Ford is in a good position within the auto industry, but Paul Ingrassia, Pulitzer Prize-winning writer, identifies five possible pitfalls that could cause Ford to stumble. Ingrassia is the newest contributor to Edmunds.com, the premier online resource for automotive information.
“History shows, after all, that when automobile manufacturers are at the peak of prosperity, they also can be surprisingly vulnerable,” wrote Ingrassia in his report at AutoObserver.com. “It would be foolish to predict that things will start unraveling in Dearborn, because the company is doing a lot of things right. But the car business can be volatile, and Ford faces some significant challenges despite its recent success.”
Here are five issues with which the company must grapple in the months and years ahead:
Hubris. Success often leads to arrogance and failure. Recent barbs directed at General Motors indicate that Ford executives remain preoccupied with its domestic competitors as opposed to Hyundai, Honda and Toyota.
Labor. Last November, Ford workers rejected contract amendments that President Barack Obama's auto task force insisted the union accept at Chrysler and GM in return for federal bailout dollars. As a result, Ford suffers an operational disadvantage, not just versus Chrysler and GM, but more importantly against the Japanese, German and Korean transplant factories that are not unionized.
Lincoln. The luxury marque is the weak link in Ford's product strategy, trailing Cadillac in sales by 30 percent and lagging even further behind Lexus, BMW and Mercedes-Benz. The brand’s relatively new nomenclature is confusing, its styling can be bizarre and its competition is intense.
Debt. The company has $31 billion in debt, nearly twice as much debt as GM had at year-end, thanks to its government-funded bankruptcy. Ford has been able to sell new stock and use the proceeds to pay down debt, but the debt burden will remain a drag for some time.
Succession. Alan Mulally, the CEO who has crafted Ford's comeback, turns 65 on August 4. Mulally says he has "no plans" to leave Ford, and rumors that he will return to Boeing are almost certainly just that. The bet here is that Mulally will stay at Ford two or three more years, cementing the turnaround and his place in American corporate history, and providing additional time to groom potential successors.