focus05

2 more thoughts: - Tax breaks: Yeah, everybody does it. Corporate Welfare. Doesn't make it right. You're right, it doesn't make it right, but it is what it is. Unless there were a law forbidding it, people are going to do it because we're talking about potentially billions of dollars. So, Ford has two options: 1) It can continue to get clocked by Toyota who not only has lower overhead costs but receives probably a quarter of a billion a year in tax breaks or 2) It can join the game until someone makes it illegal. I think we've clearly established that no one cares what Toyota does - heck, they can do no wrong! So, even if Ford took the high-ground, they would be criticized, debased and ultimately, the buyer would go to the Toyota dealership.

The truth is that this is what Toyota has been doing for years with its parts sourcing and plant locations. $300 million in tax credits for the plant in San Antonio. Something like $250 million from Indiana. Georgetown has basically tax-free status, probably adding up to like $20-30 million per year. I think Ford has only begun to realize the power of job creation and tax incentives (used before, but never at the level of Toyota), and if Mullaly can do something like that at Boeing, I'm sure Ford will be on competitive footing with the other foreign manufacturers in the U.S. in this arena.

I think this is a good outsider to bring in. It's not like they scoured the financial industry and brought in someone who has run hedge funds. Airplane development is HUGELY complex, expensive and aggressive with millions of parts and often thousands of suppliers. Coordinating the engineering and, more importantly, the BUSINESS of developing supplier relationships, product specifications and predicting future market trends is a massive job. What all the nay-sayers about the new guy fail to mention when they talk about the "generous" 6 to 7 year lead times of airplane development is that if you screw up - you're screwed; making it a high-pressure product environment. You don't just try to match your competition - you try to cream them (see the 787). Bringing that kind of experience in might be key to making sure product development at Ford continues in the style of the Fusion and Edge. And ultimately, it will be that kind of product development that saves Ford. Although I have no doubt that it will be difficult for him to convince industry hard-liners and old school auto workers that he is the right man, I believe that only an outside perspective will be a "bold" enough move to save this company. Quality products, controlled costs. I think he can deliver both.

I'd be curious to see what Toyota's fleet mix is. About a third of the new Rav4's and a good number of the new Camry's I've seen around where I live have been rental units. Same thing with Hyundai's. Overall, I agree Ford needs to get its stuff together, but it's even more than that. The Explorer is much better vehicle now (having driven both during business trips). In fact, it drives better than any mid-size SUV I've rented (Chevy, Toyota, Dodge). The sheet metal is not that different, but I still think it's a fairly attractive vehicle. The problem is perception. My friend recently (February) bought a 4Runner, and I asked him why. He said because it was better than all the rest. Why? Because it was Toyota. He didn't even drive the Explorer, or any other vehicle. He just bought the name. However, there was some justice as he's had some mechanical issues with his "unbreakable" SUV and now he swears he'll never buy a Toyota again. I think Honda is his new love. The prevailing perception will not easily be changed. It takes years. It took 15-20 years for the Japanese manufacturers to go from tinny rice rockets to high-quality, desireable vehicles in perception (and partly in product line). And it will take years for Ford to gain any positive image as well.