2006: Worst year in Ford's 103 year history

[XR Martin]

This aint good. Seven unnamed plants to close....

Ford Motor Co. posted a net loss of $12.7 billion, or $6.79 a share, in 2006.
That tops Ford’s worst year on record, which was 1992, when the automaker posted a $7.39-billion loss. It also tops General Motors Corp.’s $10.6-billion loss in 2005.

Ford’s staggering, historic loss comes after the company bled $5.8 billion, or $3.05 per share, during the last three months of the year. That was on top of the $7 billion in losses through September.

Special charges related to the company’s ongoing restructuring efforts also cost the company $9.9 billion, or $5.29 a share.

Declining sales of SUVs and F-Series pickup trucks in the United States played a key role in the company’s decline — as evidenced by the free fall of sales revenue in North America. Sales plummeted $11.2 billion to $69.4 billion from $80.6 billion in 2005.

Gains in the rest of the world only slightly offset that loss. Overall, Ford’s worldwide automotive revenues fell $10.2 billion from $153.5 billion in 2005 to $143.3 billion.

“We fully recognize our business reality and are dealing with it,” Ford CEO Alan Mulally said in a statement. “We have a plan, and we are on track to deliver.”

In all, 2006 will go down at one of the saddest and difficult periods in Ford’s 103 years of operation.

Last year began with Ford’s dramatic unveiling of its "Way Forward" revival plan. That strategy was proven to be inadequate over the summer and was revamped in the fall.

It now calls for closing 16 plants and eliminating 44,000 hourly and salaried jobs, among other actions. Seven of the plants have not been identified.

Throughout the year, consumers kept rejecting Ford’s most profitable vehicles — the Ford F-Series and SUVS — as they sought out more fuel-efficient models.

In August, the automaker announced it would slash production of 168,000 of those vehicles. It was the largest production cut in more than two decades and would result in downtime at three local factories and seven others nationwide.

Meanwhile, 38,000 employees, 46% of the company’s hourly workforce, preliminarily decided to take buyouts and voluntarily leave the company.

The Ford family also had a bumpy year: The dividend was suspended and the great-grandson of company founder Bill Ford stepped aside as CEO in September, retaining his title as chairman. In his place, he installed an automotive industry outsider, Boeing’s Alan Mulally.

Then, Ford rolled the dice on a huge gamble that might someday cause the Ford family to lose control of the company. Ford took out more than $25 billion in loans, using nearly everything it owns, including the trademark for the blue oval logo, as collateral. The money was desperately needed to survive through 2009, when Ford expects it will burn through $17 billion in cash and post a small profit.

And finally, the launch of a critical new vehicle, the Ford Edge crossover, was delayed until the last weeks of the year. The response has been good, but not nearly the blockbuster hit Ford needs to get its mojo back.

No matter how bad today’s results are, employees, dealers and the state of Michigan should prepare for things to get even worse.

In late November, Ford filed a document with the U.S. Securities and Exchange Commission that warned: "In 2007, we anticipate a deterioration in overall total company earnings."

Not everyone agrees it will be that bad, of course.

David Healy, an automotive analyst with Burnham Securities, recently wrote that "assuming that Ford’s thin new product lineup swells successfully and that the necessary corporate shrinkage in employment and capacity is carried out on schedule, next year’s results ... will probably show a significant improvement over this year’s."

But even he recognizes that a positive outlook for Ford has a lot of “ifs” attached, and he doesn’t recommend buying Ford stock.

“Anything is possible,” he said. “However, we’d prefer to watch from the sidelines.”

[Night Runner]

.

Man, that sucks, even with the new Mustang selling in decent figures they are still losing. Hope things take a turn for the better. No matter the company/brand I think as car guys in general it would be a shame to see any big company go down like this.

Thanks.

[Kryton]

FORD CUSTOMER SERVICE.
end of story.

[Night Runner]

Originally Posted by davway

FORD CUSTOMER SERVICE.
end of story.

