bitkahuna

iTrader: (20)

So I've been wondering about Ford's future. Their valuation is low, their sales and earnings are down, but maybe this is just part of their 'big turnaround' plan. They've made big investments in Rivian, have other partnerships with VW and Mahindra, and seem to be restructuring their whole business.

I read their fourth quarter and full year financial release which is here:
https://media.ford.com/content/dam/f...cials-ford.pdf

One thing of note to us car enthusiasts is new models planned for 2020:

• F-150, featuring a first-ever hybrid-electric version
• A small off-road utility vehicle (Bronco, presumably)
• The first of 30 market-specific Ford and Lincoln vehicles in China – 10 of which will be electric – over the next three years, and
• Electrified versions of the Lincoln Corsair and Ford Escape/Kuga.

Ford acknowledges that coronavirus could impact China plans so maybe their huge investments there won't help much in 2020 at least.

Perhaps their investment in Rivian will provide a great EV platform for many vehicles. Besides Ford, Amazon has made an ENORMOUS investment and commitment to Rivian which has yet to launch anything but is promising trucks, suvs, vans, etc.

Ford now has more UAW workers than GM which is pretty incredible and no doubt their pension obligations to retired uaw workers are VAST like GM's.

What do you think of Ford's future? I wonder if at some point they'll need to merge with someone else to remain viable.

bagwell

More UAW folks is bad news - it will catch up with them.

I thought they also had a smaller pickup than the Ranger coming too....
https://www.motor1.com/news/302288/f...-announcement/

All4Lexus

Nice summary write up! Ford seems to "get" the global complexity and challenges. The tie ins with Amazon and VW means they're ready to tackle it globally. The 2020 decade of vehicles will determine whether they are the 'leader' of the Detroit 3. Their stock has the best chance of doubling. Too bad they did not emerge from the 2008 crisis in a far healthier and robust market position. They get a 2nd chance now.

Hoovey689

iTrader: (16)

The upcoming Ford Maverick is the small rugged cousin of the Escape. Bronco will be larger.

sivikvtec

In my experience, the design and feel of recent Ford vehicles are far better than the equivalents GM and FCA.

GM is still cranking out truly terrible cars. Every time I get one as a rental I’m amazed at how bad it is.

mmarshall

If you disagree with some (or all) of what I have to say, remember...........you asked.

Given the fact that Ford has actually been shedding divisions and other companies (Mercury, Jaguar, Land Rover, Volvo, Mazda), it's difficult to answer that one, although ownership of other companies, economically and financially, is not necessarily the same as merging with others. And, given the fact that Ford is already such a large and influential corporation (even after shedding those other companies), it may not be an easy sell to get Government regulators (and possibly the Federal courts) to agree to a merger, particularly if it is with also-huge GM.

The regular Bronco will be mid-sized. A smaller cousin (possibly named Maverick) will compete in the compact class. I have already expressed the (strong) opinion that the Bronco will pick up a fair number of the BOF customers who had been waiting for Chevy's new Blazer and were disappointed in its platform and styling. However, at least from what I have seen of the smaller Chevy Trailblazer, which shares its crossover platform with the new Buick Encore GX, but, nevertheless includes some off-road-capable hardware, I think it will compete against the upcoming Ford Maverick better than the larger Blazer will against the Bronco. Base versions of the Trailblazer also have an extremely low price (by today's standards) which will also increase its appeal to low-income buyers.

I don't see pensions as a liability or an unnecessary expense. Those people on the assembly line worked long and hard for their money and benefits, particularly in the days before many jobs were automated. They risked many hazards in the plants, such as Repetitive-Motion-Injuries, accidents on the job, a harsh working environment, loud noises all day on their ears, and (in the past) exposure to harmful substances such as asbestos in brake linings....all to help the corporation produce vehicles, meet their production/sales quotas, and give the company their bottom line. Do they deserve a good retirement, with compensation for many years of hard work? You bet they do.

As long as the hybrid power train produces enough torque to carry F-150-size loads adequately, I can't imagine it not being popular. Yes, I can see it having very good sales...and getting better fuel mileage than the typical gas-guzzing full-size pickup.

Coronavirus is not the first recent disease-epidemic to come out of China (remember the SARS and Avian-Flu epidemics a number of years ago?) Ford lived through those.....and they will probably live through this one, too.

If it is a hybrid (not full-electric) I might take a look at that one myself. Despite the lack of a V6, I have a high opinion of the Corsair.

FrankReynoldsCPA

We can argue til the cows come in about whether the pensions are necessary expenses, but pension obligations are in the strictest definition of the word, a liability. That's a universal truth in business and accounting. Anything that exists on your books that you will have to pay in the future is a liability. There's a reason pensions have pretty much disappeared. They are largely unsustainable and risky.

Working now doesn't entitle to you a lifetime of compensation. You're entitled to your salary. Any pension is a benefit which was entered into voluntarily by the employer. Most of us have to set aside our own funds for retirement. So i won't cry too hard for the blue collar boomers who didn't set anything aside.

mmarshall

I think I see a line of cows approaching in the distance.......

One reason Social Security (which is like a national pension) was passed, back in the 1930s, was that the nation, as a whole, felt that retirees were entitled to something more then just their salary. And I myself don't get SS (which would be double-dipping), because I did not pay into it......CSRS retirees like me had their own system they paid into (and collect from).

