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Ford Motor Co
Goldman Sachs Group Inc/The
JPMorgan Chase & Co
General Motors Co
Six years ago, Ford Motor (F) was running out of time and money. To save the company, Henry Ford’s great-grandson had to do something the founder never could have imagined—sign away the family name. In order to secure a $23 billion loan, a syndicate of banks led by Citibank (C), Goldman Sachs (GS), and JPMorgan Chase (JPM) demanded as collateral the rights to the blue oval logo that surrounds the Ford name on the nose of millions of cars. “When we had to hock the blue oval, that was a very tough thing,” recalls Bill Ford, the company’s executive chairman. “I will never forget signing those papers. My heart stopped for a moment. It will start beating again when we get it back.”
The loan, pitched to investors by then-new Chief Executive Officer Alan Mulally in late 2006, proved to be a lifesaver. It enabled Ford to withstand more than $30 billion in losses from 2006 through 2008 and avoid the bailouts and bankruptcies that befell General Motors (GM) and Chrysler Group. And the timing, nine months before Lehman Brothers fell, was perfect. By the time GM sought cash in 2007, banks weren’t lending.
Now Ford is on the verge of reclaiming control of its insignia. The company has paid off $21 billion of the $23 billion loan and on April 24 recovered its investment-grade credit rating from Fitch. According to the covenants of the loan, once a second major rating agency lifts Ford to investment grade, the automaker gets back all the major assets it put up as collateral. “It’s going to be great,” Bill Ford says of reclaiming the logo. “It’s a very personal thing to me and members of our family.”
Now that Ford has regained traction, earning $29 billion over the past three years, recovering the logo has become an obsession among its employees. “Getting the blue oval back has been a huge rallying cry,” says Neil Schloss, Ford’s treasurer, “and one that we all feel emotionally connected to.”
Leslie Butterfield, global chief strategy officer for consultant Interbrand, says that’s understandable since the whole process struck many Ford veterans as a particularly cruel humiliation. “How bad must things be if you’re prepared to pawn your wedding ring?” Butterfield asks. “And therefore, how proud will they be to get it back?”
The carmaker’s emblem first appeared in 1927 on the nose of Henry Ford’s new Model A. The cursive script inside it dates to at least 1906, when it appeared on the radiator of the Model N and later on the more famous Model T, according to automotive historian John Wolkonowicz. It was trademarked in 1909, the company says.
The script logo is not, as often thought, based on the founder’s signature. Rather, it was created by Childe Harold Wills, a draftsman for Henry Ford. “The font was similar enough to Henry’s own signature that it looked as if he was signing every car,” says Bob Casey, senior curator of transportation at the Henry Ford museum in Dearborn, Mich. “But that was more happy coincidence than by design.”
After World War II the blue oval disappeared, replaced by the Ford name in more modern-style block letters above car grilles. It wasn’t until the automaker’s 75th anniversary in 1978 that the founder’s grandson, Henry Ford II, revived the oval marque. “Henry Ford II said, ‘What the hell is this? We have no logo!’” Wolkonowicz says. “So they dredged this thing out of the trash barrel and it became hallowed.”
Not quite. The brand marker again fell from grace in 1999, when CEO Jacques Nasser had it removed from the company’s headquarters and replaced with an extended script logo spelling out Ford Motor Co. To Nasser, the blue oval represented a common-man moniker out of step with the growing stable of luxury brands he was amassing, including Volvo, Land Rover, Jaguar, and Aston Martin. “Ford was a brand that was more down-market than he wanted to go,” Casey says.
When Bill Ford fired Nasser and took over as CEO in late 2001, one of his first acts was to put the blue oval back atop Ford’s glass headquarters. To this day, when Bill Ford signs his autograph, he uses the script F on his last name. “For me, it’s a very emotional symbol,” he says. “It’s not just another corporate logo.”
The bottom line: Ford may soon regain the rights to its trademark, which was part of the collateral for $23 billion in loans. The emotional value is priceless.