Ford US in dire straits (no not mark knopfler)

[JNP304]

Just read this story this morning about how bad financially Ford is going in the US. Talks about cutting tens of thousands of jobs. First time Ford has used their assets to borrow money with. I wonder what impact this will have on new products ect at Ford Australia?

FORD Motor Co said today it would borrow $US18 billion ($23bn), using its assets as collateral, an unprecedented requirement that highlights its worsening financial condition.

The plan, which prompted ratings cuts by all three rating agencies, is expected to finance Ford's efforts to rescue a North American operation that has lost $US12.39bn.

It was the first time Ford had used collateral for loans, Ford spokeswoman Becky Sanch said.

"They're at the point where they have to pledge assets for loans," said Glenn Reynolds, chief executive of research firm CreditSights Inc.

He said it was an indication investors viewed Ford as a "very high-risk" company.

"This confirms they see nothing but trouble ahead because they're front-loading their debt now," Mr Reynolds said.

[Jac001]

Ford US has a number of brands including Mazda, land rover, jaguar, volvo, Aston martin, lincoln and mercury, so the effect of having the ford US in trouble will be widely felt. It would be interesting to see which brands could be sold off to raise money if wost comes to worst, and who would buy them up.

[Funky_Munky]

Ford owns Aston Martin?

Guess you learn something new everyday.

Vanquish DB9 :bow:

[JNP304]

Yes will be interesting. I know for sure that Aston Martin is up for sale as of today. But they dont expect a buyer until the new year. I wonder how an automotive giant can go bad so fast.

[Funky_Munky]

Yes will be interesting. I know for sure that Aston Martin is up for sale as of today. But they dont expect a buyer until the new year. I wonder how an automotive giant can go bad so fast.

Probably a degenrative process. I would say its been happening over the last decade and its at a point where they are now forced to borrow.

[Jac001]

. I wonder how an automotive giant can go bad so fast.

Well holden (GM) spend $1billion on the VE platform and upgrading the elizabeth plant in SA. Now imagine if VE/WM had been a terrible flop? There $1Billion gone, on just one model. Now imagine having close to 100 cars plants around the world like gm with dozens of different models. There is a huge investment to be made long before a car is ever sold. Make 3 or 4 flops and that is a lot of money lost...

[Mikey]

Well holden (GM) spend $1billion on the VE platform and upgrading the elizabeth plant in SA. Now imagine if VE/WM had been a terrible flop? There $1Billion gone, on just one model. Now imagine having close to 100 cars plants around the world like gm with dozens of different models. There is a huge investment to be made long before a car is ever sold. Make 3 or 4 flops and that is a lot of money lost...
Didn’t the AU cost $750 mill back in the mid 90's? and that would not have paid for itself either especially after Ford was forced to spend another $500 mill on the BA only 5 years later. That equates to $1.25 billion over 5 years that had to come from somewhere.

Either way this is not good for Ford globally, period.

[Dacious]

Jaguar is also bleeding millions of pounds and may shut down in Coventry, UK, where they'v been since they started as SS or Swallow Sports in the 30's. (Namechange courtesy A. Hitler in WWII). They've been for sale for ages. Aston is actually profitable. Mercury in the US is looking shaky, like Oldsmobile did before GM topped it.

Alan Mullaly moved across from Boeing to being CEO of Ford Detroit. He was the guy who cut Boeing's models from twelve to four, and made it so the fuselage of the planes could all be built on the same line in different lengths. He's already expressed dismay at duplication and national divisions going it alone for development and product.

What does that mean for Ford Oz? I think the Falcon will in future be made from a standardised international platform and set of powertrains, like the Toyota, Nissan, Mazda etc. Holden is also moving that way, with the next revision of the Commodore after VF likely to be built internationally. It won't necessarily be Orion that changes, but probbly the next major revision due after 2010.

[clixanup]

Well holden (GM) spend $1billion on the VE platform and upgrading the elizabeth plant in SA. Now imagine if VE/WM had been a terrible flop?
At an average of $40,000 per car, how long would it take to recover $1bn? By my calculations you only need to sell 25,000 cars to get to that. By the end of the model run, they may have sold 250,000 to 300,000 units... So, $1bn isn't much in the grand scheme.

[CLUB_819]

At an average of $40,000 per car, how long would it take to recover $1bn? By my calculations you only need to sell 25,000 cars to get to that. By the end of the model run, they may have sold 250,000 to 300,000 units... So, $1bn isn't much in the grand scheme.

So true mate but it will take more than 25k of cars, take into account wages, production costs, material costs, interest on loan if any etc.. etc... I'd say more like 100,00 or so cars, if not more. But the way the VE is going export wise it won take long.

Mind you though the mark up on spare parts may change that significantly, we all know hgow hard they sting in spare parts.

