- M. Stanley Looks to Sell China Investment Bank Stake
- Goldman Sachs Head Says Banks Do 'God's Work'
- Fed's Bullard: Tighten Only When Recovery's 'Solid'
- Bankers Are Like Domino's Pizza Franchises: Expert
- Kraft to Formalize Hostile Cadbury Bid on Monday
- GE, Comcast Agree on NBC Universal Valuation
- Hottest Zip Codes for Home Prices
- US Home Values Follow Sales Higher, For Some
- China Urges US to Control Deficit to Stabilize Dollar
- Tamminen: Why Does Oklahoma Want To Drown New York?
- Food Network, HGTV Drive Scripps Networks' Upside Surprise
- Tommy Lee, Medical Tourism and Nasty Santa, Your Emails
- U.S. Markets Gain 3% for the Week Despite 10.2% Unemployment
- Disney's 'Carol' Tests Widest 3-D Release Ever
- Stimulus II? Jobs Tax Credit=Cash For Clunkers
- Rockwell Automation Earnings: What Options Are Saying
- Gold Will Touch Higher Lows and Higher Highs: Analyst
- Is Misery Alive And Well in Your Office?
MOST SHARED
- US Becomes Top Country Brand Under Obama: Survey
- BofA Board in Civil War Over Lewis' Succesor
- GE, Comcast Agree on NBC Universal Valuation
- Kraft to Formalize Hostile Cadbury Bid on Monday
- Framed for Porn – By a PC Virus
- What Stocks to Buy Amid Health Care Overhaul: Strategist
- Sweeping Health Care Overhaul Bill Passes House
- Hottest Zip Codes for Home Prices
Text Size 
On Nov. 29, 2006, Ford Motor made a surprising pitch to the nation’s biggest banks. In a packed ballroom at a New York hotel, Ford’s chief executive, Alan R. Mulally, said he would mortgage all the company’s assets for billions of dollars in loans to finance an overhaul of the troubled automaker. Although the economy was healthy then, Mr. Mulally said the money would give Ford “a cushion to protect for a recession or other unexpected event.”
At the time, the request was considered an act of desperation. But the $23.6 billion in loans it received turned out to be Ford’s salvation.
 |
AP Alan Mulally |
Plunging car sales have driven its two American rivals, General Motors and Chrysler, to the brink of bankruptcy, forcing them to borrow $17.4 billion from the federal government to stay in business. The future of both companies will be decided in the weeks to come by President Obama and his special auto task force.
But because of the money it borrowed nearly three years ago, Ford is in far better shape than its two crosstown rivals. The loans have kept it independent and on a course to survive the worst new-vehicle market in nearly 30 years.
“It was a defining moment for us,” Mr. Mulally said in an interview. “But they never would have been willing to lend us the money if we weren’t on a different path.”
Mr. Mulally had been on the job as Ford’s chief executive less than 90 days when he asked for the loans. But as he told the bankers, he was prepared to make tough decisions, including selling off brands, shedding jobs and focusing Ford’s efforts on small cars rather than trucks and sport utility vehicles.
 |
Since then, he has accelerated Ford along that path, pursuing a top-to-bottom transformation that extends from its global product lineup to its renewed focus on the Blue Oval trademark.
As a result, for the first time in decades, Ford’s fortunes no longer seem so closely tied to the broader fate of Detroit.
Mr. Mulally, 63, is doing all he can to separate Ford in the public’s mind from its hometown competitors.
To emphasize his point, he pulled out a recent newspaper cartoon that compared college basketball’s Final Four to Toyota [TM
Loading...
()
], Honda [HMC
Loading...
()
], Volkswagen—and Ford [F
Loading...
()
].
“We are competing against the best in the world,” Mr. Mulally said. “It’s not just with the companies in the U.S.”
While GM [GM
Loading...
()
] and Chrysler wait for more federal aid, Ford is capitalizing on its status as the only one of the Big Three in Detroit to make it, so far, on its own.
Some surveys are showing consumers migrating away from GM and Chrysler to Ford showrooms. Inside Ford headquarters here in Dearborn, management sees a unique opportunity to expand its market share and further separate Ford from the competition.
“I don’t take any joy in watching GM and Chrysler struggle,” said William C. Ford Jr., the company’s executive chairman. “I wish them well, but I wish us better. I want us to win.”
Ford is hardly out of the woods. The company lost $14.6 billion last year, when its vehicle sales in the United States slumped 20 percent, compared with 22 percent at GM and 30 percent at Chrysler.
Its once-bulging bank account is dwindling as well. Industry analysts estimate that Ford has about a year’s worth of cash left to carry it through a still-depressed car market.
Still, Ford’s decision to borrow billions in 2006 when the capital markets were thriving will go down as one of the most significant moves in the company’s 105-year history.
“We believe this foresight to strengthen the company’s balance sheet is what has separated Ford from its crosstown rivals during the economic downturn,” a Merrill Lynch analyst, John Murphy, said in a report to investors this week.
Print
Email
- Rumors abound that Oprah will leave her show to start a new network. What would this mean for daytime TV?
- A private equity specialist sponsored a stand-up comedy troupe in New York to prove that CEOs can, in fact, be funny.
- Cramer did the research and found eight stocks that lead the pack. Read on to get his top picks.
- Did Hideki Matsui’s performance make it more likely that the Yankees will pay to have him back?
- The Mötley Crüe drummer is looking for a new record industry paradigm, and you can participate.
- Two competitors in this year’s World Series of Poker in Las Vegas have stories fit for Hollywood.
Data is a real-time snapshot *Data is delayed at least 15 minutes