Ford Motor Company (NYSE: F) is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and Aston Martin in the UK. Ford's former UK subsidiaries Jaguar and Land Rover were sold to Tata Motors of India in March 2008. In 2010 Ford sold Volvo to Geely Automobile.[2] Ford discontinued the Mercury brand at the end of 2010.
Ford introduced methods for large-scale manufacturing of cars and large-scale management of an industrial workforce using elaborately engineered manufacturing sequences typified by moving assembly lines. Henry Ford's methods came to be known around the world as Fordism by 1914.
Ford is the second largest automaker in the U.S. and the fifth-largest in the world based on annual vehicle sales in 2010.[3] At the end of 2010, Ford was the fifth largest automaker in Europe.[4] Ford is the eighth-ranked overall American-based company in the 2010 Fortune 500 list, based on global revenues in 2009 of $118.3 billion.[5] In 2008, Ford produced 5.532 million automobiles[6] and employed about 213,000 employees at around 90 plants and facilities worldwide. During the automotive crisis, Ford's worldwide unit volume dropped to 4.817 million in 2009. In 2010, Ford earned a net profit of $6.6 billion and reduced its debt from $33.6 billion to $14.5 billion lowering interest payments by $1 billion following its 2009 net profit of $2.7 billion.[7][8] Starting in 2007, Ford received more initial quality survey awards from J. D. Power and Associates than any other automaker. Five of Ford's vehicles ranked at the top of their categories[9] and fourteen vehicles ranked in the top three.[10]
Ford Motor Company (Ford), incorporated in 1919, is a producer of cars and trucks. Ford and its subsidiaries are also engaged in other businesses, including financing vehicles. It operates under two segments: Automotive and Financial Services. The Automotive segment includes the operations of Ford North America, Ford South America, Ford Europe and Ford Asia Pacific Africa. The Financial services include the operations of Ford Motor Credit Company and Other Financial Services. The Company's primary markets include Canada and Mexico. Outside of the United States, Europe is the Company's market for the sale of cars and trucks. During the year ended December 31, 2010, the Company’s Battery Electric Vehicle, Ford Transit Connect BEV, was launched in North America, and also MyFord Touch. On August 2, 2010, the Company, through its subsidiary, Volvo Personvagnar Holding AB, sold 100% of the outstanding shares of Volvo Personvagnar AB, which together with its subsidiaries is the main operating entity for the production and sale of Volvo-brand vehicles (Volvo Car Corporation), to Geely Sweden AB (Geely Sweden). It also sold 100% of the membership interest of Volvo Cars of North America, LLC, the distributor of Volvo-brand vehicles in North America, to Mintime North America, LLC (Mintime). During 2010, it acquired the remaining minority interest in S.C. Automobile Craiova SA. (ACSA), thereby holding 100% interest.
Automotive Sector
The Company’s vehicle brands are Ford and Lincoln. During 2010, Ford sold approximately 5,524,000 vehicles at wholesale worldwide. All of its cars, trucks and parts are marketed through retail dealers in North America, and through distributors and dealers (dealerships) outside of North America, the majority of which are independently owned. At December 31, 2010, the approximate number of dealerships worldwide distributing its vehicle brands was 12, 000. In addition to the products Ford sells to its dealerships for retail sale, it also sells cars and trucks to its dealerships for sale to fleet customers, including commercial fleet customers, daily rental car companies, leasing companies and governments. Through the Company’s dealer network and other channels, it provides retail customers with a range of after-sale vehicle services and products, including maintenance and light repair, heavy repair, collision repair, vehicle accessories and extended service contracts. In North America, Ford markets these products and services under several brands, including Ford Service, Lincoln Service, Ford Custom Accessories, Ford Extended Service Plan, and Motorcraft.
Ford classifies cars by small, medium, large, and premium segments, and trucks by compact pickup, bus/van (including minivans), full-size pickup, utilities (both car-based and traditional truck-based platform vehicles), premium and medium/heavy segments. Ford South America market share is based on its six markets in the region (Argentina, Brazil, Chile, Colombia, Ecuador and Venezuela). Ford Asia Pacific Africa industry and market share data focus on its 12 markets in the region (Australia, China, Japan, India, Indonesia, Malaysia, New Zealand, the Philippines, South Africa, Taiwan, Thailand and Vietnam).
Financial Services Sector
Ford Motor Credit Company LLC (Ford Credit) offers a range of automotive financing products to and through automotive dealers worldwide. The majority share of Ford Credit’s business consists of financing its vehicles and supporting its dealers. Ford Credit earns its revenue primarily from payments made under retail installment sale and lease contracts that it originates and purchases; interest supplements and other support payments from the Company and its subsidiaries on special-rate financing programs, and payments made under wholesale and other dealer loan financing programs.