I thought I was the only one getting it.....anyone in Wellington New Zealand "should" know that Stevens Fords in Lower Hutt are the biggest plonkers around. I'd rather take my Ford to a Holden dealer, that's how bad they are....bunch of twats. I wouldn't take my push bike to Steven's Ford.

:

[chich]

Originally Posted by davway

FORD CUSTOMER SERVICE.
end of story.

I agree that this is a huuuge factor, however areas such as build quality and resale still need to be addressed.

Unfortunately Ford and GM have had their heads up their a**es for so long they've complete lost touch with what actually matters to people. Now they're paying for it in the form of decreased sales. Ford and GM are closing 6 or 7 plants each in North America to stem loses where-as Honda and Toyota are building new ones in the same region. Nuff said..

Originally Posted by davway

FORD CUSTOMER SERVICE.
end of story.

It is a factor but the underlying truth is that the Ford US product range is ordinary. Go to www.ford.com and have a look at the "quality" of vehicles.

It needs the European Focus, and Fiesta first of all. It needs a decent sedan, Falcon/Fairlane maybe? And as already mentioned it needs to ditch the pension plan.

[AEF_Silver94]

damn bad news

[Phoon Hoon]

Geesz that makes tough reading for a Ford fan...

[banarcus]

For all the workers and factories that are cut, I hope the same ratio of fat cats go as well.

[davocol]

I can't see how a company can possibly sustain such huge losses consistently, It will not be long before we see one of the big US companies go.

[sfr rob]

hit the nail on the head there chich!

[Ford_Boy]

why? i want ford around forever. if ford go down then i'll have to make do with a holden or jap car. i hope ford do somthing to get themselves out of this. ford usa should try getting some of our cars over there.maybe it would rekindle peoples liking.

[LeadFoot81]

What does this truly mean for Ford operations outside of America? ie Ford Europe and Ford Oz? Can they keep functioning without the parent company? They don't actually get cash from Detroit, just the premission to borrow money for their own projects (which are selling)

[XR Martin]

Originally Posted by Inline6

What does this truly mean for Ford operations outside of America? ie Ford Europe and Ford Oz? Can they keep functioning without the parent company? They don't actually get cash from Detroit, just the premission to borrow money for their own projects (which are selling)

Yeah but they borrowed 25billion using their assets as collateral, Geelong and Broadmeadows would have to be part of those assets...

[Polyal]

Originally Posted by Inline6

What does this truly mean for Ford operations outside of America? ie Ford Europe and Ford Oz? Can they keep functioning without the parent company? They don't actually get cash from Detroit, just the premission to borrow money for their own projects (which are selling)

Not true mate. FoA does not make enough cash to invest in itself, they go begging to the US for it.

Its a sad fact of life, but unless FoA becomes a major figure in this region (read Asia) then its pretty much on borrowed time.

[Annie1962]

Well if people are buying Hondas, Toyotas, Mazdas then Ford needs to look at why and then change their plans accordingly.

I'm thinking fuel economy without losing a sporty look and speeeeeed.

[chich]

Originally Posted by Annie1962

Well if people are buying Hondas, Toyotas, Mazdas then Ford needs to look at why and then change their plans accordingly.

I'm thinking fuel economy without losing a sporty look and speeeeeed.

You really don't need to look too far into it to work out why people by Japanese and European vehicles. They offer better cars, better resale and much better service. I'll give you a couple of examples.

A colleague at work has a BA XT manual V8 thats covered 60,000kms and thankfully near the end of its lease. In the 4 years he's had it, he's had nothing but issues. Front discs need to be machined every 15,000kms to stop the shuddering, driveline shunt is still there, pcv hoses splitting, gear boot cracking, cracked radiator, bonnet latch has broken three times etc etc.