Unlike me, many of them also have kids and grandkids taking care of them....and vice-versa.

mmarshall

Well, with Ford's stock price currently being so low, many investors could be looking at that as a buying opportunity. You know the old saying...."Buy Low, Sell High."

bitkahuna

iTrader: (20)

thank you!

as they didn't go through bankruptcy in '08 like gm and chrysler did allowing the latter two to shed much baggage including gm's ABSURD overcapacity, it left ford with its pride for not going through bankruptcy, but also with a mountain of debt.

I don't see ford stock doubling any time soon even if they understand their predicament and are working hard to thrive.

i would put the chance of ford and gm trying for a merger at zero.

they ARE a liability as brettjacks points out and they are necessary because the uaw has used strikes and extortion to force car makers to provide pensions that have become a gigantic liability to them. According to uaw's own website...

"The UAW has more than 400,000 active members and more than 580,000 retired members in the United States, Canada and Puerto Rico.[/quote]

I'll say it again, paying health and living benefits to over half a million people is a GIGANTIC liability. But it is what it is. A gm ceo years ago said gm's chances of survival depend on how quickly retirees die. Harsh but true.

your empathy is admirable, but people who build houses and other buildings are exposed to at least as many hazards not to mention skin cancer from being outside, do they deserve uaw-style pensions and healthcare for life too?

Of course in this country we have social security and medicare designed to help older people get by although social security is rarely enough for anyone to live on. Besides your govt pension YOU took personal responsibility to live modestly and INVEST in bonds to ensure a better standard of living in your 'golden years' and good for you! But you seem to imply uaw workers don't have to take any personal responsibility because their work used to be more hazardous than today.

GM was able to unload a load of useless plants during the drastic step of bankruptcy and there was little the uaw could do. Before bankruptcy though, the uaw held a gun to the head of gm demanding they keep those useless plants open.

Ford is in bad shape partly because it chose to NOT go through bankruptcy.

not in uaw-fantasy world with its endless "us vs. 'management' mentality" while the union management itself is horribly corrupt.

Precisely.

bitkahuna

iTrader: (20)

an individual share's price is pretty meaningless. It is literally a "share" of the market's valuation of the company and depends on how many shares are out there. So for arguments sake (keeping the numbers small) is company A has 1000 shares on the market and they're $10 ea., and company B has 10000 shares on the market and they're $100 ea. Each share of company A and B is the same percent of equity. I run into this all the time, people thinking if a share price is 'cheap' it's a buying opportunity. Two things, 1) there may be a good reason it's so cheap even on an equity share basis (company doing badly and the market overall doesn't see likely improvement any time soon), and 2) it depends one's level of investment... 100 shares @ $1 is no different than 1 share @ $100.

low share price (esp. with low P/E) can indicate a buying opportunity. I bought bp stock right after that rig in the gulf blew up. Despite all the bad press i knew it wouldn't be long before the market in general forgot and the cost was really not a big hit to BP, and sure enough, 6mos later, it was doing great.

ford MAY be a buying opportunity, but i see a lot of challenges, plus the car business is really a pretty horrible low margin business.

mmarshall

One reason it is a low-margin business is because of dividends paid out to the shareholders. I'm not saying that those who invest should not be rewarded for it (they should be)....but money that is paid out each quarter to shareholders obviously cannot be used in the company for future growth. The people who run the company have to decide which is more important, and where the available money is going to go. The fact, example, that Lincoln products are so much more impressive now than several years ago shows the difference that wise investment of available funds can make.


Perhaps this is a little off-topic (I'll let you decide that as a moderator), but, while we are all pondering the question of Ford's future, I think we should also look at, and remember, the valuable contributions to the auto industry and country that Ford has made over the years. First, more than any other single company, it actually put America itself on wheels, with the perfection of the moving-assembly-line and the simple, reliable Model T. Then came the first reliable mass-produced V8 with the Model A. Ford produced, in the famous Tri-Motor, the first corrugated-metal airliner for flying passengers, and the smaller Ford Flivver recreational aircraft. During World War II, Ford assembly-lines built the famous ******/Bantam Jeep under license, and produced the war's most widespread bomber, the B-24 Liberator. The massively successful 1964 Mustang invented the idea of the ponycar itself and set a new (at the time) sales-record for a Detroit product. The Taurus, in the 1980s, revolutionized the way sedans were designed and built. The original Ford GT managed to take Formula-One titles away from Ferrari, who produced some of the best exotic sports cars in the world. And the 1990 Explorer was the first SUV to truly appeal to the American family-masses....much more so than had the earlier Jeep Wagoneer.

Fizzboy7

What Ford (and GM) needs to do is focus on sedans. Yes, sedans. The structure Honda, Toyota, Hyundai, and Nissan uses proves sedans are still viable and are money-makers. Ford is letting the Focus and Fusion die off, which is a weak and lame move. Sedans still contribute to the bottom line and broaden's a company's appeal.

Toys4RJill

I think it’s hit and miss for all brands. The Japanese dominate in the bread and butter segments. Toyota has hybrid all to themselves. Ford is still hanging on to the large truck category, but struggle in the lower priced Areas. UAW is killing them. I doubt I will Ford anyway (if they were to disappear)

mmarshall

That's my basic view, too, but the public, as a whole, has become enamored with crossovers. I'm a firm believer in the axiom that one cannot sell what they do not build, but the real question is if there are enough potential sales to justify the expenses of production. Plus, not only that, but the Focus and Fiesta had a crap dual-clutch transmission that caused its owners nothing but problems (there is a class-action suit on it), even after several years of production. The Fusion, I agree, was a nice mid-size sedan...one of my favorites in that class, and it did continue to sell. Why Ford axed it has simply not really adequately explained.