Ford Credit has a portfolio of finance receivables and leases, which it classifies into two segments: consumer and non-consumer. Finance receivables and leases in the consumer segment relate to products offered to individuals and businesses that finance the acquisition of vehicles from dealers for personal and commercial use. The financing products include retail installment sale contracts for new and used vehicles, and leases for new vehicles to retail customers, government entities, daily rental companies and fleet customers. Finance receivables in the non-consumer segment relate primarily to products offered to automotive dealers, including loans to finance the purchase of vehicle inventory (wholesale financing), for improvements to dealership facilities, for working capital and for purchase of dealership real estate. Ford Credit also purchases receivables generated by the Company and its subsidiaries, primarily in connection with the sale of parts and accessories.
Ford Credit does business in all states in the United States and in all provinces in Canada through regional business centers. Outside of the United States, FCE Bank plc (FCE) is Ford Credit's operation. FCE's primary business is to support the sale of its vehicles in Europe through its dealer network. FCE offers a range of retail, leasing and wholesale finance plans in countries where it operates. FCE does business in the United Kingdom, Germany and other European countries. Ford Credit, through its subsidiaries, also operates in the Asia Pacific and Latin American regions. In addition, FCE, through its Worldwide Trade Financing division, provides financing to dealers in countries where the Company has no established local presence. Other Financial Services includes a variety of businesses including holding companies, and real estate.
The Company competes with General Motors Company (General Motors), Chrysler Group LLC (Chrysler), Toyota Motor Corporation (Toyota), Honda Motor Company (Honda), Nissan Motor Company (Nissan), Hyundai-Kia Automotive Group (Hyundai-Kia), Volkswagen A.G. Group, PSA Group, Renault Group and Fiat SpA.
The diversification into financial services that began in the mid-1980s continued in earnest throughout the rest of the decade, as each of the major U.S. car manufacturers sought to insulate themselves against the cyclical nature of their business. Ford spent $5.5 billion acquiring assets for its financial services group during the latter half of the decade, including a $3.4 billion purchase in 1989 of The Associates, a Dallas-based finance company. That acquisition, completed the same year Ford purchased the venerable British car manufacturer Jaguar Cars Ltd. for $2.5 billion, made Ford the country's second largest provider of diversified financial services, ranking only behind Citicorp. With plans to eventually derive 30 percent of the company's profits from financial service-related business, Ford entered the 1990s with $115 billion worth of banking-related assets, a portfolio that provided the company's only bright moments during the otherwise deleterious early 1990s.
An economic recession crippled U.S. car manufacturers during the early 1990s, and Ford bore the brunt of the financial malaise that stretched around the globe. Domestically, car sales faltered abroad, particularly in Great Britain and Australia, Ford's sales plummeted. In 1991, Ford's worldwide automotive operations lost an enormous $3.2 billion after recording a $99 million profit the year before. In the United States, automotive losses reached an equally staggering $2.2 billion on the heels of a $17 million loss in 1990. The losses struck a serious blow to Ford, which as recently as 1989 had generated $3.3 billion in net income; however, the financial results of 1991 would have been worse without the company's strategic diversification into financial services. For the year, Ford's financial services group registered a record $927 million in earnings, up from the previous year's total of $761 million, which left the company with a $2.25 billion loss for the year, an inauspicious record in Ford's nearly 90-year history.
The financial disaster of 1991, however, was just a prelude to more pernicious losses the following year, as the global recession reached its greatest intensity. In 1992, with revenue swelling to slightly more than $100 billion, Ford posted a $7.38 billion loss. Although 1992 represented one of the bleakest years in Ford's history, the worst was over, and as the economic climate improved, the company emerged with renewed vitality. Against the backdrop of successive financial losses, Ford had increased its presence in the truck and minivan market niche, which represented the fastest-growing segment of the broadly defined automotive market. Roughly 200,000 minivans and sports utility vehicles were sold in the United States a decade earlier and now, as consumers once again returned to car dealers' showrooms, more than 2.3 million opted for minivans and light trucks, a trend that bolstered Ford's financial position and predicated its return to a profitable future.
During this time, the gap separating Japanese and American car manufacturers' production standards had narrowed considerably, with the U.S. manufacturers emerging from the early 1990s in a more enviable position--Ford included. As the technological and managerial race between U.S. car manufacturers and their Japanese counterparts tightened, the importance of prudent product development and effective distribution networks increased. Toward this end, Ford reorganized its production and distribution operations in mid-1994 to better respond to the changing economic structure of the numerous countries in which Ford operated facilities. Regional trading areas, rather than nation states, would represent the primary focus of Ford's future efforts, a direction the company moved toward with its worldwide reorganization in 1994.
