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Previously published on KarenDeCoster.com

Bill Ford's Green Socialism and the

Imminent Demise of Ford Motor Company


by Eric Englund


On October 30, 2001, Ford Motor Company's board of directors ousted CEO Jacques Nasser, replacing him with William Clay Ford, Jr., Ford Motor Company's current chairman of the board. The company's October 30th press release, about this matter, stated that "Bill Ford will set the company's objectives and focus on corporate, financial and strategic issues, the overall direction for the future of the company and strengthening relationships..."

This makes for good press, yet Jacques Nasser is a scapegoat, as Ford Motor Company's current strategic direction was set by Bill Ford, not Jacques Nasser. It is Bill Ford's vision to make Ford Motor Company a model practitioner of "sustainable capitalism." In other words, Bill Ford wants to blend Green Socialism and capitalism in order to form a more perfect corporation. This "third way" of corporate governance is leading Ford Motor Company into bankruptcy. Thus, Ford Motor Company's current problems and eventual demise must be pinned on Bill Ford himself, not Jacques Nasser.

William Clay Ford, Jr. is a Green Socialist born with a silver spoon in his mouth. He is in a quandary as he loves his wealth and power, but hates the very products that made the Ford family so wealthy. Indeed, Bill Ford thinks his company's cars and trucks emit a substantial portion of the carbon dioxide that he strongly believes is responsible for the global warming that is allegedly baking our planet to death (i.e. Mr. Ford has completely bought into the Green Socialist nonsense about global warming).

In turn, Mr. Ford has looked to what is tantamount to a political solution to resolve his own cognitive dissonance (i.e. the love-hate quandary mentioned above). As many political leaders believe socialism and capitalism can be blended to form a more perfect nation, Bill Ford feels that having Ford Motor Company adopt Green Socialist dogma will somehow transform Ford Motor into a company "with the best set of social values." Therefore, Mr. Ford believes this appearance of "social responsibility" will somehow help Ford Motor sell more vehicles. Indeed, this company has become nothing more than a "third-way" corporate experiment to satisfy Bill Ford's social conscience. 

My assertion that Bill Ford is a Green Socialist is supportable. First of all, please be aware that he served as the chairman of Ford Motor Company's Environmental and Public Policy Committee from 1997 until 1999, when he became chairman of the board of directors for Ford Motor Company. Upon becoming chairman of the board, Mr. Ford launched his "green revolution" under the nebulous guise of "corporate citizenship." Under Bill Ford's direction, Ford Motor undertook the following initiatives:

  1. Environmental Management, which includes the following:
    • Climate change/global warming initiatives
    • Protecting and renewing ecosystems infringed upon by Ford Motor's office buildings and manufacturing plants.
    • Developing uses for recycled materials in Ford's vehicles
    • Cutting water use in manufacturing
    • Reducing the use of "chemicals of concern"
  2. Protecting human rights
  3. Increasing diversity within Ford Motor Company
  4. Contributing to a safer and healthier world

All of the above-mentioned information can be found in Ford Motor's "2000 Corporate Citizenship Report." Clearly, Ford Motor's leftist initiatives reflect William Clay Ford's "greenness." However, the following quote from Mr. Ford should remove all doubt:

I believe there is now more than enough evidence of climate change to warrant an immediate and comprehensive - but considered - response. Governments will have a role to play in the change process. I'm not dismissing global treaties and their potential to generate action, but I believe there's a better way. Transparency, stakeholder engagement, and accountability with real performance measures and standards will be the real regulatory tools of the 21st century, and consumers will be the real regulators.

Clearly, Mr. Ford feels that his green version of social responsibility is going to attract customers to his company's products. Perhaps the fact that the above-mentioned statement was delivered at the October 5, 2000 Greenpeace Business Conference in London will make Ford's products all the more attractive to consumers?

Ford Motor Company's shareholders and creditors should be especially alarmed by Bill Ford's Green Socialism as he is making Ford Motor politically and economically accountable to political/environmental groups that are only accountable to plants, animals, inanimate objects, and thus to Mother Earth herself. Members of such environmental groups are self-appointed, as I haven't yet heard of any environmentalists being appointed by redwood trees or spotted owls. By politically engaging with environmental groups such as Greenpeace, Mr. Ford has decided to allow Ford Motor Company to be held accountable for global warming itself (among other fashionable leftist causes). Make no mistake here, holding Ford Motor self-accountable for its alleged contribution to global warming - for which there is no scientific evidence - does not come without real monetary costs.

Before delving into these costs, let's look at how Mr. Ford is melding capitalism with self-imposed accountability to the Green movement. The following quote, from the 2000 Corporate Citizenship Report, was penned by Mr. Ford himself and reflects his faith in his own "third-way" philosophy of corporate governance: 

Discussions about business tend to fall into two categories. Most rely on the obvious financial indicators, gauging success in ways that have been in use for most of the last century. Nearly all of these standard indices look backward at what has been achieved.

