Ford - back from the brink


  • Share via facebook
  • Tweet this
  • Bookmark and Share

A short five years ago, Hal Feder was calculating how much it would cost to return his family from South Africa to the United States as the worldwide brand to which he had devoted his entire 30-year career teetered a mere $4bn away from liquidation.

As president and CEO of Ford in Southern Africa, the American had a bird’s eye view of the business’ global figures and the scene was not pretty.

“The cash got to about $14bn — the finance guys will tell you it takes about $10bn to run a company like Ford, so we were probably a quarter or two from the brink, and, at that point, the scary thing was we had already told the government we don’t need your money,” Feder tells Arabian Business.

“So it got pretty serious. I asked myself how much would it cost for a family of four to get back to the US because there was no guarantees [of survival].”

Ford’s miraculous revival, led by former Boeing CEO Alan Mullaly, has become a textbook example of how to bring back a company from near bankruptcy. It was even more amazing considering the fate of the two other auto firms in the US, General Motors and Chrysler, which despite accepting multi-billion-dollar government bailouts, are still far from crying: “we’re back”.

Now global director of export and growth, Feder says the days of excuses and cover-ups within Ford’s executive ranks have been bulldozed and a new culture of transparency and honesty cultivated.

Last year, the Detroit-based automaker made $5.7bn in net profit and ended the year with the highest pre-tax profit for a single quarter in nearly ten years, earning $1.7bn in the fourth quarter. Its share price also has rebounded, from as low as $1 in 2009 to more than $12.

That compares to losing $17bn a few years earlier.

“There’s clear evidence that the plan is working,” he says. “We’ve just completed our third year in excess of $8bn of pre-tax profit. [We’ve had] fourteen quarters now of profitability [and] $34bn in liquidity.

“Alan calls it the largest home improvement loan in history. We were in about $36bn worth of debt, [then] we went out and raised about $23bn ahead of the capital markets collapsing and actually — if you can believe it — put the Ford oval on the table at the banks and said ‘if this doesn’t work you own the oval’, so we hocked — mortgaged — our brand. We’ve paid off those loans now. So I think you’d have to look at the financial comeback of Ford and say that this plan is working.

Article continued on next page

Related:
Topics
Companies
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Playing by the numbers: Saudi Arabian Airlines

Playing by the numbers: Saudi Arabian Airlines

Why is Saudia only mentioned as an afterthought when one talks...

Ports of change

Ports of change

Investment in ports in the GCC region is at a record high, as...

Crowded skies in the Middle East

Crowded skies in the Middle East

Aviation experts give their suggestions on how to solve the Middle...

Most Discussed