Ford's notable achievements during the latter half of the 1990s were philosophical in nature, as the company attempted to replace the corporate culture of its past with a new way of thinking for the future. The proponent of Ford's new vision was Lebanese-born, Melbourne, Australia-raised Jacques Nasser, who was named president and chief executive officer in January 1998, concurrent with the appointment of William Clay Ford, Jr., great-grandson of the founder, as chairman. Two years before his historic promotion--at age 51, Nasser became the youngest, non-family chief executive in the company's history--Nasser was named president of Ford's worldwide automotive operations, and he did not like what he saw. The company had the lowest profits from total vehicle sales of any U.S. automaker, an alarming statistic that Nasser began to improve by slashing costs. His cost-cutting efforts earned Nasser the nickname Jac the Knife, but once he was named Ford's chief executive in 1998, the characterization of his influence took on an added dimension. Nasser's aim was to replace the corporate culture of decades past with an entrepreneurial style that placed a much more intense emphasis on the customer. He continued making his trademark cuts in costs, realizing $5 billion in savings between 1997 and 1999, but he also worked toward instilling a new ethos at Ford.
As part of the new movement espoused by Nasser, the company's Lincoln-Mercury division was relocated from Detroit to Irvine, California, an unprecedented move for a major U.S. automaker. Nasser wanted the division to attract younger customers--Lincoln's typical customer was 63 years old, Mercury's was 56 years old--and to be closer to suppliers and to emerging auto trends. Nasser wanted the division to breathe new life into itself away from the scrutiny of company headquarters, to benefit from a more entrepreneurial-driven perspective.
The changes at Lincoln-Mercury typified the profound currents of change sweeping through Ford at the century's end. Much remained to be done to achieve Nasser's vision of a fundamentally revamped Ford, but by the end of the 1990s there were impressive signs of progress. The company ended the decade as the most profitable automaker in the world. Its stock price increased 130 percent between 1996 and 1999, outpacing the increases recorded by its rivals. Analysts predicted great things for Ford, thanks in large part to the company's increased ownership stake in Mazda Motor Corporation (from 25 percent to 33.4 percent in 1996) and its $6.45 billion acquisition of Swedish auto maker Volvo in 1999.
The New Millennium
However, Ford faced major challenges in the early years of the new millennium. While it continued to lay the groundwork for future growth by spinning off its Visteon unit, acquiring BMW's Land Rover SUV business, and purchasing the remaining shares of Hertz that it did not already own, it was dealt a significant blow when Bridgestone recalled over 6.5 million Firestone brand tires--tires used as original equipment on Ford's popular Explorer model, the Mercury Mountaineer, the Ranger, and some of its F-150 pickups. In the largest recall in automotive history, Ford was forced to call back over 300,000 vehicles and replace over 13 million Firestone tires at a cost of $3 billion in 2001 alone. To make matters worse, several deaths had been linked to faulty tires on the Ford Explorer, and some alleged that Ford had known about the problem all along and had failed to act.
As a result of the tire debacle and several other product recalls, Ford was ranked last in the industry in terms of quality according to J.D. Power & Associates. In 2001, the company posted a loss of $5.45 billion. Nasser was ousted in late that year, leaving William Clay Ford, Jr., at the helm. The task set before him was monumental; he faced faltering employee morale, major quality issues, sluggish sales, and intense price wars.
In early 2002, Ford launched a major restructuring effort that included the closure of five plants, the elimination of 35,000 jobs, over $9 billion in cost cutting measures, and the shuttering of several car lines including the Mercury Cougar and the Lincoln Continental. Included in the plan were efforts to boost the morale of employees. In a speech quoted in a November 2002 Fortune article, CEO Ford reminded his work force "We've come back from adversity many times in our history. We're going to do it again. On the eve of our 100th anniversary, the stage is set for a dramatic return to greatness. We started the job; now let's finish it."
The company forged ahead in 2002 cutting its losses to $559 million. Market share continued to fall, however, hovering at 21 percent versus the 25 percent it held in 1998. In response, Ford sold some non-core assets and ramped up new product development, launching the Ford Focus C-MAX in Europe, the Jaguar XJ, the Volvo S40, a new Ford F-150, the Ford Freestar, and the Mercury Monterey in 2003. Ford anticipated launching 40 new products in 2004 including the new Mustang and the Escape Hybrid, the first gasoline/electric SUV. Overall, the company planned to have 150 new products in the marketplace by mid-decade.
While a turnaround at the Ford Credit subsidiary bolstered the company's income, automotive operations, especially the international arm, continued to struggle. James J. Padilla, elected chief operating officer in 2004, and William Clay Ford, Jr., indeed faced a long road ahead. Restoring Ford's image and getting the company back on a successful financial path would no doubt be their focus in the years to come.
