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Not the sharpest tool in the shed
Oct 18, 2002
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The Cleft of Venus
Ford posts loss of $5.8 billion
Mon Oct 23, 2006 1:50 PM ET
By Poornima Gupta


DETROIT (Reuters) - Ford Motor Co. on Monday posted a quarterly loss of $5.8 billion -- its largest loss in 14 years -- as slower truck sales, charges for job cuts and asset write-downs in its troubled North American operations and elsewhere took their toll on the No. 2 U.S. automaker.

Ford said it would restate results from 2001 through the second quarter and cautioned that operating results would weaken further in the current quarter.

Ford also said it was considering raising new funding secured by its automotive assets in order to protect its cash position as it pays the bill to close 16 plants and cut up to 45,000 jobs.

"These business results are clearly unacceptable," said Chief Executive Alan Mulally, who took over at Ford in early September.

Ford posted a net loss of $3.08 per share for the third quarter compared with a loss of $284 million, or 15 cents per share, a year earlier. That included a battery of charges that totaled $4.6 billion after taxes, or $2.46 per share.

Ford's loss from continuing operations was 62 cents per share, matching analysts' average forecast as tracked by Reuters Estimates.

Analysts have urged Mulally to consider further asset sales to protect Ford's cash position, and in his first post-earnings conference call with analysts some credited him with a more open approach to the company's turnaround.

"One of the things that's positive about Mulally coming in is that nothing is sacred and he is willing to take a fresh look," said Morningstar analyst John Novak.

Said Argus Research analyst Kevin Tynan: "Simply shrinking again is not necessarily the answer. Ford needs to become a company flexible enough to be profitable at lower production volumes on each line (and) on each platform."

REVENUE DOWN, CASH IN FOCUS

Revenue for the quarter was $36.7 billion, down $4.1 billion. Auto sales accounted for $32.6 billion of total revenue.

High gasoline prices have caused U.S. consumers to shift away from sport utility vehicles and pickup trucks, a segment that represents over 60 percent of Ford's current sales.

Ford ended the quarter with cash of $23.6 billion but said that total would drop near $20 billion by the end of the year as it restructures.

Fitch Ratings, which placed Ford's debt on watch for a downgrade on Monday, said the automaker needed to hold at least $15 billion in consolidated cash in order to avoid raising concern among suppliers and customers.

Chief Financial Officer Don Leclair said Ford was "exploring various financing strategies, including secured financing involving a substantial portion" of its automotive operations.

Ford is selling its British luxury brand Aston Martin. Leclair said the company is in the process of preparing a short list of bidders but does not expect to close a sale this year.

Mulally also said Ford is open to reviewing its other luxury brands -- leaving the door open to a potential sale of Jaguar, Volvo or Land Rover.

"I really think it's going to hinge on how the businesses are doing and can we make profitable growth businesses out of them with the action we have taken and additional actions that might be required," he said.

BUYOUTS ON THE TABLE

Ford is offering buyouts to all of its 75,000 unionized workers in a bid to reduce its factory work force by nearly half. The bulk of hourly workers taking buyouts to leave the company in the first and second quarter of 2007.

About 4,000 employees at former Visteon Corp. factories, now grouped under Automotive Component Holdings, have already accepted buyouts, the company said.

In the third quarter, Ford took pretax charges of $861 million for job cuts related to plant closings in North America, $259 million for job cuts elsewhere, and $437 million to pay out pensions earlier than planned .

Ford also took pretax charges of $2.2 billion to write down the value of North American assets and $1.6 billion for the impairment of Jaguar and Land Rover assets.

Ford Motor Credit's net profit fell to $262 million from $577 million a year earlier in part because of higher financing costs driven by the parent company's junk credit rating.

"The reduced profitability at Ford Motor Credit now shines a more intense light on the weakness of Ford's fundamental operation -- the automotive business," Tynan said.

Ford executives repeated that the company has no plans to sell its finance arm, although Leclair said the automaker would be open to partnerships in some markets.

Shares of Ford were down 14 cents or 1.8 percent to $7.87 in early afternoon trade on the New York Stock Exchange.
 

Secret Squirrel

There is no Justice!
Dec 21, 2004
8,153
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Up sh*t creek, without a paddle
When they speak of selling off assets..... I mean they own Mazda Volvo and Jaguar.....maybe they should keep them and sell off the Ford part.
Sell Jag too....Once Ford took over, they haven't produced one vehicle that I would consider owning if I ever had the money to purchase one.

