Ford May Be the Weaker of the Big Two Auto Companies

Yesterday’s good news at General Motors (the company actually showed an operating profit from its core auto operations) brought into sharp relief just how bad things are at Ford, and how badly Ford has slipped in comparison to its larger rival in a fairly short time.

In April of last year, when the serious problems at GM became obvious, the consensus was (yes, including me) that while GM was in dire straits, Ford’s situation was less serious, and that the company had more room to maneuver to successfully engineer a turnaround.

That no longer appears to be the case, because Ford’s external distractions may negate its clear labor-relations advantage over GM.

Earlier this week, I noted Ford’s problem with the American Family Association (AFA) over advertising in gay-friendly publications. A subscriber-only Wall Street Journal article yesterday by Alan Murray shows that the AFA situation is just the beginning:

On Ford Motor Co. CEO Bill Ford’s long list of problems these days, Michael Brune may not rank very high. But he ranks.

Mr. Brune is executive director of the Rainforest Action Network, a scrappy group of liberal activists who combine anticorporate guerrilla tactics with high-level corporate engagement to achieve some surprising results.

This is the group whose members chained themselves to wood piles in Home Depot stores before getting the company to stop selling old-growth lumber.

….. Mr. Brune has put Ford — and its CEO of the same name — at the top of his target list. Mr. Brune argues that global warming is the greatest threat to the rainforests, that gasoline is the greatest cause of global warming and that Ford Motor — with its heavy reliance on trucks and sport-utility vehicles — is the auto maker with the worst, or near worst, fuel-efficiency record. Ford also makes an inviting target because it is, in his words, “the most recognized brand in America.”

….. Mr. Brune isn’t the only one who finds Ford an inviting target these days. The American Family Association has reignited its boycott of Ford cars because the company continues to advertise in gay and lesbian publications. The group has targeted Ford dealers in the South and Southwest, and some of those dealers are worried they are losing sales as a result. Meanwhile, gay and lesbian groups are keeping the pressure on to make sure Ford doesn’t cave in to the AFA.

Then there is the ever-growing gaggle of more mainstream activists, like Patricia Wolf — known to her co-workers as “Sister Pat” — who runs the Interfaith Center on Corporate Responsibility. Sister Pat says her group is “engaging” with Ford on human rights, global labor standards and HIV-AIDS, as well as global warming.

Mr. Brune, the American Family Association and Sister Pat are all bit players in the diverse stew that makes trying to engineer a turnaround at a big public company like Ford in today’s corporate environment such a severe challenge. It’s not enough to stanch the flow of red ink — Ford has lost $1.3 billion on its North American operations in the first half of this year alone — or just negotiate with the United Auto Workers union. It has to be done while fending off a kaleidoscope of groups who believe they deserve a say.

That’s why it might be tempting for Mr. Ford to think about taking his company private …..

Mr. Murray goes on to state his belief that going private isn’t viable, but I’m left to wonder why GM and other car companies have managed to avoid the ire of these organizations while essentially committing the same offenses Ford has.

I believe the answer is this: In the mid- and late-1990s, Ford “engaged” many of these groups, particularly the enviros, and labored mightily to “do the right thing” by THEIR definition.

This was all well and good while the profits were flowing, but when the company’s business fell off (with a lot of help from former CEO Jack Nasser), Ford of necessity had to try to make business decisions to improve the bottom line (the fact that they haven’t yet worked well is beside the point), and in the process shortchanged enviro initiatives.

The activist response has essentially been that of a lover scorned (this may be also true with AFA, which claims that Ford has broken promises it made to them). It would be better if William Clay Ford hadn’t had his late 1990s enviro and PC fling in the first place. Thanks to that dalliance, the company is carrying a lot of baggage that its competitors have avoided.