Ford (F) was being mentioned as a bankruptcy candidate two years ago. Its stock got down around $6. Bill Ford has failed to make the company more competitive on a product or cost basis.

Now that Alan Mulally, former airplane manufacturing executive has joined up as the car company’s CEO all of that is changing. The company’s new contract with the UAW will cut labor costs in North America. Mulally has fired every white collar worker he can find. Those hiding under their desks may dodge the bullets.

But, now Ford management is saying all of that cutting may not be enough. Mortgage and high fuel cost problems could make Ford sales worse. The company has already suffered double digit drops in most months during 2007 compared with the year before.

The new CEO told Reuters "The business environment has clearly gotten tougher. It’s gotten tougher and we want to be ready to move if we need to."

"Ready to move" is CEO-speak for closing more production facilities and laying off more workers. it also means that at some point Ford will have to cut the number of models it produces and the segments of the market that it can attack. It is losing some of that ability by selling off Jaguar and Rover. The company says otherwise, but, in a pinch, Volvo could be next.

Ford could decide that it does not need so many lines of pick-ups and SUVs. If $4 gas becomes the norm, who will buy them?

Ford could easily end up being a much, much smaller company than it was in 2005 when it had $177 billion in revenue.

Too bad.

Douglas A. McIntyre

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