Can Bill Ford Defeat His Green Goblins?

As automaker runs out of gas, nature bunny great-grandson steers into a hole

Shikha Dalmia | June 1, 2006

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It is stunning that Ford would increase by ten-fold production on such colossal cash-suckers when it is inches away from bankruptcy. But it justifies its decision on grounds that Toyota is jacking up its hybrid production to 1 million by 2010.

The big difference is that for Toyota hybrid production is about PR, not about reviving its flagging fortunes. And Toyota can well afford to splurge on such gambits given that its market capitalization—the total value of its outstanding stock—is $200 billion, about 15 times more than Ford's. Hybrids might one day yield a profit. But the question is whether Ford will still be in business when that happens.

The repercussions of Ford's failure to come up with a winning business strategy won't be limited to its glass-and-steel headquarters in Dearborn; they will be felt all over the state. Home foreclosure rates in neighboring Oakland County, the fourth richest county in the nation, have doubled in the last two years, The Wall Street Journal reported recently. Area restaurants and other businesses have drastically slashed prices. People are severely cutting back discretionary spending on all kinds of services from landscaping to spa treatments, adding to a sense of general gloom in the area.

People could leave the state for greener pastures—as opposed to greener corporations—elsewhere, except that it's not so easy for those of us who have homes here. Property values have slumped in the past two years and many homes are staying on the market for months even after deep cuts in the original asking price.

Our fates therefore depend a great deal on Bill Ford exorcising the environmental gods and devoting himself angst-free to the task of making cars that people will buy, just as great-grandpa did.