- The Washington Times - Thursday, August 3, 2006

DETROIT (AP) — Ford Motor Co. is trying to speed up its North American turnaround amid setbacks, including the expansion yesterday of a major recall and the restatement of second-quarter losses to about twice the original amount.

Hence the hiring of a former Wall Street merger-and-acquisitions whiz as a strategic adviser, cementing the idea that everything is on the table as the nation’s No. 2 automaker battles sluggish sales, rising costs and ferocious competition from Asian rivals.

On Tuesday, industry figures for July showed that for the first time, Ford sold fewer vehicles than Toyota Motor Corp. in the United States — underscoring the former’s woes.

Last month, Ford pledged to speed up and possibly deepen its North American turnaround plan. And analysts say the hiring of Kenneth Leet to advise Bill Ford, the automaker’s chairman and chief executive, increases the possibility that the company may sell some operations as part of its restructuring.

“Everything has to be in play, whether it’s job cuts or plant closings or alliances or partnerships or sale of assets,” said industry analyst David Cole. “You really can’t avoid looking at every element.”

Ford says it has no plans to sell any of its brands or invest in a new alliance. Crosstown rival General Motors is considering an alliance with Nissan and Renault.

But in an e-mail to employees this week and comments last month, Mr. Ford made clear that the company is keeping its options open.

“I will continue to evaluate the rapidly changing landscape of our industry and review the best ways in which we should adjust,” Mr. Ford wrote Wednesday. “That’s why I’ve hired Ken Leet to assist me and our senior management team in evaluating our business and exploring strategic options.”

Mr. Ford hasn’t said how he would accelerate the turnaround effort but expects to detail efforts by mid-September.

Mr. Leet, who spent 18 years with Goldman Sachs Group Inc. and led European banking operations for Bank of America Corp., is familiar with Ford from his investment banking work. He was tapped by President Bush in 2003 to be the Treasury Department’s undersecretary for domestic finance but dropped out from consideration, citing health reasons.

“Given Leet’s background as [a mergers-and-acquisitions] banker, rationalizing some of Ford’s ailing brands through a sale appears more likely, with Jaguar the most obvious candidate,” Merrill Lynch analyst John Murphy wrote.

Ford spokesman Tom Hoyt said yesterday that Mr. Leet isn’t giving interviews.

The Wall Street Journal reported Wednesday that Ford is starting a review of poorly performing units, including Jaguar, with an eye toward the sale of some operations. But some analysts note that Jaguar is intertwined with Ford on purchasing, manufacturing and distribution — making a sale complex.

Mr. Ford, meanwhile, asserted that the company has benefited from turnaround efforts.

“Contrary to speculation, nothing has been decided and we will not rush to judgments,” he wrote in his e-mail.

“I’m proud of the progress that our operating units and brands around the world are making.”

Ford’s recent problems come as GM logs milestones in its major restructuring announced in November. GM recently reported it lost $3.4 billion in the second quarter because of heavy charges for layoffs and early retirements, but without those charges, the world’s largest automaker scored a profit that bolstered management’s claim that the turnaround is working.

GM and Ford have been trying to deal with towering health care and pension costs for their workers. But Japanese automakers continue to add pressure. Last month, U.S. sales at Ford, GM and DaimlerChrysler AG’s Chrysler Group dropped, while Toyota and Honda Motor Co. made gains.

Dearborn, Mich.-based Ford’s “Way Forward” plan, initiated in January, calls for shedding 25,000 to 30,000 jobs and closing 14 plants by 2012 to help return Ford’s North American automotive operations to profitability. But the company has faced criticism from Wall Street that it isn’t doing enough.

Ford, which has been losing market share to Asian manufacturers for a decade, has been badly stung by high gas prices because big trucks and sport utility vehicles account for nearly 70 percent of the vehicles the company sells. Analysts say any more job or plant cuts must be accompanied by new, appealing vehicles outside the realm of trucks and SUVs.

“It’s difficult to cut your way to success,” said Michael Robinet, vice president for global forecasting at the auto industry consulting company CSM Worldwide. “It’s going to come down to product.”

Ford shares closed down 10 cents, or 1.4 percent, to $6.86 yesterday on the New York Stock Exchange after closing up 38 cents, or 5.8 percent, a day earlier.

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