Ford Motor Co. had the worst year in its 103-year history in 2006. The automaker lost $5.8 billion in the fourth quarter alone – and lost $12.7 billion on the year. Yet CEO Alan Mulally - who came to Ford after overhauling aerospace giant Boeing - is reportedly considering paying bonuses to some of Ford’s managers, even as the company seeks concessions from its unions and predicts more losses this year. Meanwhile, the stock is moving higher. So what exactly is going on at Ford? Brian Johnson of Lehman Brothers was on “Morning Call” to give some insight.
Johnson says Mulally is in a tough spot. On the one hand, he has to get cost-competitive in the face of a major labor negotiation set for October. He also has to streamline product development, as it will be the most important phase of Ford’s turnaround. In order to do this, white-collar workers at the company must be motivated. That’s where the bonuses come in. Essentially, Johnson says, Mulally is trying to balance what will look good to the unions with figuring out how to motivate those people at the top who will facilitate the company's massive restructuring plan.