Principal Subsidiaries: Ford Brasil Ltda.; Ford Capital B.V. (Netherlands); Ford Motor Company (Belgium) N.V.; Ford Espana S.A.; Ford European Holdings, Inc.; Ford Holdings LLC; Volvo Car Holding Germany GmbH; Ford Motor Land Development Corporation; The Hertz Corporation; Ford Global Technologies, LLC; Ford International Capital Corporation; Jaguar Ltd.; Ford Italia S.p.A.; Ford Mexico Holdings, Inc.; Ford Motor Company of Canada, Ltd.; Land Rover Holdings; Ford Motor Company of Southern Africa (Pty) Ltd.; Ford Motor Company of Australia Ltd.; Ford Deutschland Holding, GmbH; Ford Motor Credit Company; Ford Credit Canada Ltd.; Ford Motor Service Company; Ford Motor Vehicle Assurance Company; Ford Trading Company, LLC; Groupe FMC France SAS; Volvo Cars of North America, LLC.
Principal Competitors: DaimlerChrysler AG; General Motors Corporation; Toyota Motor Corporation.
OVERALL
Beta: 2.38
Market Cap (Mil.): $57,522.16
Shares Outstanding (Mil.): 3,796.84
Annual Dividend: --
Yield (%): --
FINANCIALS
F.N Industry Sector
P/E (TTM): 9.56 5.27 14.01
EPS (TTM): 154.29 -- --
ROI: 5.56 0.53 1.32
ROE: -- 1.48 2.20
Statistics:
Public Company
Incorporated:1919
Employees:327,531
Sales:$164.1 billion (2003)
Stock Exchanges:New York Pacific Euronext Paris Swiss London
Ticker Symbol:F
NAIC: 336111 Automobile Manufacturing; 336112 Light Truck and Utility Vehicle Manufacturing; 33612 Heavy Duty Truck Manufacturing; 33621 Motor Vehicle Body Manufacturing; 532112 Passenger Car Leasing; 524126 Direct Property and Casualty Insurance Carriers
Key Dates:
1903: Henry Ford sets up shop in a converted wagon factory.
1908: Ford's Model T is introduced.
1922: Lincoln Motor Company is acquired.
1945: Henry Ford II is appointed company president.
1963: Ford Mustang is released.
1985: Ford Taurus is introduced.
1989: Jaguar Cars Ltd. is acquired.
1999: Swedish automaker Volvo is acquired in a $6.45 billion deal.
2001: The company takes a $2.1 billion charge to cover the cost of replacing Firestone tires on its vehicles; William Clay Ford, Jr., is named CEO.
Name Age Since Current Position
Ford, William 53 2006 Executive Chairman of the Board
Mulally, Alan 65 2006 President, Chief Executive Officer, Director
Booth, Lewis 62 2008 Chief Financial Officer, Executive Vice President
Fields, Mark 50 2005 Executive Vice President and President, The Americas
Bannister, Michael 61 2007 Executive Vice President; Chairman and Chief Executive Officer of Ford Motor Credit Co
Fleming, John 60 2009 Executive Vice President - Global Manufacturing and Labor Affairs
Leitch, David 50 2005 Group Vice President, General Counsel
Shanks, Bob 58 2009 Vice President, Controller
Farley, James 48 2007 Group Vice President - Global Marketing, Sales and Service
Fields, Felicia 45 2008 Group Vice President - Human Resources and Corporate Services
Mays, J. 56 2003 Group Vice President and Chief Creative Officer - Design
Ojakli, Ziad 43 2004 Group Vice President - Government and Community Relations
Kuzak, Derrick 59 2006 Group Vice President - Global Product Development
Smither, Nick 52 2008 Group Vice President - Information Technology
Hinrichs, Joseph 44 2009 Group Vice President & President, Asia Pacific and Africa
Brown, Tony 54 2008 Group Vice President - Purchasing
Cischke, Susan 56 2008 Group Vice President - Sustainability, Environment and Safety Engineering
Fowler, Bennie 54 2008 Group Vice President - Quality
Odell, Stephen 55 2010 Group Vice President & Chairman and CEO, Ford of Europe
Hockaday, Irvine 74 1987 Lead Independent Director
Ford, Edsel 62 1998 Director
Marram, Ellen 64 1988 Independent Director
Neal, Homer 68 1997 Independent Director
Thornton, John 57 1996 Independent Director
Manoogian, Richard 74 2001 Independent Director
Casiano, Kimberly 53 2003 Independent Director
Butler, Stephen 63 2004 Independent Director
Shaheen, Gerald 66 2007 Independent Director
Gephardt, Richard 70 2009 Independent Director
Earley, Anthony 61 2009 Independent Director
Hance, James 66 2010 Independent Director
Address:
One American Road
Dearborn, Michigan 48126-2798
U.S.A.
