Why Ford is in worse shape than GM

[andy82471]

I thought about posting this article on the Ford forum but since GM is also mentioned prominently in the article I decided to post it in the GM forum. Much of the stuff said in the article I think we already know about

http://money.cnn.com/2006/09/15/news/compa...rce=yahoo_quote

Why Ford is in worse shape than GM

General Motors' turnaround is now in motion, but don't count on Ford having made the same progress this time next year.

By Alex Taylor III, Fortune senior editor

September 15 2006: 10:10 AM EDT

NEW YORK (Fortune) -- As he finishes his first full week as CEO of Ford, Alan Mulally may be wondering what he got himself into. The rumble of bad news never seems to stop.

Consider:

More Ford news

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Will a new CEO and a new sense of urgency be enough to turn around the deeply troubled No. 2 automaker? (more)

Ford turns to an outsider

Putting a Boeing exec at the helm of the ailing automaker is a risky move for Ford Chaiman Bill Ford Jr., who is giving up the CEO spot. (more)

A lot riding on 2007 models

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Ford looking to sell Aston Martin

Sports car made famous by James Bond on the block as No. 2 automaker struggles to restructure. (more)

A leaked internal document says Ford is forecasting a pre-tax loss of nearly $6 billion in its auto operations this year, losing money everywhere except Europe and South America. With restructuring costs, the total loss for 2006 could reach $9 billion.

The latest Way Forward plan contains more layoffs, more production cuts, and more factory closings. Ford has now offered buyouts to all 75,000 of its UAW workers.

Two top manufacturing executives quit on Thursday.

Ford (Charts) is heading into the same trough that GM (Charts) entered a year ago, and the possibilities of an upturn seem so distant as to be unachievable. But there are major differences between the condition of the two companies that don't weigh in Ford's favor.

GM had a turnaround plan already in place. Events tend to move at a glacial pace at the world's largest and most bureaucratic automaker but at least top management had pointed company towards four goals, including build better vehicles.

As Ford struggles with its third turnaround plan, the only clear direction is shrinkage. As the old saying goes, you can't cost-cut your way to prosperity.

GM had a stable management team in place. CEO Rick Wagoner was a proven executive of long experience and he has been ably assisted by numbers whiz Fritz Henderson and product czar Bob Lutz.

Bill Ford was a well-intentioned and well-liked CEO who was punching above his weight. Swirling around him was a revolving door of executives. Anybody remember former Ford big hitters David Thursfield, Nick Scheele, or Jim Padilla today?

GM followed through on initiatives. While it sat on the sidelines during the explosion in hybrids, GM insisted that fuel-cells were the answer to high oil prices and global warming.

Next week, GM will announce a big fuel-cell initiative that will place it at the forefront of the industry. Ford, on the other hand, made a rosy prediction about the future of hybrids, then backed away when sales of its first hybrid, the Escape failed to match the hype. It has had little to say on the subject since.

GM had a reasonable product plan in place There is plenty of blame to go around for starving Saturn, Pontiac, and Buick of new models, but GM has slowly corrected that, having belatedly remembered that autos are a product business.

Ford is replacing new models more slowly than Toyota (Charts), Nissan, DaimlerChrysler (Charts), Honda, or GM. And when it does replace them, it has a disconcerting tendency to make the new ones look like the old ones so it is hard for customers to tell.

A decade ago, Ford rode the crest of the truck boom and was considered one of the most capable manufacturers on the planet. Its fall has been astonishing.

Today the truck boom is over and whatever will be the next big generator of profits is nowhere in sight. Digging out of the current mess will be a team effort that will take several years -- with a successful resolution by no means assured

[andy82471]

GM had a stable management team in place. CEO Rick Wagoner was a proven executive of long experience and he has been ably assisted by numbers whiz Fritz Henderson and product czar Bob Lutz.

And Buickman was calling for Rick Wagoner's head !!!!!!!! Wonder what his take is on GM's turn around plan ???

