Weekend Question 4: When Is Ford Going to Have Its ‘Wal-Mart Moment’?
ANSWER: Hopefully soon, if it wants to stay around.
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The bad news just keeps coming out of Dearborn, while the fortunes of the other members of the Big Three appear to have turned:
Ford’s slips to No. 4 in Nov. sales
With a slump in U.S. vehicle sales by Ford Motor Co. last month, the No. 2 domestic automaker was beaten out not only by Japanese rival Toyota Motor Corp. for a the second time ever but by DaimlerChrysler AG as well.
Ford, which also detailed planned production cuts, said Friday that sales dropped 9.7 percent in November compared with the same period a year ago. The drop came as industry sales rose a modest 2.9 percent to nearly 1.2 million vehicles.
Toyota sold 196,695 vehicles in November, a 15.9 percent increase over November 2005, and DaimlerChrysler’s were up 4.7 percent to 186,635, compared with Ford’s 181,111. Sales by GM, the world’s largest automaker, rose 6.1 percent to 293,558 vehicles in the U.S. last month.
“I think it’s more the product,” Global Insight analyst George Magliano said of Ford’s unexpected stumble.
Ford’s light truck sales dropped 13 percent to 119,259, including a 16.1 percent drop in sales of the dominant F-Series pickup, while car sales fell 2.6 percent to 61,852, reflecting lower deliveries to fleet customers.
Maybe it’s “the product,” but Bill Ford and new CEO Alan Mulally assume that “the product” is their only problem at their grave peril. It’s hard for me to believe that Ford’s product line is that bad, or that the product lines of GM and Daimler Chrysler are that good.
As noted several times previously (here, here, here [4th item], and here), Ford needs to acknowledge (and has not) that it has a serious problem on its hands with a boycott by Don Wildmon’s American Family Association over its embrace of the gay activist agenda.
This post is NOT about the merits of that agenda. Rather it is about:
- The fact that Ford continues to divert management time and attention to items that don’t relate to its core business (this would also include its non-business-related environmental initiatives).
- The fact that the company is ignoring pleas from its dealers (and likely from some of its employees and shareholders), who believe they are suffering from the AFA boycott, to alter its stance.
- The fact that the company is forgetting that its primary duty is to its shareholders.
What’s more, the AFA’s latest e-mail (bolds removed; original links included) indicates that Ford, despite its borderline-dire circumstances, has gotten more instead of less distracted:
Prior to the recent elections, Ford Motor Company sent an e-mail to their salaried employees pointing them to one of the most liberal, anti-family Web sites on the Internet. Ford urged their employees to go to Ballot.org for information on how to vote on issues including homosexual marriage. (Go to 4th paragraph where it says “check out the 2006 BISC Picks [our yes and no votes].” The Ford-recommended Web site urged voters to vote against constitutional amendments which defined marriage as being between one man and one woman in Arizona, Colorado, South Dakota, and Wisconsin.
Of the hundreds of voters guides Ford could have endorsed, Ford chose Ballot.org. Ford’s endorsement of this site clearly indicates that Ford favored the positions promoted on Ballot.org. The Web site accused those who favored the marriage amendments of “extreme bigotry” and said the amendments were an “attack on marriage equality, civil unions and all domestic partnerships.” This is the Web site Ford sent its employees to for information on how to vote.
Your efforts helped convince Wal-Mart to remain neutral in the homosexual marriage battle. AFA is asking that you do the same with Ford.
Geez, it turns out that AFA just scratched the surface. The following is just a sampling of other issue positions, characterizations, and often-insulting commentary at Ballot.org’s BISC Picks page that all Ford salaried employees were indeed referred to:
AZ Proposition 202: Economic Justice (minimum wage)
No-brainer….. The values issue of ’06.CA Proposition 90: Environment/Land Use (regulatory takings)
Misleads voters that the issue is property rights. It’s actually special rights for big developers.CA Proposition 89: Election Reform (Clean elections)
Cleans up a dirty system.CA Proposition 85: Reproductive Freedom (parental notification)
Risky to teens and restrictive of reproductive choice.ID Proposition 1: Education
More money for kids. An obvious choice.MI Question 2: Affirmative Action
Michigan Civil Rights Initiative: Bad tactics, terrible policy. Affirmative action provides opportunities for women and minorities for better jobs and education.NE Initiative 423: Tax & Budget (TABOR)
….. Grover Norquist’s vision of drowning government in a bathtub through TABOR.WI Ballot Question 2: Criminal Justice (death penalty)
Meant as a conservative turnout driver. This is one policy that should never spread to new states.
Ford, in particular its Governmental Affairs area, has completely… lost… its… mind. What do any of the marriage initiatives, or any of the above initiatives, have to do with selling vehicles?
The answer, of course, is not a darn thing. This is so-called “Corporate Social Responsiblity” run completely amok coming from a company that won’t be around in a couple of years if it doesn’t get its act together.
Note that the AFA isn’t demanding allegiance to its position; it is asking for neutrality. AFA only asked Wal-Mart for neutrality; staring down the abyss, Wal-Mart went neutral, and decisively so. Yes, the retailer had a relatively weak first Christmas-shopping weekend, simply because it didn’t announce its change of heart until the previous Monday, and not all who had been upset got the news in time to alter their shopping plans. I’ll bet that most of the remaining Christmas season will be better for the company than the previous month has been.
