An Attitude Change Needed ForReversal of Ford...s Finance Woes
By Micheline Maynard
THE NEW YORK TIMES
The Ford Motor Co. reported its worst financial results in more than 14 years on Monday and warned that its business was likely to worsen in the months ahead, as it and other Detroit auto companies struggle to reinvent themselves.
Indeed, the new chief executive at Ford, Alan R. Mulally, a former Boeing executive, said the automaker would require a full transformation in the way it thought about consumers and approached the American market.
The typical Detroit turnaround, based on plant closings and introducing a few hit vehicles but with little change in attitude, will not be enough to see Ford through, Mulally said in an interview at Ford’s headquarters here on Monday.
The company, posting a $5.8 billion loss for the third quarter, has to first acknowledge the grim realities of the marketplace and then restructure itself to be more productive and nimble.
“The most important thing to watch,” Mulally said, “is do the leaders have a view that’s different than the way it’s being done today. Because if they don’t, we are surely not going to get there.”
But there will not be much good news any time soon for Ford or for the Chrysler Group, which on Wednesday is expected to join Ford in reporting dismal results for the last three months.
Only General Motors, which is slowly bouncing back from one of the worst stretches in its history with savings from deep cost cuts, is expected by Wall Street to earn a profit in the third quarter, of about $300 million, though its American operations may well remain in the red.
The dire straits in Detroit represent the continuing fallout from the auto companies’ too-long reliance on gasoline-consuming sport utility vehicles, as well as their failure to develop new cars and trucks to fend off their Asian competitors, particularly Toyota and Honda of Japan and Hyundai of South Korea.
Those foreign companies have built factories in the United States during the last two decades and focused on fuel-efficient vehicles, even as they added SUVs and pickup trucks to compete in Detroit’s last stronghold. That two-part approach paid off in record sales for Asian companies this summer, when gasoline prices soared above $3 a gallon on average nationwide.
The rapid shift in the preferences of American consumers has been especially hard on Ford and Chrysler, which have been slow to wean themselves away from big vehicles and the outsize profits that such vehicles typically produce.
Including the $5.8 billion third quarter loss it reported Monday — its worst showing since early 1992 — Ford could be on track to lose more than the $10.6 billion GM lost last year, even though GM is one-third bigger. Ford’s recent losses were deeper than Ford, and many on Wall Street, had expected.
Officials at Ford said the company’s operating performance in the fourth quarter would be even worse than its results during the third quarter. And it expects that its problems will continue through at least the first half of 2007.