Alliance talk: Is Ford jumping into the mix?
August 24, 2006
BY SARAH A. WEBSTER
FREE PRESS BUSINESS WRITER
Carlos Ghosn, pushing Renault-Nissan higher
ntry.
Ford Motor Co. stock surged Wednesday after news reports said Chairman Bill
Ford last month called Carlos Ghosn, the CEO of Japan's Nissan Motor Co. and
France's Renault SA, to discuss a partnership if General Motors Corp. does
not join with Ghosn in a global automotive alliance.
Ford spokespeople declined to comment on the reports.
Some observers interpreted the news as a sign that Ford's embattled top
leader -- chairman since 1998, CEO since 2001 and de facto president since
July -- may be willing to step down, or at least to the side, to allow
another executive to take the helm. And it adds to an emotional period for
workers at the struggling 103-year-old automaker, who already face the
prospect of a deeper, faster restructuring this fall.
Brian Pannebecker, an hourly worker at Ford's Sterling Heights axle plant,
was excited about the possibility of Ghosn leading Ford and said he was
buying as many Ford shares as he could get his hands on because of the
reports.
"Bill Ford has emotional ties to the company and to the employees,"
Pannebecker said. "We probably need an outsider, like Ghosn, who can put
emotional ties to the side and shut down excess capacity."
In an interview with Business Week published online Wednesday night, Ford
said the company has not been approached by any other automaker yet, and
emphasized that he, and the Ford family, would do whatever is right for the
company.
"One thing I have always said is that I'm not hung up on my own title. I'll
always look at talent that can help us move forward," he said. "I've been
part of this company since the day I was born. All I care about is getting
it on the right track."
Behind the scenes, the conversation suggests that crosstown rivals Ford and
GM could be competing against each other -- or might be pitted against each
other -- in a courtship for Ghosn, who has been praised for his rapid
turnaround of Nissan and bold, inspiring leadership. Ghosn has also insisted
that he has no interest in becoming chief executive of GM.
"GM may find the alliance maybe a little more attractive" now, said Peter
Nesvold, an automotive analyst for Bear Stearns & Co.
For southeast Michigan, the report seemed to signal that this incredible
period of turbulence in the automotive industry might intensify. And who
will win this latest chess game is anybody's guess.
By the end of September, Ford is slated to announce its revised turnaround
plan, which could cut as much as 25% of the company's 140,000-strong hourly
and salaried workforce in North America and close more factories faster.
The company said the revision to the original Way Forward plan, which called
for slashing 34,000 jobs and closing 14 plants, was necessary after Ford
lost $1.4 billion in the first half of the year. Sales of the company's
vehicles through July have also fallen 10%.
By mid-October, meanwhile, Ghosn and GM are scheduled to present a
preliminary report on a possible alliance to their respective boards.
So, the domestic auto industry could look a lot different by year's end.
David Cole, executive director of the Center for Automotive Research in Ann
Arbor, said he's even heard talk that DaimlerChrysler AG, the product of the
1998 merger between Daimler-Benz AG and the old Chrysler Corp., is talking
to Renault-Nissan, which Ghosn has said could benefit from a North American
partner.
"Who knows who else is talking?" Cole said. "We're just in an unusual period
in the amount of activity."
The overtures by Bill Ford to Ghosn -- first printed in an opinion piece in
the Wall Street Journal, later reported by Bloomberg News -- seem to suggest
that the 49-year-old great-grandson of company founder Henry Ford may be
ready to end his reign or substantially alter his role. By some counts, Ford
has now approached Ghosn three times -- in 2002, 2005 and now -- and he has
also approached DaimlerChrysler Chairman Dieter Zetsche in the recent past.
Industry insiders have said that it could be difficult for Ford to find an
alliance partner or new CEO with a Ford family member as chairman. The
family controls 40% of the company's shareholder votes through Class B
shares, which have special voting power. The news of the Ghosn-Ford
conversation comes as faith in Ford's leadership seems to be faltering on
Wall Street.
The Way Forward turnaround plan is Ford's second attempt to get the company
on the right track, after his 2002 turnaround effort failed to reach its key
target of lofty objectives, the heart of which was a $7-billion pretax
profit by 2006.
Workers and investors interviewed by the Free Press said that, despite his
heartfelt intentions, Bill Ford has repeatedly failed to deliver on his
enthusiastic promises. The company and workers are suffering as a result,
they said.
"The consensus view" on Bill Ford "is pretty critical right now," Nesvold
said.
Brett Hoselton, an analyst with Keybanc Capital Markets, said Ghosn could
give Ford what it really needs: a leader.
"Ford is leadership-challenged," he said. "It's surprising, the management
turnover the past few years. ... We haven't seen any consistent direction
for the company."
He added: "Given the right leadership, the company could be formidable."
Even Mark Fields, Ford's president of the Americas, who is charged with
turning around the company's ailing North American operations, had kind
words for Ghosn.
"We used to get together at least once a year for dinner when we were in
Japan," he said during a dinner this month with the Free Press. "A good
focused leader -- I've got a lot of respect for him."
Contact SARAH A. WEBSTER at 313-222-5394 or [EMAIL PROTECTED] Business
writer Jason Roberson contributed to this report.
Related links:
* . GRAPHIC: Who could benefit and why (PDF)
. GRAPHIC: Ford stock over last four trading days (PDF)
Key factors for GM, Ford
* Category by category, who could benefit in a deal with
Renault-Nissan
NORTH AMERICA
Best combo: GM/Renault-Nissan
Why: The Ford, Lincoln and Mercury brands are redundant with Nissan
and Infiniti.
EUROPE
Best combo: Ford/Renault-Nissan
Why: The Ford-owned Jaguar and Volvo may appeal to Renault and
Nissan.
ASIA
Best combo: GM/Renault-Nissan
Why: Ford's stake in Japanese automaker Mazda may cause conflicts in
Nissan's home cou
Copyright C 2006 Detroit Free Press Inc.