[hyperv6]

GM started the turn a good while ago you just don't fix a company like GM over night.

With the problems they have had and other things that were flat wrong it was plain Rick was going to need time to turn the ship with support.

Now if we had changed managment mid recovery we could have been setting the time table back and still had a good chance of not being any better off.

I know they are not fully out of the woods yet but they are in the right direction. I think we will see steady improvment and with the way Rick has done this we will see less loss of what is good about GM vs what all we would have loss if a cut and slash manager would have come in. I fear if that had happened we would have seen some or all of GM sold off to save what was left.

[razoredge]

GM had a stable management team in place. CEO Rick Wagoner was a proven executive of long experience and he has been ably assisted by numbers whiz Fritz Henderson and product czar Bob Lutz.

And Buickman was calling for Rick Wagoner's head !!!!!!!! Wonder what his take is on GM's turn around plan ???

193649[/snapback]

I wouldnt be waving any victory flag yet, GM is still in trouble, sales are not any better. The competition is still trumping them on every developement. Wagoner was and is still responsible for some unbelievably insane investments and losses as well as fistsfull of poor, late and slow decisions. Sloan and Earl they are not !

[jry]

IMO, ford needs to make peace with the AFA. every little bit helps.

[GEESIXER]

I wouldnt be waving any victory flag yet, GM is still in trouble, sales are not any better. The competition is still trumping them on every developement. Wagoner was and is still responsible for some unbelievably insane investments and losses as well as fistsfull of poor, late and slow decisions. Sloan and Earl they are not !

193806[/snapback]

I will agree with not winning the war, but the tides are changing and they are starting to win battles, you have to stop the bleeding before you can start the healing. i would like to know where your numbers are coming from when you say the sales are not any better. Cobalts are making money, G6 sales have increased sense last year. they are doing fine.

"Stay the course #1, we'll be fine"

[WCCPSGM]

Man, I didn't realize Ford was so far in the crapper. GM's doing well, but they need to do much beter to stay ahead. Don't rest on your laurels at a few successes. Colbalt's good, not groundbreaking. G6 is great, but is practically a lone star in Pontiac's lineup, and it doesn't fit their "All RWD" direction. Saturn has the new Aura, great piece of work, but they are still hamstrung by ION and an image problem. Buick is having trouble with Lacrosse and is between crossovers. Oh, and the minivans still suck.

I'm proud of what I've seen from GM, but I'm not ready to start declaring victory.

[jry]

I believe the sean hannity deal will make a difference as well.

Hannity Helps GM Hawk Cars

Sep. 21, 2006

By Katy Bachman, Mediaweek

SOURCE: Mediaweek

To stimulate consumer interest in its line of American-built cars, General Motors has turned to radio and Sean Hannity. Beginning Sept. 25, Hannity will serve as the spokesperson for GM’s You’re A Great American Car Give-Away, offering radio listeners the chance to pick and win one of five GM vehicles.

One of the largest car give-aways by an auto manufacturer, “it is the largest car give-away in history by a national radio personality,” said Phil Boyce, VP of news/talk programming for ABC Radio.

GM’s multi-platform campaign combines Hannity’s syndicated radio show -- broadcast on more than 500 radio stations, including 50 in the top 50 markets -- with his Web site, where listeners will be directed to register their names. During his radio show, Hannity will announce one contestant’s name per hour. Listeners will have until 6 a.m. the next morning to send Hannity an email to confirm they’ve heard their name read on the air. The contest runs for five weeks through Nov. 6, when the final car is given away.

The radio promotion comes during a tough period for all automakers, which have been struggling to boost lagging sales. To manage costs, many automakers, GM included, have cut national advertising, while concentrating on local campaigns to drive sales. GM ad spending was down 17.4 percent overall in the first half of this year, while spending on local spot TV grew 11.3 percent, according to TNS Media Intelligence.