Cheers
Scotty

[summoner]

FoMoCo has been going down for a long time. The cars are selling the problem is the UAW which negotiated GM and Ford in such a manner that the companies will go under unless something is done soon.

Basically any employee who is laid off continues to recieve full pay until they find another job, also all pensions are paid in full etc etc.. it is costing them so much a year that it is destroying any profits they make

[X BC X]

At an average of $40,000 per car, how long would it take to recover $1bn? By my calculations you only need to sell 25,000 cars to get to that. By the end of the model run, they may have sold 250,000 to 300,000 units... So, $1bn isn't much in the grand scheme.


add all the flow on market from selling a car aswell....
such as spare parts profit :deal:

[clixanup]

So true mate but it will take more than 25k of cars, take into account wages, production costs, material costs, interest on loan if any etc.. etc... I'd say more like 100,00 or so cars, if not more.
OK, working with a net profit margin of 10% per car, it'd take about 250,000 cars. You'd need to factor in the cost of minor upgrades & updates as time passes, but if history is anything to go by, the $1bn plant/development will probably run for 9 or 10 years. They might sell 750,000 to 800,000 cars by the end of the series. How many VT thru VZ models were sold?

But the way the VE is going export wise it won take long.
I read somewhere that Holden have started manufacturing Statesmans (Statesmen?) in China. Currently, they are only for the Chinese market, but how long before they're selling Chinese Statemans to the Saudis? Or here even? Some of those dollars would certainly help to amortise development costs more quickly...

[Aussie V8]

Actually Ford Credit has been propping up Ford Motor Company for many years. It has been reported that Ford looses money on every car they make and that is probably the same for GM when considered on a average Global basis.

[zorro]

US car manufacturers are all suffering. GM recently sold IZUZU trucks and were rumoured to buy out Ford at one stage. Ford have been losing moey for years, Henry's distant nephew of how ever many generations got rid of jac nasser and the company started going down quicker.

Don't Toyota lead most car segments in the states now?

[clixanup]

Don't Toyota lead most car segments in the states now?
Not just in the States...

[muzza]

Ford (and GM and Chrysler) in the US have been slowly getting on the nose for at least 10 years. Despite some of the good stuff their divisions and other marques do o/s, their domestic line ups are basically crap old style vehicles (with a few exceptions) and trucks, which while they sell at very good profit becuse there's bugger-all cost to designing a new "SUV" (dumbest name for a truck ever), they aren't real sophisticated and the cost of fuel is even hitting the Yankees now.

Plus the Jap and Korean car-makers have been offering smarter and more efficient product for years, some made in the US but without the strangling effect of the UAW hanging over them.

I can't believe the formerly strongest companies in the world have had their heads so buried in the sand they didn't see the automotive landscape shifting outside(and inside) their borders - haven't they listened to what their people in Europe, Asia and Australia have been telling them?

Gotta wonder why they dont shut shop in the US, move offshore and base themselves in Europe or Asia and cut their losses. After all, it's a free world.........

[Road Warrior]

I thought Ford sold Jaguar and was keeping Aston Martin? In any case, Ford's problem (like GM's problem) is the UAW and the horrendous legacy/pension schemes that they have to fork out for.

I don't think all of this will hurt Orion, I would say it's all signed sealed and delivered (almost) by now. What happens after that...well...:errr:

[Holden Man]

At an average of $40,000 per car, how long would it take to recover $1bn? By my calculations you only need to sell 25,000 cars to get to that. By the end of the model run, they may have sold 250,000 to 300,000 units... So, $1bn isn't much in the grand scheme.

They don't make $40000 dollars profit on a $40000 vehicle !

I don't know what they would make (profit) per vehicle maybe $5000-10000 tops.

I wonder what BMW or AUDI would spend on a new release vehicle ?

[Stevotski]

I thought Ford sold Jaguar and was keeping Aston Martin? In any case, Ford's problem (like GM's problem) is the UAW and the horrendous legacy/pension schemes that they have to fork out for.

I don't think all of this will hurt Orion, I would say it's all signed sealed and delivered (almost) by now. What happens after that...well...:errr:

from what I have heard Orion is going to be rebodied on the same platform, like XC to XD. This will mean that the (AU) platform will be approx 15 years old at the end of orion so I hope for ford's sake that they will have development money for a new platform at that stage or it will end up like the Lincoln Town Car

[clixanup]

They don't make $40000 dollars profit on a $40000 vehicle !
See my later post... :)

[Holden Man]

See my later post... :)

sorry clixanup, should have read further but felt I had to respond there and then. We roughly agree on profit margin too !.

