Rivals’ woes give Ford Motor Co. a clear field

Executives at Ford Motor Co., the only Detroit automaker that has not sought government loans or submitted to government control, used to worry about having to compete with “U.S.A. Inc.” But lately the automaker’s strategy of independence has been paying big dividends.

While Chrysler LLC is reorganizing in a way that gives control of the company to its autoworkers union, and General Motors Corp. appears headed toward a bankruptcy reorganization that would give Uncle Sam majority control, Ford has been gaining market share and enjoying the benefits of being an independent corporation.

Consumers are showing a preference for buying cars from an American company whose solvency is not in doubt and which is not subject to the vagaries of government and union ownership. Ford not only increased its share of the U.S. market in six of the past seven months against GM and Chrysler, but it managed to overtake Toyota in April for the first time in five months as No. 2 in auto sales nationwide.

Ford’s stock price has tripled in less than two months. And in perhaps the ultimate declaration of independence and sign of corporate health, Ford announced last week that it will raise as much as $2 billion in a stock offering - something that GM and Chrysler in their battered and shackled states could not expect to do for years to come.

Analysts say Ford’s gains have come at the expense of its Detroit rivals, whose troubles have been in the news from coast to coast since the end of last year.

“Ford is gaining retail market share and separating itself from GM and Chrysler in the minds of car buyers and investors,” said Peter Morici, business professor at the University of Maryland. He called Ford’s stock offering “a smart move.”

“A successful share offering could reinforce the positive image gains and car-buyer confidence now being generated by its strong lineup of new vehicles,” he said.

Ford has burnished its image as a U.S. company that can compete head to head with Japanese and Korean manufacturers in selling high-quality, fuel-efficient cars in the United States.

“In many categories, its cars now challenge offerings from Toyota and Honda for best in class,” said Mr. Morici. “From the Focus to the Flex, Ford is separating itself from the pack.”

The well-timed stock offering is the kind of adroit financial move that has enabled Ford to avoid the bankrupt state of its peers, analysts said. The money will be used in part to fund a retiree health care fund. But unlike GM and Chrysler, Ford is giving the union-run fund cash rather than equity shares, which would give the United Auto Workers part-ownership of the company.

Breakingviews.com, an investor information service, heralded the Ford stock sales as “smart union arbitrage” that not only leaves the company firmly in the control of investors, but does not dilute their shares too much.

The lift Ford is getting from the favorable comparison with the other Detroit automakers was neither expected nor inevitable. Ford executives were so unsure of the company’s fate late last year they told Congress that, while they did not need loans immediately, they might need to secure a line of credit with the Treasury to get through hard times.

When the government moved to assist GM and Chrysler with loans this year, Ford executives openly fretted that they could be put at a disadvantage without the backing of the government and access to the deep well of Treasury financing.

“We really don’t want to compete with a state-owned enterprise,” said Bill Ford, Ford’s executive chairman, at a conference in California last month.

“Frankly, that’s probably not in anybody’s best interest, including the government’s,” he said at the time.

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