Ooooo...the XK8....booooo :thumbsdown: Oversized turd.
X-type...puh-leeze....That car screams Soccermom-Mid-Life-Crisis (and the husband doesn't bring home enough bacon to afford a real Crisis-mobile)......
 

rockwool

Turbo Monkey
Apr 19, 2004
2,659
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Filastin
Sell Jag too....Once Ford took over, they haven't produced one vehicle that I would consider owning if I ever had the money to purchase one.

Ooooo...the XK8....booooo :thumbsdown: Oversized turd.
X-type...puh-leeze....That car screams Soccermom-Mid-Life-Crisis (and the husband doesn't bring home enough bacon to afford a real Crisis-mobile)......
You God blessed people over there are really picky about the image a car gives you. Lovvit, we need some more of that over here.
 

BurlyShirley

Rex Grossman Will Rise Again
Jul 4, 2002
19,185
17
TN
It'd be sad if ford went under but seriously... They made ugly unreliable crap for too long. Still, I hope they turn it around.
Unreliable?

I dont want to sound like a commercial here, but in TN, its almost exclusively fords for anyone in ag. They are solid trucks. And now the focus has been proven to be as reliable as its japanese counterparts. Reliability simply isnt the issue.

I figure its workers/unions. I heard that worker healthcare ALONE adds $15OO to
 

rockwool

Turbo Monkey
Apr 19, 2004
2,659
0
Filastin
Which car has the best reliability over there? Here it's Japanese built toyotas. How well built are your US made Japanese cars?
 

Secret Squirrel

There is no Justice!
Dec 21, 2004
8,153
0
Up sh*t creek, without a paddle
Unreliable?

I dont want to sound like a commercial here, but in TN, its almost exclusively fords for anyone in ag. They are solid trucks. And now the focus has been proven to be as reliable as its japanese counterparts. Reliability simply isnt the issue.

I figure its workers/unions. I heard that worker healthcare ALONE adds $15OO to
Past years they were unreliable. Recently (after having every other foreign company on the planet hand them their ass in this department) they've gotten markedly better. Kudos to them, but it's a little late in the game.
 

Secret Squirrel

There is no Justice!
Dec 21, 2004
8,153
0
Up sh*t creek, without a paddle
You God blessed people over there are really picky about the image a car gives you. Lovvit, we need some more of that over here.
I'm not so much into the image a car gives you, I'm into the aesthetics of design and finish work. If it looks something like how a 9 year old would draw "the car of the future", I'm out....

Look at the XJ220: Visually pleasing - undecided, leaning towards no for most. Aesthetically it stands alone. The quality of the manufacture is second to none.

Of course, it's a pure bred car that John Q. Public isn't ever going to own, but the fact that that kind of engineering prowess is there is undeniable.
 

rockwool

Turbo Monkey
Apr 19, 2004
2,659
0
Filastin
Japs and Korean cars are generaly well placed here too, bu tit seems like only #1 counts if you look at how many people buy Toyotas (which are damn ugly) and their 2nd hand value is higher than other cars.
 

BurlyShirley

Rex Grossman Will Rise Again
Jul 4, 2002
19,185
17
TN
I was recalling it from last years Consumer Reports (the manufactures that I mentioned all have plants in the US IIRC)....I don't subscribe so I can't locate it on the web and I no longer have the magazine...

Are subaru or acura built in the US??? I can't remember....
I dunno. Acura is just honda, Subaru, I thought was made in Korea. Im thinking of getting a suby or a Nissan right now.
 

syadasti

i heart mac
Apr 15, 2002
12,701
290
VT
For the US market, Subarus are made in the US. So are Hondas and some Toyotas. Where they are made does have an effect - ie Japanese factories have less defects.

Honda's newer US built models aren't as reliable as the older models probably because they are more complex than they use to be.

Toyota's US AND Japanese products are suffering design defects/quality control problems from their inability to manage their big growth - when you come close to being as big as GM, you get their problems (which makes GM recent improvements in the past few years all the more better). See recent WSJ article posted at the end of my post...

Overall North American cars are now built better than Euros in terms of defects, but are not as good as Japanese.

The Wall Street Journal said:
Toyota May Delay New Models
To Address Rising Quality Issues

By NORIHIKO SHIROUZU
August 25, 2006; Page A1

Toyota Motor Corp., jarred by a surge of recalls and quality problems, is considering tapping the brakes on its ambitious growth plans, delaying introductions of some new models by as much as half a year, people familiar with the matter say.

Toyota has been accelerating its growth world-wide and moving to overtake General Motors Corp. as the world's No. 1 auto maker. In May, the company said capital expenditures in the current fiscal year would reach a record of roughly $14 billion. But the fast-paced expansion has come with a cost: an increasing number of quality problems in North America, Japan and elsewhere that threaten to dent its quality image.

