Example; at the Hermisillo plant in Mexico start thinking (Mazda/Ford 500 and Ford Fusion/Lincoln Zepher). Ford wants all manufacturing OFF-Shore as fast as possible so that it get its pension plan through bankruptcyand impact its suppliers and operations in a minimal way. with off-shore suppliers and manufacturing plants the "impact" to those operations can be minimal to non-existent if you file bankruptcy in the States. Ford is positioning itself for a 2007 bankruptcy. The unfortunate thing is that they may not make it? Various trading houses are starting to look at the Ford corporate bond rates and are concerned that Ford is closer to bankruptcy that we all think. One little downturn (ie; 9/11) incident and it may take them out. Its VERY close.
The issue with Ford is that there is no other company on the PLANET that could assume its debt and pension plan. It has a stable of overseas assembly plants making low volume cars that it has to support and its expensive. They are "FORDizing" Volvo pretty but all the other odd ball lines are so specialized that its hard to streamline them and get their production numbers up.
Ford is running a marathon, its running as fast as it can, to survive. All its free cash flow is being directed into off shore plants and facilitites, if this "plan" fails it will all overwith! Remember that it most countries Ford does NOT own the realestate or buildings that it uses! So they will have no asset base to sell off if they have to "fold up" any of these plants!
There are no suitors for FORD today, and FORD knows this. They MUST get all the US car plants closed (except the truck plants), and get into a 3-4 platform offering in low cost countries (LCC). In Hermisillo the fully burdened worker rate is $7.14/hr. In the States its near $40, or more. If they can pull this off and get the pension plan through bankruptcy in 2006-07-08 then they can be sold off and it may survive. But there is no room for error, its that close.
And we sit and talk about the LS and what offerings it will have next? It will have ZERO offerings that WE would like and appreciate! In fact, all of the Engineers that worked on the LS are now gone, or will be gone by July 2006, when the Wixom Lincoln plant closes. Its done. Toast!
What is Wixom going to build? The Ford GT? LOL Everyone says that the Wixom plant must stay open because it has a 3 year contract with the UAW? This is BS. What people don't know is that if FORD can show it is in financial trouble or files bankruptcy it can close ANY PLANT at any time!
People equate Fords success to the strong Mustang sales? Strong sales? While not a flop, but at the current rate of sales it will take FORD what...10 YEARS to recoupe the tooling and development costs of $900 million? Ford does not need stellar sales of any one car, it MUST have moderate sales and profitability across the line mix to generate an adequate EBITDA number to sustain operations. Currently it is not and there is no sign that in the near future it will.