Ford introduced methods for large-scale manufacturing of cars and large-scale management of an industrial workforce using elaborately engineered manufacturing sequences typified by moving assembly lines. Henry Ford's methods came to be known around the world as Fordism by 1914.
Ford is the second largest automaker in the U.S. and the fifth-largest in the world based on annual vehicle sales in 2010.[3] At the end of 2010, Ford was the fifth largest automaker in Europe.[4] Ford is the eighth-ranked overall American-based company in the 2010 Fortune 500 list, based on global revenues in 2009 of $118.3 billion.[5] In 2008, Ford produced 5.532 million automobiles[6] and employed about 213,000 employees at around 90 plants and facilities worldwide. During the automotive crisis, Ford's worldwide unit volume dropped to 4.817 million in 2009. In 2010, Ford earned a net profit of $6.6 billion and reduced its debt from $33.6 billion to $14.5 billion lowering interest payments by $1 billion following its 2009 net profit of $2.7 billion.[7][8] Starting in 2007, Ford received more initial quality survey awards from J. D. Power and Associates than any other automaker. Five of Ford's vehicles ranked at the top of their categories[9] and fourteen vehicles ranked in the top three.[10]
Ford Motor Company (Ford), incorporated in 1919, is a producer of cars and trucks. Ford and its subsidiaries are also engaged in other businesses, including financing vehicles. It operates under two segments: Automotive and Financial Services. The Automotive segment includes the operations of Ford North America, Ford South America, Ford Europe and Ford Asia Pacific Africa. The Financial services include the operations of Ford Motor Credit Company and Other Financial Services. The Company's primary markets include Canada and Mexico. Outside of the United States, Europe is the Company's market for the sale of cars and trucks. During the year ended December 31, 2010, the Company’s Battery Electric Vehicle, Ford Transit Connect BEV, was launched in North America, and also MyFord Touch. On August 2, 2010, the Company, through its subsidiary, Volvo Personvagnar Holding AB, sold 100% of the outstanding shares of Volvo Personvagnar AB, which together with its subsidiaries is the main operating entity for the production and sale of Volvo-brand vehicles (Volvo Car Corporation), to Geely Sweden AB (Geely Sweden). It also sold 100% of the membership interest of Volvo Cars of North America, LLC, the distributor of Volvo-brand vehicles in North America, to Mintime North America, LLC (Mintime). During 2010, it acquired the remaining minority interest in S.C. Automobile Craiova SA. (ACSA), thereby holding 100% interest.
Automotive Sector
The Company’s vehicle brands are Ford and Lincoln. During 2010, Ford sold approximately 5,524,000 vehicles at wholesale worldwide. All of its cars, trucks and parts are marketed through retail dealers in North America, and through distributors and dealers (dealerships) outside of North America, the majority of which are independently owned. At December 31, 2010, the approximate number of dealerships worldwide distributing its vehicle brands was 12, 000. In addition to the products Ford sells to its dealerships for retail sale, it also sells cars and trucks to its dealerships for sale to fleet customers, including commercial fleet customers, daily rental car companies, leasing companies and governments. Through the Company’s dealer network and other channels, it provides retail customers with a range of after-sale vehicle services and products, including maintenance and light repair, heavy repair, collision repair, vehicle accessories and extended service contracts. In North America, Ford markets these products and services under several brands, including Ford Service, Lincoln Service, Ford Custom Accessories, Ford Extended Service Plan, and Motorcraft.
Ford classifies cars by small, medium, large, and premium segments, and trucks by compact pickup, bus/van (including minivans), full-size pickup, utilities (both car-based and traditional truck-based platform vehicles), premium and medium/heavy segments. Ford South America market share is based on its six markets in the region (Argentina, Brazil, Chile, Colombia, Ecuador and Venezuela). Ford Asia Pacific Africa industry and market share data focus on its 12 markets in the region (Australia, China, Japan, India, Indonesia, Malaysia, New Zealand, the Philippines, South Africa, Taiwan, Thailand and Vietnam).
Financial Services Sector
Ford Motor Credit Company LLC (Ford Credit) offers a range of automotive financing products to and through automotive dealers worldwide. The majority share of Ford Credit’s business consists of financing its vehicles and supporting its dealers. Ford Credit earns its revenue primarily from payments made under retail installment sale and lease contracts that it originates and purchases; interest supplements and other support payments from the Company and its subsidiaries on special-rate financing programs, and payments made under wholesale and other dealer loan financing programs.
