Wednesday, March 27, 2019

Looks like Ford is heading to bankruptcy

last month or the one before was the news that Ford pulled out of South America


now I read they are pulling out of Russia:

“Ford profits have been on a declining path and it should come as no surprise that Ford has taken these steps to rebalance operations and reduce losses in its European division where Russia has long been a drag. A stubbornly fragile Russian economy and a vehicle market that remains way off past peaks – and has recently fallen back – has not helped.

“But Ford's troubles in Russia were also indicative of poor decisions on product offerings and pricing, which left it competitively exposed and with declining market share.

“Cost-cutting is one way to react to poor performance, but investors also want to see more flesh on the bone on how it plans to meet the huge auto industry challenges ahead and grow profit in the face of even tougher global trading conditions expected this year. The strategic tie-up with Volkswagen has also underwhelmed in terms of announcements so far.

“Meanwhile, the Ford share price languishes at under $9, the increased shareholder value hoped for under CEO Jim Hackett seemingly as elusive as ever.” "  https://www.globaldata.com/media/

and we already know that Ford decided last summer to stop production of cars not named Mustang. 

9 comments:

  1. At least their CEO's pay went up so at least one person is getting great value out of Ford. https://www.bloomberg.com/news/articles/2019-03-15/ford-ceo-s-pay-rises-to-17-75-million-for-mediocre-year

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    1. I blame upper management for a corporation's failing, and it's clear to me, across the board, that upper management gets paid too much, and that's part of the reason corporations tank... they waste money on guys that prove they can't make a company profitable while earning a golden parachute.
      That's probably why so few companies exist for even a 100 years
      All the rail road tycoons? Bankrupted their companies... how many railroad companies were there, vs how many still exist? All vs 2 or 3? Canadian Pacific, and Union Pacific are the only railroad companies that spring to mind

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  2. Ford are still making cars not named Mustang, but just not in the American market. In Europe and Australia, for example, you will still be able to enjoy Ford Focus, Fiesta and other Ford cars.

    It is a smart move to stop selling in markets when it is no longer viable. Stepping back from Russia is a good idea, they did the same in Japan a few years ago. It allows Ford to concentrate their resources where the best returns are.

    So I'm not sure Ford is "headed to bankruptcy". This year is proving challenging to all car manufacturers with many, like Jaguar and Bentley, looking at significant range reductions in the near term to find profitability. Ford is profitable in many markets, but the share market is hard to satisfy.

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    1. Allright, it's certainly obvious that it's only logical to stop selling in markets where it's no longer viable, as you say....
      here's the hook: Why isn't it, what does that mean for Ford, and most of all, what is the resultant effort in what remaining market? And what is that leading to? Certainly not leading the car manufacturing industry, is it even being in the top ten? And with the loss of global manufacturing, but, having spent fortunes to attain those markets, at what price comes the withdrawal from those markets?
      Do you recall Kaiser and Willys retreating to South America? That didn't end well.
      What will Ford concentrate on, if not cars? With the competition taking over the car market, and Ford relinquishing what had been it's mainstay for about a century, the overwhelming majority of it's existance, and expertise, what then is the result of it shying from what made it the once global force?
      I predict, it's bankruptcy. Debts larger than assets and profits.
      Probably a result of really bad decisions starting with the Edsel, continuing with the purchase and sale of Jaguar and other mergers and failures, Alpine, etc. It's not been a good time for Ford since 1970. Awfully rocky road it's been traveling since Henry and Edsel died.

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    2. The big problem woith this is the following...as a previous Bosch employee handling certain components for Ford i saw fisrt hand how even their highest selling model in Europe (the Focus) failed to make money.

      Its hard to fathom that a company as large as Ford, using as many common components as they do, is not able to make their largest volume selling vehicle make money. And yet...thats the case. Many things conspire to create this situation such as market preference for SUV/CUVs, acceptability and taste for diesel engines going down, large capacity plants that are used to a fraction of those capacities, etc etc. Here in the UK they used to design, test, and manufacture the Transit vans. That was moved to Turkey in 2009, and yet the offices, warehouses, and test facilities where all that happenned (Ford Dunton) are still there exactly as they were. Half empty at this point, but stil a massive building to maintain.

      Unfortunately I think Ford will have to have a very large rethink of their business model, their product offering, and yes...cut some big costs as well.

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    3. That's what I was driving at with "the loss of global manufacturing, but, having spent fortunes to attain those markets, at what price comes the withdrawal from those markets? "

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  3. In Brazil they have two plants: One producing EcoSports and the 'brazilian' Ka and the second plant producing Fiestas and trucks. A month ago they announced they are closing the second one and stop producing the Fiestas and trucks.

    The first one is installed in a poorer state, so maybe that will help keep it going. The Ka is selling well, always among the top 10, and SUVs (is an EcoSport a SUV?) are theoretically more lucrative.
    Let's see what happens next.

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  4. Competition for automobile sales is fierce. Ford and GM are getting their asses kicked by Toyota, Honda, Kia and Hyundai. They make great cars that nobody wants. In the U.S. for sells more F-150's in a month than they do Fiesta's in a year. They've had to keep up the façade of loss leading cars to comply with CAFE standards, but can no longer justify the costs. The other thing that must be noticed is that Ford and GM are considering a different transportation paradigm in the future, where fewer cars are privately owned, self driving cars will be common and probably electric.

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    1. That's fantastic clear view of the situation! I'd forgotten about the often reported shared car nonsense, the news keeps bringing it up for some reason.
      But what really gets me is that you remembered the Cafe standards and it's control of the production average MPG... whoa! Good point!
      What will they do when they stop making cars that lower their average MPG to fed standards? They'll be out of compliance, and will the feds then give them ultimatums?
      Could they be forced out of business for not having any high mileage cars? Is that why they will make only the Mustang, and the other electric car no one has a name for, just for the average mpg lowering effect?
      Compliments sir! Most astute!

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