Ford needs to get a grip, swear off ANY political activism in ANY direction, and get back to basics. The very survival of the company probably depends on it.
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RELATED: This Saturday column by Wayne Winegarden at Townhall is a hard-drive saver — “Corporate Social Responsibility is Immoral.”
People in the real world could care less about these calls to boycott. If people are predisposed to buying Ford vehicles or shop at Wal-Mart, they will. I highly doubt that a boycott arranged by a little-known special interest group value so highly in the decision-making process that people will change their minds and shop somewhere else. Rather than compare the performance of Ford against that of GM and DC, why don’t you include Toyota and Honda. I think that you’ll find that Ford’s real problem is that consumers are choosing cheaper, more efficient, and more reliable vehicles.
Comment by Kevin — December 3, 2006 @ 2:23 pm
The related article made me upset.
In response to the rise of CSR principles more than 30 years ago, Milton Friedman wrote that in a free society, “there is one and only one social responsibility of a business – to use its resources and engage in activities designed to increase its profits, as long as it stays with the rules of the game, which is to say, engages in open and free competition without deception or fraud.â€
This is where Friedman is wrong. The responsibility of a corporation is not to increase its profits, but to maximize its shareholder value. Short-term profit gain and ignoring long-term prospects for business cause a decrease of shareholder value. CSR is a means to attract business, not an end.
First, CSR is not consistent with the principles of capitalism. CSR activists take private property – individuals’ ownership rights in a corporation – and hijack it to advance their own personal agendas and priorities.
Individuals (shareholders) entrust their property (shares) to boards and management teams to invest and create additional value. If the management teams are successful in creating incremental shareholder value by participating in socially responsible activities, what is the problem?
CSR undermines our political process. Resolution of challenging social problems such as global warming is complex and affects all of us. It is a public problem that should be addressed in the public realm where all positions and perspectives can be heard, debated, given its proper consideration, and ultimately resolved by elected officials. Granting de-facto regulatory authority to CEOs based on businesses’ effectiveness, speed, or efficiency at addressing problems does not justify disenfranchising citizens. Delegating government’s regulatory authority to private boardrooms weakens our political institutions and diminishes our democracy.
What? Friedman says get the government out. Conservatism proscribes that individuals make choices in how they use goods and their effect the environment. Corporations are individuals. What a hypocrite.
Comment by Kevin — December 3, 2006 @ 2:42 pm
#1, Kevin, that’s what I thought several months ago until I saw the numbers. I vastly underestimated their influence, as you still do:
- Their home page (afa.net) claims 3,490,090 supporters.
- The boycottford.com site lists the AFA and 32 other organizations involved in the boycott, including many I recognize as having quite a few members. They claim that 44 organizations have petitioned Ford to change their stance.
- I’m pretty sure but I can’t find it right now, that their boycott pledge petition has been signed by over 600,000 (no, I’m not one :–>).
Based on what I see, I would suggest that the total sphere of influence is in the neighborhood of 15-20 million people through word-of-mouth and other communications who would feel strongly enough to have the current situation affect their car-buying decision. If that’s all adults (and I don’t see why it wouldn’t be), you’re pushing 10% of the adult population.
I’d like to think that it’s the product line, and I’m sure the Ford execs would too, but as I said in the post, I can’t see Ford’s being that much worse than GM and D-C.
I would also suggest that the people inclined not to buy Fords as a result of this will tend to be families with kids, i.e., high-margin minivan and SUV buyers. So their influence on the bottom line is really beyond their raw numbers.
Comment by TBlumer — December 3, 2006 @ 2:45 pm
#2 Kevin, item by item, I hope:
- I would suggest that Friedman was thinking of long-term profits that would of course lead to the highest possible asset values. It is to his detriment that he didn’t emphasize increasing wealth as much as maximizing (long-term) profits, but I don’t think that means he didn’t agree with it.
- Friedman himself has acknowledged that corps may engage in a certain amount of activity seen as “socially responsible” in the interest of maximizing profits. I did a post about a week ago on how that bar has moved because of people’s muddled thinking. Corps unfortunately have to adapt to the muddled thinking or face negative consequences. To the extent that corps overdo CSR, and it’s difficult to argue that Ford hasn’t, they are knocking down shareholder value, and to the extent that shareholders haven’t explicitly approved it, stealing from them. I’d extend that and say that to the extent the NYT jeopardizes its franchise by violating security laws and crossing its fingers that they won’t dare be prosecuted, they are also stealing from their shareholders, which is a double whammy in their case because minority owners have majority control….. come to think of it, I forgot until just now that Ford has the same setup.
- I think you’re overreacting. He’s saying that if you want to effect change honestly, you do it through the legislative process. Of course Friedman believed in trying to minimize government interference (I especially have a problem with the unlegislated bureaucratic variety), but he wasn’t an anarchist. He like other economists recognizes the need for “rules of the game.” CSR wants to impose its own rules on the corporate sector and doesn’t care whether there is a societal consensus on the rules they are trying to impose. In that sense, the disenfranchisement argument is valid.
Comment by TBlumer — December 3, 2006 @ 2:58 pm