Even though these issues are common across the BA range, Ford still hasn't got a fix for them. When something breaks they simply replace it with another part thats also destined to fail (i.e the design is not reviewed). To add insult to injury when the dealer is asked to investigate a noisey diff or the like, they simply say "within factory tolerance" and wash their hands of any responsibility... until warranty is up when amazingly everything needs replacing. Unfortunately this is a common theme amongst 95% of the people i know with Aussie cars... XT's, Futura's, XR's, SS's, Calais etc etc

The Japanese on the other hand learn from mistakes and treat their customers with courtesy and respect. We had an issue with a power window regulator on my mums Camry a few years back. I went to the dealer and he said it was a common problem, handed me a new improved part and off i went. I havn't had another issue in 4 years. Servicing is not an inconvenience, the car is finished on time and the service is completed by trained mature technicians... not 16yo idiots who drop burnouts and dump the clutch at every opportunity.

In the automotive business these little things matter... afterall you're dealing with peoples second most expensive asset.

Then we get onto the topic of resale. Take a look at what a once $60K XR8 is worth 3 years on... 45% of its original value. Now take a look at what a 3 year old 3.0L Subaru Liberty or Honda Accord Euro are worth.. 60% of their original value. Unfortunately it doesn't make sense to buy Aussie anymore..

[mik]

12.7 billion is a lot but nissan had had a far worse loss and came back from it, so i dont see henry going down for a long time

[csv8]

Originally Posted by mik

12.7 billion is a lot but nissan had had a far worse loss and came back from it, so i dont see henry going down for a long time

True..but RENAULT bailed them out..as did Daimeler Benz for Chrysler.

[El_Poochino]

That loan could be the end of Ford as we know it today. If they stuff up and lose the money. If that did happen either Toyota or another Jap maker could snap up Ford Co and bargin basement price and change the mindset of US, European and Australian cars more towards a Japanese base. Or it could be butchered up, Ford Australia independant of Detroit bigwigs.

Slim chance of it happening. But it looks like Ford has nowhere to go but up now.

[XR Martin]

Is this the same Toyota that just settled out of court for the repair of 3.5million faulty engines in the US? And recalled their complete SUV and pickup range for faulty ball joints over the last two years? (nearly 1.5 million cars)

[chich]

Originally Posted by XR6 Martin

Is this the same Toyota that just settled out of court for the repair of 3.5million faulty engines in the US? And recalled their complete SUV and pickup range for faulty ball joints over the last two years? (nearly 1.5 million cars)

Yeah it is. And its also the same Toyota thats running rings around Ford and GM in every way possible. If you want proof simply look at the global sales figures.

It seems you're forgetting the nice little fiasco that Ford created for itself with the exploding tyres.. how many billion dollars and more importantly lives did that cost?

And then we have the Ford Punto... the car that trapped its occupants and burst into flames when it was rear-ended. Many people lots their lives so Ford could save a few bucks on a sheet of rubber that would've eliminated the problem.

Don't go throwing stones... everyones houses are made of glass in the automotive business.

[XR Martin]

Yeah thats right, Toyota can do no bad :rolleyes:

Toyota Motor Sales U.S.A. Inc. has quietly settled a class-action lawsuit



Automotive News | 1:00 am, January 8, 2007
LOS ANGELES -- Toyota Motor Sales U.S.A. Inc. has quietly settled a class-action lawsuit that covers about 3.5 million Toyota and Lexus vehicles that may have been damaged by engine oil sludge. Details of the settlement, which allows for third-party mediation of sludge claims rejected by Toyota, have been mailed to 7.5 million current and previous owners.

Critics contend Toyota has told customers and dealers too little about sludge issues. They say some customers took vehicles with dead engines to dealers who had little or no knowledge of the problem and often assumed it was the owners' fault. Unhappy customers had no remedy other than hiring a lawyer to go after Toyota.

Under the agreement, owners whose claims have been denied by Toyota may submit them to a third-party mediator at no cost for binding arbitration. "This settlement breathes life into claims that have been dead for years," said Gary Gambel, a lawyer for plaintiffs who sued Toyota. "This is not a settlement that gives a few dollars to everyone. The relief is exactly tied to the problems and damages that someone might have."

