The turnaround at Ford Motor Company (F) is not coming. Even some members of the storied Ford family want out. According to an account in The Wall Street Journal: "Of the $500 million or so in Ford stock held by the family, about $300 million of it wants to stay until the end. The rest would prefer to get out, get their money while they can, because they aren’t sure it can be fixed." That is, of course, the smart money, the inside money talking.
Ford’s bread-and-butter vehicles, the SUVs and pick-ups, lead by the F-series and Explorer, are getting killed. Ford used to sell 900,000 F-series trucks. This year it will sell under 700,000. Explorer sales used to be 440,000 per annum. They now run 150,000.
Ford is trying to raise money by selling Land Rover and Jaguar, but cash is not Ford’s immediate problem. It raised $23 billion recently.
Ford’s problem is that its US market share keeps falling, and its labor costs run about $75 an hour. That is well above what it runs for the Japanese because of pension and health care considerations. And, UAW talks do not begin until the Fall. That makes squeezing an operating profit out if its North American operations almost impossible at current sales levels.
Economic woes including lower home prices and higher gas prices are likely to hurt Ford right through the summer. That means Junes sales will be tough, and the forecast for Q3 should be tougher.
Ford is in for a hard Q2.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
Top Gaining Stocks
Top Losing Stocks