According to senior executives and engineers familiar with the move, the company is considering adding as much as three to six more months to projects that normally call for roughly two to three years of development lead time, in order to stem the growing tide of quality problems. Those individuals say that while some programs would be spared, delays likely would affect a relatively wide range of projects. Among the high-volume models that could be affected are the next Sienna minivan, Solara sports coupe and Avalon sedan.

Toyota's chief spokesman, Shigeru Hayakawa, declined to comment, saying product-development lead times and the specific timing of product launches are "competitive" information. "It's our basic stance that we introduce products in a timely manner while meeting changing needs of the market," he said. "That general direction remains unchanged."

Toyota's rethinking of its fast-paced new-model strategy comes as the Japanese auto giant's sales around the world, and in the U.S., are increasing rapidly. So is the number of Toyota vehicles being recalled for quality problems.

Last year in the U.S. -- its largest market by volume -- Toyota recalled 2.38 million vehicles, according to the National Highway Traffic Safety Administration. That's more than the 2.26 million it sold. Overall, the company sold nearly eight million vehicles world-wide.

This year, the company has recalled 628,000 vehicles in the U.S., and people familiar with the matter say it may soon recall an additional half-million vehicles. The latest recall would affect the current generation of the Sienna minivan, because of concern that poorly designed locking devices for rear seats may fail to securely anchor them to the vehicle floor.

Recalls also are on the rise in Japan, Toyota's second-largest market, where police and prosecutors are investigating possible professional negligence for shirking recalls for eight years. Investigators are looking at whether a suspected faulty steering part on the Hilux Surf recreational vehicle may have caused an August 2004 head-on crash that injured five people. The Japanese government has reprimanded the company and called for improved recall practices in the wake of the police probe.

For the most part, Toyota's recalls have involved relatively minor issues and nearly all have been voluntary actions by the company, not the kind in which consumer complaints prod the government into action, says manufacturing guru James Womack, chairman of the Lean Enterprise Institute in Cambridge, Mass.

Many analysts say the recent rise in recalls may not cause consumers to avoid Toyota cars at all. Despite the rise in recalls, third-party quality surveys by J.D. Power & Associates and Consumer Reports continue to rank Toyota high in initial and medium-term vehicle quality and reliability.

Still, Toyota has painstakingly built a reputation for superior quality over the past three decades, and the soaring number of recalls has been highly embarrassing for its management. At a news conference last month, Toyota President Katsuaki Watanabe offered an elaborate apology.

"I take this seriously and see it as a crisis," Mr. Watanabe said. He then bowed deeply in front of the cameras, adding, "I want to apologize deeply for the troubles we have caused."

Though not final, a move to slow product cycles would mark a step back from an aggressive strategy for global expansion set in motion in the mid-1990s by then-President Hiroshi Okuda.

The strategy called for engineers to pump out more vehicles to fuel the company's growth around the world. Product-development bosses kept engineers on tight launch schedules. Toyota also began relying more heavily on computer-aided design tools to radically compress vehicle-development times by skipping steps such as making physical prototypes to test components.

Using these high-tech tools, Toyota cut new-model development time to as short as about two years -- compared with three or four years in the past. According to officials at the Toyota product-development and engineering center in Ann Arbor, Mich., virtual-engineering tools have helped the company slash the number of prototypes it builds per project to fewer than 20 from 60.

But the new approach, which allowed its main advocate Yoshio Shirai, a senior managing director, to gain a seat on Toyota's board, is now suspected of contributing to the recent rash of embarrassing quality glitches.

Additionally, Toyota executives and engineers say, some mistakes are happening because computer-aided engineering tools have limitations that allow potential design flaws to slip through. Others point to increased use of parts designed by outside suppliers like Delphi Corp. that aren't part of the traditional circle of Toyota partners in Japan.

A slowdown would follow a set of actions announced by the company after the Japanese government's reprimand of its recall policies. In a report submitted to the government, Toyota said it would upgrade a new data network for sharing technical information and product-quality reports from customers in order to handle recalls more efficiently. It also will increase staff at its quality-control headquarters.

Earlier this year, Mr. Watanabe named two executive vice presidents -- including Akio Toyoda, a scion of the auto conglomerate's founding family -- as quality chiefs to oversee various initiatives for building more quality into components and vehicle design.

Inside the company, spending more time doing quality-assurance tests on new and redesigned cars under development is seen as vital to in regaining control of quality, say individuals close to the matter.

By delaying introductions of some products, Toyota would conduct more quality checks on components and, in some cases, create more prototypes to make sure thousands of parts and systems that comprise a typical car work as intended and verify their durability, these people say.