Ford Credit has a portfolio of finance receivables and leases, which it classifies into two segments: consumer and non-consumer. Finance receivables and leases in the consumer segment relate to products offered to individuals and businesses that finance the acquisition of vehicles from dealers for personal and commercial use. The financing products include retail installment sale contracts for new and used vehicles, and leases for new vehicles to retail customers, government entities, daily rental companies and fleet customers. Finance receivables in the non-consumer segment relate primarily to products offered to automotive dealers, including loans to finance the purchase of vehicle inventory (wholesale financing), for improvements to dealership facilities, for working capital and for purchase of dealership real estate. Ford Credit also purchases receivables generated by the Company and its subsidiaries, primarily in connection with the sale of parts and accessories.
Ford Credit does business in all states in the United States and in all provinces in Canada through regional business centers. Outside of the United States, FCE Bank plc (FCE) is Ford Credit's operation. FCE's primary business is to support the sale of its vehicles in Europe through its dealer network. FCE offers a range of retail, leasing and wholesale finance plans in countries where it operates. FCE does business in the United Kingdom, Germany and other European countries. Ford Credit, through its subsidiaries, also operates in the Asia Pacific and Latin American regions. In addition, FCE, through its Worldwide Trade Financing division, provides financing to dealers in countries where the Company has no established local presence. Other Financial Services includes a variety of businesses including holding companies, and real estate.
The Company competes with General Motors Company (General Motors), Chrysler Group LLC (Chrysler), Toyota Motor Corporation (Toyota), Honda Motor Company (Honda), Nissan Motor Company (Nissan), Hyundai-Kia Automotive Group (Hyundai-Kia), Volkswagen A.G. Group, PSA Group, Renault Group and Fiat SpA.
The diversification into financial services that began in the mid-1980s continued in earnest throughout the rest of the decade, as each of the major U.S. car manufacturers sought to insulate themselves against the cyclical nature of their business. Ford spent $5.5 billion acquiring assets for its financial services group during the latter half of the decade, including a $3.4 billion purchase in 1989 of The Associates, a Dallas-based finance company. That acquisition, completed the same year Ford purchased the venerable British car manufacturer Jaguar Cars Ltd. for $2.5 billion, made Ford the country's second largest provider of diversified financial services, ranking only behind Citicorp. With plans to eventually derive 30 percent of the company's profits from financial service-related business, Ford entered the 1990s with $115 billion worth of banking-related assets, a portfolio that provided the company's only bright moments during the otherwise deleterious early 1990s.
An economic recession crippled U.S. car manufacturers during the early 1990s, and Ford bore the brunt of the financial malaise that stretched around the globe. Domestically, car sales faltered abroad, particularly in Great Britain and Australia, Ford's sales plummeted. In 1991, Ford's worldwide automotive operations lost an enormous $3.2 billion after recording a $99 million profit the year before. In the United States, automotive losses reached an equally staggering $2.2 billion on the heels of a $17 million loss in 1990. The losses struck a serious blow to Ford, which as recently as 1989 had generated $3.3 billion in net income; however, the financial results of 1991 would have been worse without the company's strategic diversification into financial services. For the year, Ford's financial services group registered a record $927 million in earnings, up from the previous year's total of $761 million, which left the company with a $2.25 billion loss for the year, an inauspicious record in Ford's nearly 90-year history.
The financial disaster of 1991, however, was just a prelude to more pernicious losses the following year, as the global recession reached its greatest intensity. In 1992, with revenue swelling to slightly more than $100 billion, Ford posted a $7.38 billion loss. Although 1992 represented one of the bleakest years in Ford's history, the worst was over, and as the economic climate improved, the company emerged with renewed vitality. Against the backdrop of successive financial losses, Ford had increased its presence in the truck and minivan market niche, which represented the fastest-growing segment of the broadly defined automotive market. Roughly 200,000 minivans and sports utility vehicles were sold in the United States a decade earlier and now, as consumers once again returned to car dealers' showrooms, more than 2.3 million opted for minivans and light trucks, a trend that bolstered Ford's financial position and predicated its return to a profitable future.
During this time, the gap separating Japanese and American car manufacturers' production standards had narrowed considerably, with the U.S. manufacturers emerging from the early 1990s in a more enviable position--Ford included. As the technological and managerial race between U.S. car manufacturers and their Japanese counterparts tightened, the importance of prudent product development and effective distribution networks increased. Toward this end, Ford reorganized its production and distribution operations in mid-1994 to better respond to the changing economic structure of the numerous countries in which Ford operated facilities. Regional trading areas, rather than nation states, would represent the primary focus of Ford's future efforts, a direction the company moved toward with its worldwide reorganization in 1994.
