Ford's Green Socialism and
Imminent Demise of Ford Motor Company
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:
- Environmental Management, which includes the following:
- Climate change/global warming initiatives
and renewing ecosystems infringed upon by Ford Motor's
and manufacturing plants.
- Developing uses for recycled materials in Ford's vehicles
- Cutting water use in manufacturing
- Reducing the use of "chemicals of concern"
- Protecting human rights
- Increasing diversity within Ford Motor Company
- 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
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
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
- Working capital stood at a $8.06 billion
- Ford had 36 cents of cash and marketable
securities for every dollar of current liabilities.
- Ford had a debt burden of $173.9 billion.
- 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.