[Campaign]

from what I have heard Orion is going to be rebodied on the same platform, like XC to XD. This will mean that the (AU) platform will be approx 15 years old at the end of orion so I hope for ford's sake that they will have development money for a new platform at that stage or it will end up like the Lincoln Town Car


Except that you could call BA significantly revised enough from AU to be considered a new platform and if you read the BF v VE reviews i think you will find that she is still very competitve.

Ford Aus is a sound outfit, its just that the parent company is a sack of moldy potatoes.

Someone with money would realise this and could buy out Ford Aus if Ford US goes down soon.

[kand8979]

I think this is a case for both GM and Ford of telling American Customers what they want instead of listening.

Add to this the huge debts they have for employee pensions, and the real killer health care. Its a like a small study of the effects of an aging population.

A much smaller base supporting a huge non-productive workforce, all good until you have product no one wants and then the income stream dries up.

Don't forget too there was talk a few months back of GM Selling Holden to a willing buyer for a quick injection of cash.

[German Statesman]

Bring back Lee Iacocca!!

http://www.answers.com/topic/leeiacocca-jpg

It's not rocket science - both Ford & GM are in trouble, Ford being the more worrying.

I read a long time ago that the problem with most car companies in the States is that car guys no longer ran car companies - the rot started in the early 50s when James Nance was installed as president of Packard. His previous work? National sales manager of Hotpoint, yes the whitegoods manufacturer:confused: Now we have car guys in minor management roles, and not bringing their years of experience to the decision-making process - instead there's accountants and efficiency experts deciding product lineups..

How bad can it get? Accountants recommended Cadillac downsize in the 80s and out came these god-awful dogs including the Cimarron (you''ll see the Camira in it very quickly), the downsized DeVille and Seville and then there was the Eldorado...Cadillacs traditional customers picked them as Chevy and Pontiac compacts from a distance and they left in droves to go to Lincoln. Next Caddy/GM fubar...front wheel drive. Lincoln stick with RWD, and beat Cadillac sales for the first time in 49 years. Ford stick with RWD and the police market gets handed to its V8 Crown Victoria on a plate rather than a FWD V6 Impala (how to trash a great name, Chevrolet).

But along with management fubars and snafus, what else has caused the once dominant players to dive??

Honda. Toyota. Nissan. BMW. Mercedes. Add in the other imports, and lined up beside a UAW-fattened American auto industry employee made car they are quickly seen as an ordinary effort. :karate:

I hope for the industry, things get better for them.

Cheers

JOHN

[Road Warrior]

Ford have a history of letting accountants run the show and in doing so make appalling long term decisions - dropping the big bad Cleveland in '83 is a classic example and that was motivated primarily by 'fiscal responsibility' or whatever you call it.

[chomper]

from what I have heard Orion is going to be rebodied on the same platform, like XC to XD. This will mean that the (AU) platform will be approx 15 years old at the end of orion so I hope for ford's sake that they will have development money for a new platform at that stage or it will end up like the Lincoln Town Car

Orion is clean sheet, like VE.

But it seems like GM and Ford in the US are dead. As everyone has stated, stupid product has contributed a lot to their demise.

One factor no one has yet mentioned is tariffs. Governments here and in the US have decimated the tariff's placed on imported vehicles, effectively killing the local industries. Back in the day, government's gave a stuff about supporting local industry and local jobs. Now...

[hallyoz]

Orion is not a clean sheet design. It's platform will still be AU-BA based, with the varous improvements that time brings.

[Maz]

I'll never own another ford or holden, so this really doesn't bother me.

Ford US and GM are the most inefficient companies.

The first company to produce a small/medium sized rear wheel drive car will win back alot of people. Something like a BMW 1 series, but at half the price.

3.2litre alloytech, rear wheel drive and a similar size of an Astra.

Would sell bucketload, not only in Australia but around the world.

Remove the Viva, Astra and Vectra all of which sell less than 1000 cars per month and replace it with a single model and sell 3000 of them instead.

They could even make the bloody thing in Korea like the captiva's.

There is far too much overlap in GM and Ford in both Australia and US.

For years Bmw only made 3 models of cars, 3 series 5 series and 7 series. They took control of the market and only now have they begun to bring out different models, once they are dominating the market. Same applied to Toyota.

Ford and GM need to slash half the models and streamline everything. Then try and get back on track.

Holden should have..

Festiva -> RWD Astra -> Commodore -> Captiva -> Rodeo

All models except the Festiva should use 3.2 or 3.6litre alloytechs, with V8 option on the commodore. Each car has a seperate market and very little overlap between each car. HSV would obviously take the RWD astra into their lineup.

[gsw]

In any case, Ford's problem (like GM's problem) is the UAW and the horrendous legacy/pension schemes that they have to fork out for.

Yep and the UAW is to stupid to realize that everybody will lose out if the company goes under. They are looking at today and not tomorrow.