The lawsuit, filed in a Louisiana district court, is expected to be approved by the court in early February.
--------------------------------------------------------------------------------
Toyotas at risk

About 3.3 million Toyota vehicles are susceptible to oil sludge, which can cause thousands of dollars in damage and require replacement of the engine. Here are the vehicles included in the settlement.
VEHICLE MODEL YEARS
Camry 4 cyl. 1997-2001
Camry 6 cyl. 1997-2002
Camry Solara 4 cyl. 1999-2001
Camry Solara 6 cyl. 1999-2002
Sienna 6 cyl. 1998-2002
Avalon 6 cyl. 1997-2002
Celica 4 cyl. 1997-1999
Highlander 6 cyl. 2001-2002
Lexus ES 300 1997-2002
Lexus RX 300 1999-2002

Chink in the armor?

Sludge is gelled oil that fails to lubricate engine parts. It can lead to damage, often requiring a new engine at a cost that can exceed $10,000. Complaints about sludged engines have plagued several carmakers, but Toyota's troubles have been especially controversial in light of its reputation for vehicle quality.
The issue highlights a possible chink in the company's armor. Executives fear Toyota is growing too fast for its engineering resources. That could lead to quality snags and a tarnished reputation.

When a customer takes a sludge-caked engine to a dealership, there is usually a "clean-out" procedure. The head is pulled and a service technician tries try to steam out the sludge. If that doesn't work, the engine must be replaced. Sludge can result from poor engine design; overly tight tolerances between moving parts; improper cooling; and poor maintenance by consumers. Toyota insists the problem arises mainly when owners fail to change their oil frequently enough. The agreement does not find Toyota at fault.

"The settlement doesn't mean that Toyota or Lexus vehicles are predisposed to develop oil gel," according to the notice. "The court did not decide which side was right."
After Toyota had received 3,400 sludge complaints by 2002 it extended its vehicle warranty to eight years and unlimited miles. The program was offered to owners of 1997-2002 Toyota and Lexus vehicles equipped with 3.0-liter V-6 or 2.2-liter four-cylinder engines. The company declined to give an updated number of complaints.

The terms
Under terms of the settlement:
Owners of damaged vehicles have eight years plus 120 days from the original purchase date to file a complaint. If Toyota denies the claim, owners can appeal to a judge-appointed third-party administrator: J. Robert Ates, a New Orleans lawyer. Customers who have already made repairs may be able to recover the costs. Only those who elect not to participate in the settlement can sue Toyota individually. The deadline for that choice was Dec. 31, 2006. The settlement is transferable to future vehicle owners.
The car only needs to show evidence of oil sludge. It is not necessary for the owner to have made repairs during the claim period. Damages that can be recovered include loss in value of the vehicle and incidental costs, such as rental cars. Past lawyers' fees, mental anguish and bodily injuries are not covered.
A Toyota spokesman said the agreement is not a defeat for the automaker. "The settlement validates the customer support program we implemented four years ago," Xavier Dominicis said.
"The terms of the program remain unchanged. There always was a way for customers to appeal our decision." Plaintiff lawyers disagree. They say Toyota failed to communicate the extent of the problem to its dealers and customers. Toyota's appeal process also meant hiring a lawyer, which many consumers could not afford. It costs nothing to file an appeal with Ates. "The consumer only needs to show reasonable maintenance in terms of oil changes," Gambel said. "You don't need to prove where the sludge came from, or explain your driving habits. If you have oil sludge, Toyota pays" the consumer.
Consumers can get more information by calling 888-279-4405 or at www.oilgelsettlement.com.

[chich]

Originally Posted by XR6 Martin

Yeah thats right, Toyota can do no bad :rolleyes:

Please show me where I made such a comment in my post.

All i'm saying is that Japanese and European manufacturers address quality and realiability issues and learn from their mistakes, they don't sweep them under the carpet a-la Ford style.