Ford's notable achievements during the latter half of the 1990s were philosophical in nature, as the company attempted to replace the corporate culture of its past with a new way of thinking for the future. The proponent of Ford's new vision was Lebanese-born, Melbourne, Australia-raised Jacques Nasser, who was named president and chief executive officer in January 1998, concurrent with the appointment of William Clay Ford, Jr., great-grandson of the founder, as chairman. Two years before his historic promotion--at age 51, Nasser became the youngest, non-family chief executive in the company's history--Nasser was named president of Ford's worldwide automotive operations, and he did not like what he saw. The company had the lowest profits from total vehicle sales of any U.S. automaker, an alarming statistic that Nasser began to improve by slashing costs. His cost-cutting efforts earned Nasser the nickname Jac the Knife, but once he was named Ford's chief executive in 1998, the characterization of his influence took on an added dimension. Nasser's aim was to replace the corporate culture of decades past with an entrepreneurial style that placed a much more intense emphasis on the customer. He continued making his trademark cuts in costs, realizing $5 billion in savings between 1997 and 1999, but he also worked toward instilling a new ethos at Ford.
As part of the new movement espoused by Nasser, the company's Lincoln-Mercury division was relocated from Detroit to Irvine, California, an unprecedented move for a major U.S. automaker. Nasser wanted the division to attract younger customers--Lincoln's typical customer was 63 years old, Mercury's was 56 years old--and to be closer to suppliers and to emerging auto trends. Nasser wanted the division to breathe new life into itself away from the scrutiny of company headquarters, to benefit from a more entrepreneurial-driven perspective.
The changes at Lincoln-Mercury typified the profound currents of change sweeping through Ford at the century's end. Much remained to be done to achieve Nasser's vision of a fundamentally revamped Ford, but by the end of the 1990s there were impressive signs of progress. The company ended the decade as the most profitable automaker in the world. Its stock price increased 130 percent between 1996 and 1999, outpacing the increases recorded by its rivals. Analysts predicted great things for Ford, thanks in large part to the company's increased ownership stake in Mazda Motor Corporation (from 25 percent to 33.4 percent in 1996) and its $6.45 billion acquisition of Swedish auto maker Volvo in 1999.
The New Millennium
However, Ford faced major challenges in the early years of the new millennium. While it continued to lay the groundwork for future growth by spinning off its Visteon unit, acquiring BMW's Land Rover SUV business, and purchasing the remaining shares of Hertz that it did not already own, it was dealt a significant blow when Bridgestone recalled over 6.5 million Firestone brand tires--tires used as original equipment on Ford's popular Explorer model, the Mercury Mountaineer, the Ranger, and some of its F-150 pickups. In the largest recall in automotive history, Ford was forced to call back over 300,000 vehicles and replace over 13 million Firestone tires at a cost of $3 billion in 2001 alone. To make matters worse, several deaths had been linked to faulty tires on the Ford Explorer, and some alleged that Ford had known about the problem all along and had failed to act.
As a result of the tire debacle and several other product recalls, Ford was ranked last in the industry in terms of quality according to J.D. Power & Associates. In 2001, the company posted a loss of $5.45 billion. Nasser was ousted in late that year, leaving William Clay Ford, Jr., at the helm. The task set before him was monumental; he faced faltering employee morale, major quality issues, sluggish sales, and intense price wars.
In early 2002, Ford launched a major restructuring effort that included the closure of five plants, the elimination of 35,000 jobs, over $9 billion in cost cutting measures, and the shuttering of several car lines including the Mercury Cougar and the Lincoln Continental. Included in the plan were efforts to boost the morale of employees. In a speech quoted in a November 2002 Fortune article, CEO Ford reminded his work force "We've come back from adversity many times in our history. We're going to do it again. On the eve of our 100th anniversary, the stage is set for a dramatic return to greatness. We started the job; now let's finish it."
The company forged ahead in 2002 cutting its losses to $559 million. Market share continued to fall, however, hovering at 21 percent versus the 25 percent it held in 1998. In response, Ford sold some non-core assets and ramped up new product development, launching the Ford Focus C-MAX in Europe, the Jaguar XJ, the Volvo S40, a new Ford F-150, the Ford Freestar, and the Mercury Monterey in 2003. Ford anticipated launching 40 new products in 2004 including the new Mustang and the Escape Hybrid, the first gasoline/electric SUV. Overall, the company planned to have 150 new products in the marketplace by mid-decade.
While a turnaround at the Ford Credit subsidiary bolstered the company's income, automotive operations, especially the international arm, continued to struggle. James J. Padilla, elected chief operating officer in 2004, and William Clay Ford, Jr., indeed faced a long road ahead. Restoring Ford's image and getting the company back on a successful financial path would no doubt be their focus in the years to come.