Toyota also is accelerating an application of what it describes as "preventive engineering" -- an approach the auto maker has been implementing since the late 1990s to forecast problem areas based on engineering knowledge accumulated over the years and using extra caution in designing those areas.

The approach is based on the idea that most components of today's cars are proven technologies, and that most problems occur when, for example, engineers combine two or more parts to create a component system. Toyota engineers focus most of their attention on those "interface" areas to predict problems that might develop.

Toyota executives and engineers say one factor behind the rise in recalls is the company's recent strategy to use the same components in a wider range of vehicles to save costs. Often when a component is found defective, it is found on not just one or two models but several products sold across the globe -- a factor that explains in part why the number of vehicles affected by a recall often is well more than half a million.

Toyota also has made what one engineer describes as a "clear and conscious change" in the way it handles recalls in the wake of a painful scandal involving an alleged coverup of vehicle defects by Japan's Mitsubishi Motors Corp. a few years ago, which crippled sales and drove Mitsubishi to the brink of collapse.

"We used to do quiet recalls called 'service campaigns' to deal with many defects, but we're not going to hide anything any more," said one senior engineer. "Most of the known defects and issues are now handled through recalls."

Still, the fast pace of new-model launches -- and pressure to keep product launches on schedule -- has given rise to what another senior engineer calls "bonehead" mistakes.

In Japan this year, for instance, Toyota discovered it had made the rear axle of one sport-utility vehicle with the material used for another SUV. Designs for the two rear axles are almost identical, but the metal materials used to produce them are different enough that mixing the parts up caused concern over the strength of the axle. A Toyota spokesman said there was a question of the strength of the axle but declined to elaborate.

Write to Norihiko Shirouzu at norihiko.shirouzu@wsj.com
 

BurlyShirley

Rex Grossman Will Rise Again
Jul 4, 2002
19,185
17
TN
Oh yea, Syadisti, Im going to trust some guy named "Norihiko Shriouzu" that says Japanese cars are better than everyone else...right :rolleyes:
 

syadasti

i heart mac
Apr 15, 2002
12,701
290
VT
Oh yea, Syadisti, Im going to trust some guy named "Norihiko Shriouzu" that says Japanese cars are better than everyone else...right :rolleyes:
No he said they have rising quality problems and a Toyota executive publicly apologized for slipping Toyota quality (the brand's strong point is fading away due to mismanaged growth) - there is a problem without a doubt is the point of the article :bonk:
 

RhinofromWA

Brevity R Us
Aug 16, 2001
4,625
0
Lynnwood, WA
http://autos.msn.com/advice/article.aspx?contentid=4023925

Full-size pickups continue to be the most popular vehicles with U.S. buyers in the first nine months of 2006, although sales of these vehicles are down from a year earlier—likely due at least in part to the high price of fuel. Total sales show the Ford F-Series and Chevrolet Silverado as the top two sellers in the country, followed by the Dodge Ram in fifth, according to sales information published by Automotive News.
I liked my 88 Ford Ranger.

Rhino
 

blt2ride

Turbo Monkey
May 25, 2005
2,334
0
Chatsworth
Unreliable?

I dont want to sound like a commercial here, but in TN, its almost exclusively fords for anyone in ag. They are solid trucks. And now the focus has been proven to be as reliable as its japanese counterparts. Reliability simply isnt the issue.

I figure its workers/unions. I heard that worker healthcare ALONE adds $15OO to
Putting the reliability issues aside, you kind of hit the nail on the head when you bring up Ford’s cost of doing business. The UAW has really put a stronghold on American car makers. When you take into consideration benefits, pensions, and the high wages they are contractually forced to pay their unionized workforce, you have to wonder if they will ever be able to turn a profit.

I don’t have exact numbers, but I would imagine that top pay for an unskilled assembly line employee is probably around $30 an hour, plus free benefits, and their retirement fund (I believe the company contributes about $.075 for every hour a union employee works).

When a company has that kind of overhead, something has to give...
 

rockwool

Turbo Monkey
Apr 19, 2004
2,659
0
Filastin
I'm not so much into the image a car gives you, I'm into the aesthetics of design and finish work. If it looks something like how a 9 year old would draw "the car of the future", I'm out....

Look at the XJ220: Visually pleasing - undecided, leaning towards no for most. Aesthetically it stands alone. The quality of the manufacture is second to none.

