Is The Ford Family Considering Less Control?

Posted by: David Kiley on August 10, 2006

David Cole is one of the best connected people in Detroit. The chairman of the Center for Automotive Research in Ann Arbor, MI, and former director of the Office for the Study of Automotive Transportation at the University of Michigan, he is also one of the best socially connected people in the auto industry.

So it was with some seriousness I take his comment that he would be surprised if the Ford Family didn’t soon come to the conclusion that its 40% control of the company’s voting shares was changed. “I’d be surprised if they didn’t come to the conclusion that it doesn’t serve them or the company any longer,” said Cole, who this week was presiding over CAR’s annual suto industry gathering in Traverse City MI.

“It served the family in the era it was done, but I don’t think it serves them today,” says Cole.

Wall Street analysts like John Murphy of Merrill Lynch believe that the family’s control of the company’s voting shares probably hinders other companies from wanting to form an alliance with Ford that might include an equity stake, as well as recruiting an outside CEO to run the company. It’s been conjectured that the family’s control is what made Renault-Nissan CEO Carlos Ghosn and DaimlerChrysler chairman (when he was still just CEO of Chrysler Group) show no interest in going to Ford when the company reached out to them. Both are widely considered the best CEOs in the industry.

Because of the control the family wields, the Ford board of directors is widely viewed as ineffectual at pushing reform and performance at the company, though it is dotted with some big names like former Treasury Secretary Robert Rubin and retired Wells Fargo chairman Carl Reichardt.

Besides Ford Motor Co. chairman and CEO Bill Ford, his father, William Clay Ford Sr. is on the board, as is Edsel Ford II, the son of Henry Ford II. Elena Ford, a granddaughter of Henry Ford II currently heads product and marketing planning for Ford, Lincoln and Mercury and has professed interest in serving on the board. Bill Ford’s brother-in-law is currently the CEO’s chief of staff. But the family as a whole controls 40% of the voting shares of the company, held in a trust, and voted in a block.

Reader Comments

Joel A

August 14, 2006 5:47 PM

That's an interesting post and speculation. It makes sense: I have worked for and have associates who work for family-runned businesses and they are extremely difficult to run. Personality "quirks" and infighting constantly divert resources to where they're most effective. The question is now how much the Ford family will relinquish; i.e., how many shares, will family members step down, etc.

Dearborn Engineer

August 17, 2006 9:36 AM

The worst thing the Ford family is doing to themselves and to the company is having a Board Of Directors that is doing nothing but serving as rubber stamps for the family. Many, if not most, of the BOD members know nothing about cars, and they have no engineering background either. They may be well-suited as BOD members for a greeting cards company, or something similar, but this is not a board for an engineering / manufacturing company of automobiles. The Ford family, and Ford Motor Company, would be much better served if they had a BOD that disagrees with the CEO's "wrong" and disasterous decisions, a BOD that understands car customers' wants & needs, a BOD that has good enginnering background, and the Family doesn't need to search hard to find such members. They should select them from their own company, from the General Salary Grades who understand this business more than anyone else on earth, but I think obsession with "control" is going to kill this company if it continues to have such board, and if it continues to promote & recruit corporate officers who will gladly tell the CEO what he likes to hear.
Of course I understand the need for a mix of backgrounds, but the current structure of the board is simply pathetic and most harmful to Ford (the family and the company).

Bob Nelson

August 17, 2006 4:45 PM

Truly an interesting concept. It would be a hard pill for the Ford's to swallow, but one that is no doubt needed to begin Ford's long term healing process. It seems that Ford's current non family top management realizes that dramatic financial and operating changes are needed to move Ford into a profit position.

Herault

August 24, 2006 6:25 AM

Many global auto companies have family ownership connections like BMW Peugeot-Citroen and Fiat which have a assorted track-record of success. FIAT turned down an alliance with DaimlerChrysler in favour of GM. Maybe that was a good play for FIAT in terms of independence. The current (bumpy-ride)situation in the US for domestic auto manufacturers requires a mammoth jump in survival strategy. The (rumoured) best solution is for a manufacturing alliance with Renault-Nissan who need VOLVO. (Excluding Jaguar) Renault always wanted VOLVO having failed to catch it some years ago. Renault in Europe is investing heavily in the future but the ground rules are rapidly changing with oil prices reaching the sky. That requires even more large-scale investment in hybrid technology. Ford has no alternative...its time to learn French with their Japanese partners.

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