Principal Subsidiaries: Ford Brasil Ltda.; Ford Capital B.V. (Netherlands); Ford Motor Company (Belgium) N.V.; Ford Espana S.A.; Ford European Holdings, Inc.; Ford Holdings LLC; Volvo Car Holding Germany GmbH; Ford Motor Land Development Corporation; The Hertz Corporation; Ford Global Technologies, LLC; Ford International Capital Corporation; Jaguar Ltd.; Ford Italia S.p.A.; Ford Mexico Holdings, Inc.; Ford Motor Company of Canada, Ltd.; Land Rover Holdings; Ford Motor Company of Southern Africa (Pty) Ltd.; Ford Motor Company of Australia Ltd.; Ford Deutschland Holding, GmbH; Ford Motor Credit Company; Ford Credit Canada Ltd.; Ford Motor Service Company; Ford Motor Vehicle Assurance Company; Ford Trading Company, LLC; Groupe FMC France SAS; Volvo Cars of North America, LLC.
Principal Competitors: DaimlerChrysler AG; General Motors Corporation; Toyota Motor Corporation.
OVERALL
Beta: 2.38
Market Cap (Mil.): $57,522.16
Shares Outstanding (Mil.): 3,796.84
Annual Dividend: --
Yield (%): --
FINANCIALS
F.N Industry Sector
P/E (TTM): 9.56 5.27 14.01
EPS (TTM): 154.29 -- --
ROI: 5.56 0.53 1.32
ROE: -- 1.48 2.20
Statistics:
Public Company
Incorporated:1919
Employees:327,531
Sales:$164.1 billion (2003)
Stock Exchanges:New York Pacific Euronext Paris Swiss London
Ticker Symbol:F
NAIC: 336111 Automobile Manufacturing; 336112 Light Truck and Utility Vehicle Manufacturing; 33612 Heavy Duty Truck Manufacturing; 33621 Motor Vehicle Body Manufacturing; 532112 Passenger Car Leasing; 524126 Direct Property and Casualty Insurance Carriers
Key Dates:
1903: Henry Ford sets up shop in a converted wagon factory.
1908: Ford's Model T is introduced.
1922: Lincoln Motor Company is acquired.
1945: Henry Ford II is appointed company president.
1963: Ford Mustang is released.
1985: Ford Taurus is introduced.
1989: Jaguar Cars Ltd. is acquired.
1999: Swedish automaker Volvo is acquired in a $6.45 billion deal.
2001: The company takes a $2.1 billion charge to cover the cost of replacing Firestone tires on its vehicles; William Clay Ford, Jr., is named CEO.
Name Age Since Current Position
Ford, William 53 2006 Executive Chairman of the Board
Mulally, Alan 65 2006 President, Chief Executive Officer, Director
Booth, Lewis 62 2008 Chief Financial Officer, Executive Vice President
Fields, Mark 50 2005 Executive Vice President and President, The Americas
Bannister, Michael 61 2007 Executive Vice President; Chairman and Chief Executive Officer of Ford Motor Credit Co
Fleming, John 60 2009 Executive Vice President - Global Manufacturing and Labor Affairs
Leitch, David 50 2005 Group Vice President, General Counsel
Shanks, Bob 58 2009 Vice President, Controller
Farley, James 48 2007 Group Vice President - Global Marketing, Sales and Service
Fields, Felicia 45 2008 Group Vice President - Human Resources and Corporate Services
Mays, J. 56 2003 Group Vice President and Chief Creative Officer - Design
Ojakli, Ziad 43 2004 Group Vice President - Government and Community Relations
Kuzak, Derrick 59 2006 Group Vice President - Global Product Development
Smither, Nick 52 2008 Group Vice President - Information Technology
Hinrichs, Joseph 44 2009 Group Vice President & President, Asia Pacific and Africa
Brown, Tony 54 2008 Group Vice President - Purchasing
Cischke, Susan 56 2008 Group Vice President - Sustainability, Environment and Safety Engineering
Fowler, Bennie 54 2008 Group Vice President - Quality
Odell, Stephen 55 2010 Group Vice President & Chairman and CEO, Ford of Europe
Hockaday, Irvine 74 1987 Lead Independent Director
Ford, Edsel 62 1998 Director
Marram, Ellen 64 1988 Independent Director
Neal, Homer 68 1997 Independent Director
Thornton, John 57 1996 Independent Director
Manoogian, Richard 74 2001 Independent Director
Casiano, Kimberly 53 2003 Independent Director
Butler, Stephen 63 2004 Independent Director
Shaheen, Gerald 66 2007 Independent Director
Gephardt, Richard 70 2009 Independent Director
Earley, Anthony 61 2009 Independent Director
Hance, James 66 2010 Independent Director
Address:
One American Road
Dearborn, Michigan 48126-2798
U.S.A.