Flying Pink Unicorns

Ford has nothing. Zip. Nada.

Today, December 2, was the deadline for the automakers formerly known as the big 3 (the Desperate 3?) to develop a bailout proposal.

http://news.yahoo.com/s/nm/20081120/bs_nm/us_autos_bailout

Well, today's the big day. According to the New York Times, Ford, "wanted access to $9 billion in loans but that it could survive and become profitable in three years without the money unless the current recession 'is longer and deeper than we now anticipate.'

http://www.nytimes.com/2008/12/03/business/03auto.html?_r=1&hp

And what turnaround plan did Ford announce in exchange for its request for $9 billion in loans? The current CEO would be willing to work for $1 a year and they will sell their corporate jets. Additional specific cost cutting measures included promises of . . . promises of . . . crickets. Nothing at all.

I'm flabbergasted. And totally appalled.

First, that Ford wants the money but thinks it can survive without it is rich. If it wants an additional $9 billion in loans, it is nervous, and rightfully so. Even if it might survive without these loans, GM is in a much more precarious position, and as Ford admitted, a GM failure could cripple Ford as well if suppliers went under. Specifically, in the Times article, Ford stated, "It is in our own self-interest, as well as the nation’s, to seek support for the industry at a time of great peril to this important manufacturing sector of our economy.”

So whether it "needs" the $9 billion in loans or not (and I'm sure it does), Ford wants money for the industry. Big money.

And its turnaround "plan" that it puts forth in exchange? The 2 items mentioned, sell the corporate jets and the CEO gets no money, are so unbelievably bare it isn't funny! First, the CEO needs to go, as does the rest of top management. But forgetting that for a moment, CEO pay $1, fine. Sell jets, fine. That should have consumed, literally, the first 30 seconds of the first meeting on the subject. After that, well, talk to the unions, eliminate brands, ask Congress for legislative relief so dealerships can be cut, cut production of gas guzzlers, ask for specified funds for hybrid or electric cars, additional tax rebates for high MPG cars and electric/hybrid cars. You know, a PLAN to actually return Ford to a profitable status, where it could pay the money back to the government, hopefully with a profit on the equity stake Ford proposed the government take in exchange for the highly risky loans.

None of that was proposed by Ford. None of it at all. Even though it would be an empty threat, if I were Harry and/or Nancy, I'd publicly threaten to hold them in contempt of Congress if they didn't come up with a real plan. I'd graciously extend the deadline to Sunday evening.

Here's what Ford did say, from the above-mentioned article:

Ford said that, as a result of its turnaround plan, it believes its core North American auto operations will be break-even or profitable in 2011 on a pre-tax basis. The company had previously set a goal of returning those operations to profitability next year but dropped that target in May without giving a new one.

Ford also said it expects industry-wide sales of 12.5 million vehicles in 2009, 14.5 million vehicles in 2010 and 15.5 million vehicles in 2011. By way of comparison, U.S. auto sales averaged close to 17 million a year from 1998 through 2006.

The company made commitments to speed up the introduction of hybrid and electric vehicles, and added that it believes the consumer shift away from light trucks towards more fuel efficient vehicles is permanent.

And Ford pledged to reverse the decades-long trend of losing money on the production of small cars in the United States. The company said it would increase the production of smaller vehicles such as the Ford Focus to more than 1 million a year and reduce the complexity of the car's parts in order to reduce costs.

So let's see. Ford's turnaround "plan" is that the American market will recover partway back to the good old days of 1998-2006, it will speed up the introduction of hybrid and electric vehicles and lose less money on small cars. It will make small cars better and cheaper. Well that's reassuring. And a clear, specific bold plan.

Or not. The market recovery is a wish. It may very well come true, but a wish or a hope is not a plan. Speeding up electric/hybrid vehicles? Fine. Would like details, but fine, that actually does bear a passing resemblance to something that would be in a plan. And making small cars better? Forgive me, but the American auto makers have failed spectacularly here for 2 generations, literally. I wouldn't bet $9 on it, let alone $9 billion. That just barely qualifies as a wish, and certainly does not qualify as part of a plan.

This is the arrogance/denial these people are living in. I sure as heck hope GM does better.