Happy Anniversery - Ford Marks Year With Ford at Helm

DETROIT October 30, 2002; John Porretto writing for AP reports: Two weeks ago, Ford Motor Co. posted third-quarter earnings that topped Wall Street estimates, yet the news was overshadowed by concerns about future profits and pension-fund deficits.

Last week, chairman and chief executive Bill Ford Jr. met with financial analysts to talk up the automaker's restructuring. By week's end, Standard & Poor's had lowered its credit rating for the world's second-largest automaker, citing concerns about the very turnaround Ford was touting.

It was a year ago Wednesday that Ford took control of the troubled company his great-grandfather founded 99 years ago, and the past couple of weeks could serve as a microcosm for the past 12 months — fruitful short-term steps obscured by lingering doubts about the firm's long-term future.

Ford, who declined requests for an interview, described the past year as ``brutal'' in a recent interview with The Detroit News.

Aside from his pedigree, the 45-year-old Ford had a 22-year work history at the company, and he wasted little time on a turnaround.

After dismissing chief executive Jacques Nasser on Oct. 29, 2001, Ford stepped in the next day and made it clear he would bring more to the table than just the Ford family name. Many observers said Nasser had become distracted from the company's core automotive business by the Firestone tire controversy and lawsuits against the automaker.

Ford told workers he bled Ford blue, and his aim was to leave the red ink behind.

Over the past year, Ford has renewed its focus on products and their quality, said David Healy, an analyst with Burnham Securities Inc.

``I think Bill Ford has succeeded in settling down management and improving morale,'' Healy said. ``He's become an articulate spokesman for the company as it gets back to basics, and that's what it's going to take. How profitable they're going to be when the turnaround is complete will depend on industry sales and pricing — things that are pretty much beyond their control.''

In January, Ford laid out a restructuring plan that called for cutting 35,000 jobs — 10 percent of the company's work force — closing five plants and eliminating four models.

The new CEO also said he wanted to improve profits by $9 billion by mid-decade. Ford lost more than $5 billion last year.

``The company was in such bad shape when he took over it was going to take more than just a new figurehead,'' said Mike Wall, an analyst with IRN Inc., an automotive forecasting and research firm in Grand Rapids, Mich.

``The financials were bad enough that they're still having to fight off a bunch of issues,'' Wall said. ``People are concerned about pension funds, the way incentives are affecting the bottom line and reports of Jaguar losing $500 million. He had a long way to go — and still does.''

After reporting third quarter earnings earlier this month, Ford officials said they were on track to reduce non-product costs by $2 billion this year and $3 billion in material and others costs by mid-decade.

Still, analysts questioned whether the cost-cutting measures were sufficient. Ford responded last week by announcing it would slash another $1 billion in costs.

The news sent Ford stock soaring to its largest one-day percentage gain in some 10 years, but generally the shares — along with others in the auto sector — have been battered on concerns about industry growth and the overall economic picture. Ford shares lost ground again Tuesday, falling 43 cents, to close at $8.35 on the New York Stock Exchange.

Other worries for investors: $162 billion in debt as of Sept. 30, U.S. pension plans that are underfunded by $6.5 billion, ongoing incentives that continue to squeeze profits and declining market share.

Wall said Ford's long-term prospects are hampered by a limited new product offering in the next couple of years. A new F-Series truck and minivan were among a slim lineup that could use a hot-selling car to compete with GM and Chrysler, among others, he said.

``The only way they're going to get themselves out of this is going to be product,'' Wall said. ``If they want high volume to replace the Taurus, they better get something out there.''