DETROIT (AFX) - Richard Bazzy owns three Ford dealerships in Pittsburgh's northern suburbs, and his livelihood depends exclusively on the nation's second-largest auto maker. But by nearly all accounts, Ford is in trouble.
Its sales are dropping. It has the oldest model lineup in the industry. It relies heavily on truck and SUV sales to make money when gas prices are sending people to cars and crossovers. It doesn't have enough new models in the pipeline, say its critics, its inventory is building and it is moving too slowly with its 'Way Forward' restructuring plan.
The company, which reports second-quarter earnings on Thursday, halved its dividend last week. Its stock is stuck near a 52-week low, and its credit rating has been pushed further into junk status. Ford lost $1.2 billion in the first quarter of the year, and Wall Street uses words like 'ominous' to describe the company's future.
Yet Bazzy says he's not worried.
'I believe that the leadership is in the right hands,' said Bazzy, who bought into the dealerships in the late 1990s when cash rolled into the showroom doors on high-margin sales of the Explorer SUV and the F-150 pickup. 'It's not like we're a ship without a plan.'
It's the plan, though, that has Wall Street and others wondering if Ford can compete in a marketplace that's being carved up more and more by aggressive foreign nameplates.
'I think Ford is in much worse shape than General Motors,' said Gerald Meyers, former chairman of American Motors who now teaches leadership at the University of Michigan. He added that even the Fords, who started the company in 1903, 'must be thinking about what kind of toothpaste to buy.'
General Motors Corp., Ford's closest U.S. rival by market share, lost $10.6 billion last year. But it is talking with Renault SA and Nissan Motor Corp. about forming an alliance this year and has made progress on its restructuring plan, with 35,000 hourly workers retiring or taking buyouts. The company plans to close 12 plants by 2008, and it made a $445 million profit in the first quarter.
Ford's share of the market has declined from around 26 percent in the early 1990s to 17.3 percent at the end of June. But the rate of decline is starting to slow, even rising slightly in June.
The company unveiled its 'Way Forward' restructuring plan in January, announcing that it will cut 25,000 to 30,000 jobs and close 14 facilities. The automaker expects 12,000 hourly workers to take buyouts or retire by the end of the year. But recently, the company has given few specifics on whether the plan is progressing.
'I don't think anyone knows where Ford is or what it's doing,' said Jim McTevia, a corporate turnaround specialist in Bingham Farms. 'Maybe one of the reasons that they're not talking about it is because there's nothing to talk about, because it's bad news.'
Mark Fields, Ford's executive vice president and president of the Americas, says he has heard it all before, when he turned around a lifeless Mazda Motor Corp. from 2000-2002.
'When I was at Mazda, we were in even more dire shape, if I can call it that,' said Fields. Mazda had lackluster products, large debt and a weak brand, said Fields, who began his present job in October.
When he introduced the 'Millennium Plan' at Mazda, he faced skepticism from Wall Street for 12 to 18 months, he said.
'I took a lot of personal heat for a while, and now the business is back on a firm foundation.'
Earlier this week, Morgan Stanley analyst Jonathan Steinmetz pointed to slowing sales of the F-150 as a harbinger of trouble. Ford's full-sized pickup remains the largest-selling vehicle in North America, and it accounts for 27.6 percent of Ford's overall sales.
But during the first half of the year, F-150 sales dropped 2 percent compared with the same period in 2005.
'The fact that it's such an important vehicle and contributes such a large portion of their overall unit sales and their profitability does give us some concern,' said Bruce Clark, a senior vice president with Moody's.
Sales of the Explorer SUV, another big profit center, also are sliding, down 29 percent from the first six months of 2005.
Car sales are up nearly 9 percent, fueled by the Ford Fusion and Mercury Milan.
Wall Street, though, is unimpressed because Ford makes considerably less money on cars than it does on trucks and SUVs.
The only truly new models that Ford has for 2007 are the Edge crossover and its Lincoln counterpart, the MKX, and the large Expedition SUV. Analysts predict that Ford will fall behind in sales as its product line continues to age.
Fields said the analysts are wrong when they say Ford has no new products. He wouldn't be specific, but said many models are coming in 2007.
'Clearly we're a lot more knowledgeable of our own plans,' he told The Associated Press in a recent interview. However, he acknowledged that Ford management has killed some lackluster products that weren't bold enough to stand up in the market.
The average showroom age for Ford products from 2007 to 2010 is 3.5 years, the oldest among all manufacturers, Merrill Lynch analyst John Murphy wrote in his annual overview of the industry.
Its smaller, fuel-efficient offering, the Focus, introduced in 1999, has received rave reviews but is aging compared with its competitors.
The drop in truck sales clearly hurts the company, Fields said, but he maintains that its products are positioned well to catch people leaving that part of the market.
The company's stock price has dipped so close to $6 per share that Chairman and Chief Executive Bill Ford Jr. is often asked if he plans to buy it back and take the company private. His response essentially has been no.
The Ford family owns 4 percent of the shares that control 40 percent of the company, making a takeover impossible.
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