Very interesting article about Bill Ford and Alan Mulally.
Maybe the Way Forward is going to work, and maybe now would be the time to invest in Ford.
Ultimately, Bill Ford and his board bet on what they hope will prove to be a long-term fix, hiring a turnaround expert from Boeing to overhaul the company from the factory floor on up. The president and C.E.O. they chose, Alan Mulally, is expected to shrink and refocus the company, killing some brands and selling off others, as evidenced in the deal announced in March to sell Aston Martin for nearly $1 billion. All of this will require a delicate dance with dealers, suppliers, the U.A.W., and some increasingly impatient shareholders who plan to call for an end to family control at the annual meeting in May. “It’s a high-wire act, no question,” says lead director Irv Hockaday.
Two conflicting forces in American business—the long-term players and the short-term opportunists—are engaged in a heated debate...On one side are the long-haul believers like Ford and his family. On the other are the high-stakes players who see companies as assets to be flipped or managed in order to capitalize on the moment. That’s just good business, they’d argue.
What he needed now was someone to perform triage, and he was willing to swallow his pride and step aside if he had to. He’d found the right man for the job, one who knew manufacturing, understood unions, and could appreciate both Ford’s culture and its storied past. Best of all, he was a fixer, not a quick fix.
If Ford and Mulally are to be believed, it's all about long term thinking, and not about pleasing and appeasing short-term stock holders. I so want to believe them...
It seems as if the entire population of North America has developed short attention spans; it's all about instant gratification and short-term fixes. It seems as if most large corporations look no further than the next quarterly earnings report and it's impact on the value of their stock. Where's the long-term thinking? Doesn't anybody realize that what's best for a company in the long-term sometimes is quite negative in the short-term? Do investors not realize that by forcing a company to improve it's bottom-line for the next quarter so that they can get out at a higher price is hurting everybody in the long-term? Maybe they just don't care.
Where would Ford and GM and Chrysler be had they looked beyond the next quarter's earnings? What if the Detroit 3 had spent money on research and development instead of glitzy advertising? Instead of forcing suppliers to cheapen parts what if the Detroit 3 had spent more money on better parts? They would be Toyota and Honda, that's what.
I am engaged in investing for the long haul, and I only have invested in companies that I feel look much further into the future, certainly further then the next quarter. Banks, insurance companies and mutual funds are all about the long term. I may not get stinking rich investing in this manner, but most people who play the stock market for short term gains end up losing money, only a small percentage make big dollars that way, and in so doing have changed the face of investing and market capitalism to it's detriment.