[RPO83]

Originally Posted by chich

Please show me where I made such a comment in my post.

All i'm saying is that Japanese and European manufacturers address quality and realiability issues and learn from their mistakes, they don't sweep them under the carpet a-la Ford style.

Case in point, Mitsubishi Motors mass cover-up scandal.

[Green X]

Service and Build quality needs to be addressed.

If something goes wrong it shouldn’t just be a band aid fix, it should be looked at and investigated as to why it failed and what steps can be taken to stop it from reoccurring.

Parts, why do they always need to charge stupid prices for parts just cause it has FORD stamped on it, you should be able to walk into you ford dealer and get the best part at the beat price after all ford built the car so they should be able to supply the best parts for the best price.

I am a Ford person I will buy ford cause that is what I have been brought up with same as a lot of other people on this forum.

It just seems like ford will get on a good thing and get some momentum up than they just let everything stagnate for a few years and then wind up back where they started and do it all over agene.

[Bill M]

Originally Posted by Green X

Service and Build quality needs to be addressed.

Parts, why do they always need to charge stupid prices for parts just cause it has FORD stamped on it, you should be able to walk into you ford dealer and get the best part at the beat price after all ford built the car so they should be able to supply the best parts for the best price.

I am a Ford person I will buy ford cause that is what I have been brought up with same as a lot of other people on this forum.

If you think Ford parts are expensive take a good look at other makes, I run 2 vehicles an AUII falcon ute and a 1997 Pulsar, the Pulsar has had less issues like none but boy do you pay for parts! The Aussie built Falcon is much more economical for parts prices, I am talking genuine parts here. I have also owned many Japanese cars from new and the parts extortion is the same across the board. Fords may have issues but at least they are relatively cheap to fix parts wise.
cheers
Bill.

[Green X]

XR6 martin

I recall that Toyota episode, Amsoil was involved as well I believe as there Oil had been used in some of those engines buy the owners, Amsoil did the right thing after Toyota rejected warranty work so Amsoil foot the bill and replaced engines that had been damaged where there oil had been used they also changed there recommended drain interval’s and would no longer warrant there oil in those Toyota engines.

[ltd]

Firstly, Alan Mulally is the boss now, he will and I emphasise will turn the company around - he did the exact same thing with Boeing. As for fuel economy, Alan captained the notion of lean and clean fuel burn, making Boeing the largest and most profitable airplane manufacturer in the world. Beforehand, there were massive layoffs and sackings at all of their plants, as the product range was far too dated and airbus were eating into their sales. Now, Boeing are hiring again and have an order book for over 1200 aircraft, with an average price of US$110 million dollars each. With options, that figure is closer to 2500 aircraft on order.

Ford are in good hands with Alan, and if there is a saviour he is it. That includes options such as making cars for the US in other places ike Oz, evidenced by the fact that most of the 787 composite is manufactured in Italy.
The pension plan has to go in the US, as it is crippling Fords viability. It will not completely go but will be significantly changed, and the unions will have to take this loss.

But hey, if all else fails Ford will get federal government assistance as it is too much of an election loser for anyone to allow that many people to be sacked.

[Dark Horse]

Originally Posted by ltd

Firstly, Alan Mulally is the boss now, he will and I emphasise will turn the company around - he did the exact same thing with Boeing. As for fuel economy, Alan captained the notion of lean and clean fuel burn, making Boeing the largest and most profitable airplane manufacturer in the world. Beforehand, there were massive layoffs and sackings at all of their plants, as the product range was far too dated and airbus were eating into their sales. Now, Boeing are hiring again and have an order book for over 1200 aircraft, with an average price of US$110 million dollars each. With options, that figure is closer to 2500 aircraft on order.

Ford are in good hands with Alan, and if there is a saviour he is it. That includes options such as making cars for the US in other places ike Oz, evidenced by the fact that most of the 787 composite is manufactured in Italy.

Yeap, agreed and he did all that in just 4 years.