Ford Weighs the Costs of Going It Alone

Ford is closely following GM's negotiations with Washington to see if it can afford to do without a bailout

By David Kiley

As Detroit waits to hear how much and what conditions the White House plans to place on a federal rescue package for General Motors (GM) and Chrysler, Ford Motor (F) is stuck between its own corporate agenda, the agenda of the Ford family, and that of rival GM.

Ford is not applying for an immediate loan, but for a $9 billion line of credit that will be available to be tapped when needed. Chief Executive Alan Mulally calls that a "safety net in case the economy gets much worse than we think." If some experts are right that the U.S. auto market will rebound starting in 2010, Ford may not have to draw down that line of credit at all as it limps back to profitability.

The Value of Rejecting Handouts

But Ford has to watch closely what GM, weeks away from likely financial collapse without government loans, gets in concessions from the United Auto Workers and debt holders. If GM is allowed to lower its costs by billions a year, Ford has to consider the price of staying away from the trough. "We still don't know what the details and conditions of the loan package are going to be, but obviously we have to make sure we aren't competitively disadvantaged," said Chairman Bill Ford.

One factor for Ford is the value that accrues to its blue oval logo if the company stays away from taxpayer loans.

"I think there would be an advantage if we can stay independently funded and people view us as a company that pulled itself up by its own bootstraps," said Bill Ford. Indeed, though Ford said it was necessary for the company to stand side by side with GM and Chrysler during November and December congressional hearings, he said it didn't do the company's image any good.

"We have a different story and I don't think it got through, and that's something we have to work on," said Ford. The great grandson of Henry Ford, he relinquished the CEO office to Mulally in 2006 but retained the chairman's role.

Bill Ford remains his company's most recognizable front man; he appeared in a series of ads in 2004 and 2005 touting Ford's reputation for innovation. In 2006, after hiring Mulally, Ford assumed a lower profile. But he appeared on CNN's Larry King Live on Dec. 16, and is expected to continue trying to separate Ford's story from those of GM and Chrysler.