Of course, it's a pure bred car that John Q. Public isn't ever going to own, but the fact that that kind of engineering prowess is there is undeniable.
Yeah I'm with you on that one, but I'm not totaly unaffected by what is considered to what and what not. My favorite brand is Alfa Romeo as their design language is just the best, bothe externaly and internaly. Their quality from the 156 model and after is also good enough for a head ache free ownership. Those last few years they have alowed Giugiaro Giorgetto to design them and I'm not a fan of his designs but they still look ok.
 

Silver

find me a tampon
Jul 20, 2002
10,846
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Orange County, CA
Putting the reliability issues aside, you kind of hit the nail on the head when you bring up Ford’s cost of doing business. The UAW has really put a stronghold on American car makers. When you take into consideration benefits, pensions, and the high wages they are contractually forced to pay their unionized workforce, you have to wonder if they will ever be able to turn a profit.
How come when this discussion comes up everyone dumps on the unions and not on the management that signed the contracts?
 

BurlyShirley

Rex Grossman Will Rise Again
Jul 4, 2002
19,185
17
TN
How come when this discussion comes up everyone dumps on the unions and not on the management that signed the contracts?
Well, sure there's some fault there, but they are pretty much held hostage by the unions. Not pitying them, but its not like theyve got alot of choice. hell, if they had one, they wouldnt've signed them. they're pretty horrible.
 

rockwool

Turbo Monkey
Apr 19, 2004
2,659
0
Filastin
How come when this discussion comes up everyone dumps on the unions and not on the management that signed the contracts?
That is a very good question. It's the same thing over here.. Who are these few people that put thoughts in the heads of so many, and how?
 

Silver

find me a tampon
Jul 20, 2002
10,846
0
Orange County, CA
Well, sure there's some fault there, but they are pretty much held hostage by the unions. Not pitying them, but its not like theyve got alot of choice. hell, if they had one, they wouldnt've signed them. they're pretty horrible.
So how come Toyota and Honda aren't held hostage by the same unions?
 

BurlyShirley

Rex Grossman Will Rise Again
Jul 4, 2002
19,185
17
TN
So how come Toyota and Honda aren't held hostage by the same unions?
They're in states that arent union, like TN. Saturn, Nissan, others have all moved to near Nashville because the unions are either non existant or very weak.
 

Silver

find me a tampon
Jul 20, 2002
10,846
0
Orange County, CA
They're in states that arent union, like TN. Saturn, Nissan, others have all moved to near Nashville because the unions are either non existant or very weak.
So why can't Ford do the same thing?

I still don't understand how unions are full of stupid ass assembly line workers, but at the same time they manage to fleece the management and shareholders of Ford and GM and Chrysler...
 

BurlyShirley

Rex Grossman Will Rise Again
Jul 4, 2002
19,185
17
TN
So why can't Ford do the same thing?

I still don't understand how unions are full of stupid ass assembly line workers, but at the same time they manage to fleece the management and shareholders of Ford and GM and Chrysler...
Are you actually under the impression that the same guy who stamps sheet metal does the contract negotiations? I know a union negotiator/lawyer and he's one of the smarter/most business savvy people Ive ever met.

Also, do you think ****ing over the entire state of Michigan is a good idea? You have to weight these things...
 

BurlyShirley

Rex Grossman Will Rise Again
Jul 4, 2002
19,185
17
TN
Silver: Ive not seen "Roger and Me" by Michael Moore, but I do know the story of Flint, Michigan, do you?
 

Silver

find me a tampon
Jul 20, 2002
10,846
0
Orange County, CA
Are you actually under the impression that the same guy who stamps sheet metal does the contract negotiations? I know a union negotiator/lawyer and he's one of the smarter/most business savvy people Ive ever met.

Also, do you think ****ing over the entire state of Michigan is a good idea? You have to weight these things...
No, of course not. Having said that, apparently the union workers are much better at finding management talent than Ford shareholders are...so surely they should be rewarded for their talent, no? Capitalism at work!

I think that maybe the Japanese concept of not looking at the worker as someone who you try to screw over as much as possible may be one of the factors that helps out Honda and Toyota a bit, but that's just a guess.
 

BurlyShirley

Rex Grossman Will Rise Again
Jul 4, 2002
19,185
17
TN
No, of course not. Having said that, apparently the union workers are much better at finding management talent than Ford shareholders are...so surely they should be rewarded for their talent, no? Capitalism at work!

I think that maybe the Japanese concept of not looking at the worker as someone who you try to screw over as much as possible may be one of the factors that helps out Honda and Toyota a bit, but that's just a guess.
I dont think its as "obvious" as you make it out to be. The union basically holds all the cards. They dont get the contract they want, they dont work...company loses. They do get what they want...company loses. Maybe if the unions werent trying to extort the automakers for every possible dime, things could be a little better. Communism at work!