A small but growing approach to assessing business focuses on corporate responsibility, or citizenship, gauging whether or not a company is meeting new, broader definitions of its roles and responsibilities. This view relies heavily on openness, transparency, and engagement with outside stakeholders to determine whether or not a company is meeting these new expectations. It can identify emerging marketplace issues because it involves dialogue about expectations and potential along a wide range of issues. It looks forward at what needs to be done.

The differences of these approaches are apparent in many ways. For example, financial markets have difficulty measuring the economic value of citizenship efforts. The absence of effective measurement tools can lead them to discount these issues. And, while activists are beginning to see that a company's financial performance is critical to citizenship efforts, there is a tendency to say that a focus on shareholder value means the company is pursuing profits over principles.

Our corporate citizenship report is an attempt to address these evolving standards of conduct. It adds measurement mechanisms for corporate citizenship to the more established measurements of corporate finance. The next step is to merge these two methods of examination because, from my perspective, there is danger in separation and opportunity in connection.

If this isn't third-way thinking, at the corporate level, then nothing is.

It is mind-boggling that Bill Ford has decided to make Ford Motor Company accountable to the environment as represented by Greenpeace and other Green Socialist groups. A major problem here is that federal governments - of which many are third-way - have printing presses and can fund socialist programs for very long periods of time. Apparently, Bill Ford does not recognize this crucial difference (i.e. Ford can't print money) and he feels that Ford Motor can indefinitely fund his Green Socialist third-way corporate experiment.

However, at Ford Motor Company, it isn't called "third-way experimentation," it is called "sustainable capitalism" (I'm not kidding, just read page 11 of Ford's 2000 Corporate Citizenship Report). I will go on record right now stating that Bill Ford's third-way management philosophy is not only unsustainable, it is incompetent and will lead to Ford Motor's financial ruin.

As mentioned earlier, Bill Ford's third-way initiatives do not come without real costs. In an October 4, 2001 msnbc.com article, Ford Motor Company admitted that its production costs per vehicle "have ballooned an average of more than $1,000 a vehicle over the past five years, while product quality has plunged far below that of rivals." Ford Motor's representative goes on to blame these higher costs on write-downs of e-commerce initiatives and growing costs of sales incentives and other marketing initiatives. These explanations are simply not believable considering that Ford's competitors are heavily engaged in competing for customers via the very same sales incentives and heavy promotions that Ford is blaming for its own uncompetitive cost structure. A key to Ford's loss of a competitive cost structure can be attributed to the expensive third-way initiatives mandated by Bill Ford himself.

Ford's high cost structure is particularly alarming considering its fragile financial condition as reflected in its June 30, 2001 10-Q. The following points illuminate several disturbing financial weaknesses:

  1. Working capital stood at a $8.06 billion deficit.
  2. Ford had 36 cents of cash and marketable securities for every dollar of current liabilities.
  3. Ford had a debt burden of $173.9 billion.
  4. Ford's total liabilities-to-equity ratio was 20 to 1 (keep in mind that a ratio of 3-1 is considered risky.)

It is interesting to note that Bill Ford spent 1995 to 1997 as the chairman of Ford Motor Company's Finance Committee. It is also curious that Ford Motor's admission, that its cost structure has become less competitive over the past five years, closely correlates with Bill Ford's ascendancy through Ford's management ranks (i.e. 1995 - chairman of the Finance Committee; 1997 - chairman of the Environmental and Public Policy Committee; 1999 - chairman of the Board of Directors of Ford Motor Company). There is no doubt that Mr. Ford has played a major role in leading this company to such a financially fragile position.

Quite frankly, Ford Motor does not have a balance sheet that will survive a recession. Granted, on October 22, 2001, Ford "priced" a $9.4 billion bond offering, which should improve working capital and cash flow. Nevertheless, this is still tantamount to rearranging the furniture on the Titanic.

By now, it should be obvious that Ford Motor Company is a lemon of a company. Perhaps it is more appropriate to describe Ford Motor as a watermelon of a company, just like the Green Socialist at its helm. In other words, Ford has become "green" on the outside yet is now "red" in the inside. Perhaps all of Ford Motor's cars should have this color scheme as a tribute to Bill Ford's third-way business experiment; that is, turning green money at the top-line into red ink at the bottom-line. Ford has lost $385 million through September 30, 2001.

Unless Ford Motor can eventually access the U.S. Government's printing press through a third-way bail out, Bill Ford will preside over one of the world's most spectacular bankruptcies. At this point, the heat Mr. Ford will be feeling will not come from that environmental bogeyman called global warming, it will come from shareholders and creditors. Don't let the October 30, 2001 removal of Jacques Nasser fool you; Bill Ford and his Green Socialism will be the culprits behind Ford Motor Company's demise. 


The Hyperinflation Survival Guide, Published by Eric Englund.