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  D.F.'s Column Archive

September 20, 2006

What Does A Failing Company Have To Do To Impress?


Some bloated, money-losing, overcommitted, market-share-losing dinosaur companies just can’t impress anyone. Poor Ford.


What is a bumbling behemoth supposed to do, exactly? It announces plans to “idle” upwards of a dozen plants. It eliminates its five-cent-per-share dividend. It gives the boot to 10,000 white-collar employees. It decides to offer buyouts to every single one of its 75,000 hourly employees. The whole thing is designed to save $5 billion by the end of 2008.


So. Is Wall Street impressed? Are you kidding? The Ford family owns the Detroit Lions, you know. You think Lions fans get excited every time a new coach or quarterback is introduced? Did you hear the one about the Lions fan who couldn’t sell his two tickets, so he left them under his windshield wiper and went for a walk? When he returned, there were four tickets.


Wall Street has had it up to here – look way up – with Ford and its restructuring, retooling, really-the-disaster-is-over-this-time plans. Merrill Lynch shoved Ford over from a “neutral” to a “sell.” Goldman Sachs declared itself skeptical that a smaller Ford would do any better than the big, dumb Ford we’ve all come to know and, well, know – and said it would make no sense to invest in it.


Analyst David Healy of Burnham Securities gauged the likelihood that Ford would be able to please investors with any plan whatsoever as “basically impossible.”


Geez. What’s with these analysts?


Of course, it could be this: Ford announced as part of its restructuring blueprint that it would next be showing a profit in 2009. That’s management’s projection. You know management. They’re the ones who give you the rosy scenarios. Even they don’t see the company making money until the first year of the Barack Obama administration.


Invest in Ford! Maybe we’ll make money some day. At least we would have some of yours.


And in the meantime, while they’re not making money, that means they’re losing money. How much? They’d rather not say. I bet. They’d rather not think about it, either. They might lose a little less money if they were willing to sell the major money-losing division known as Jaguar, but that option is not on the table.


This makes the analysts groan. Granted, quite a few of them probably drive Jaguars, but buying the car is one thing. They wouldn’t touch the company that makes them with a 10-foot pole.


I’m guessing a pretty good percentage of those 75,000 hourly employees are starting to feel the same way. These are folks who have gotten accustomed to good wages, incredible benefits and generous vacation packages, all courtesy of union negotiators who know when they’re dealing with a company that will do absolutely anything to achieve labor peace.


What good does it do you to be making a great wage and great benefits from a company that has basically told you, “We can’t afford you anymore, so what will it take to get you to leave?” The company hasn’t disclosed the nature of the buyout offer, but what if all 75,000 hourly workers decided to take “Ford’s” up on its offer and skedaddle?


Now you’re saving serious money! You no longer have to pay any wages. Of course, you still have to pay all the overhead on all those buildings you idled, and you still have to pay all your white-collar people and middle management, and you still have to pay your marketing department, and you still have to pay your lawyers, and you almost certainly have to continue paying health benefits to all 75,000 of your recently departed hourly workers.


And the only way you can get money to pay for any of this is to sell cars. And – oops! – there’s no one left to build them for you. You just paid them all to leave.


It’s hard to believe Wall Street isn’t impressed by this company. Next thing you know, they’ll be finding fault with General Motors.


© 2006 North Star Writers Group. May not be republished without permission.


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