Sometimes things just don’t work out as planned.
Two weeks ago, I scheduled a fishing trip with my father. We fish together off the Mid-Atlantic Coast a lot, but rarely do we get perfect weather like we did that week.
A day on the water rarely excites me to the point of not being asleep anymore, but that morning, I was up a good half hour before the alarm clock. As we slurped down a couple of cups of coffee, I tuned my marine band radio to the latest weather forecast.
The daily synopsis: perfect.
We tossed our lines onto the dock just as the sun was making its first daily appearance on the horizon. Before long, we were blazing across a mirror-flat bay, through the inlet and heading towards our “secret” spot.
Seconds after pulling back the throttles, our lines were in the water, and we were set to spend the day lazily drifting atop some of the East Coast’s best fishing grounds. No worries.
Then it happened. My cell phone rang.
Immediately, two thoughts ran through my head.
One: How is my phone getting reception way out here? Two: Should I toss the phone in the water and worry about it when I get home?
When I reached for the phone as it rattled across the helm, the second option was the intention. Then, I saw the number that was calling me. It was my brother-in-law.
He’s smart enough not to bother me when he knows I’m fishing. It had to be something important.
It was important. His truck, with baby on board and boat in tow, broke down about 90 miles short of his destination. He needed help and I was close. Fishing would have to wait.
As the continent slowly curled back onto the horizon and the miles between me and the fish increased, I couldn’t help but curse Ford (F:NYSE) for making a truck that would break down with just 170,000 miles under its belt in 90 degree weather while towing a 5,000-pound boat. Unbelievable.
Of course, I am not the only one cursing the company. The roughly 20,000 workers that are employed at the 10 factories Ford will be partially closing for the rest of year are likely to be even angrier than I am. They are losing more than a day on the water.
If you haven’t heard, the company is expediting its “Way Forward” plan that management claims is sure to turn the company around.
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Frankly, it is Ford’s management team that needs to be cut, not its hourly workers. Its incompetent management is a perfect example of how not to run a company.
Bill Ford Jr., the company’s CEO, does not have the forward-focused vision it takes to lead the company through an ultra-competitive market.
As I mentioned, the company announced last week that it would be drastically cutting its production for the remainder of the year. By eliminating 21% of its production, 168,000 fewer new cars and trucks will be produced.
The chief reason for the cuts is the management team’s gross underestimation of the powerful effects rising gasoline prices would have on the sales. SUV sales have slipped to figures that were not expected until 2010 and truck sales are downright pitiful.
Because of the sales setback, the company will produce fewer vehicles than it has since 1991. The figures are disgusting. Multibillion-dollar companies are not supposed to make major slips like this.
I don’t want to sound like a socialist, but there is far more on the line than just an automaker. Out of the company’s $14.24 billion market valuation, $9.7 billion is held by mutual funds and institutional traders. In other words, hundreds of thousands of pensions and 401(k) plans are relying on the company to continue to appreciate in value.
Unless Ford gets a solid management team -- preferably a leader without a last name of Ford -- billions in investor equity will be lost. A lot of people are depending on this company and the industry it spurs.
To say the least, Ford’s turnaround is not going nearly as well as hoped. Worst of all, the “Way Forward” plan is misguided and is already proving to be riddled with inaccurate forecasts. This is only the beginning of the bad news.
General Motors (GM:NYSE), with Rick Wagoner at the helm, has a shot at a turnaround. Unless it finds a new captain, Ford does not.
Send me your thoughts on the subject at fng@taipangroup.com.
Enjoy your Monday.
Andrew Snyder
Executive Editor, Fear and Greed
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