Toyota is in crisis mode, and with the heartbeat of America still recovering from its recent stroke, the road is cleared for Ford to establish itself as a major player in the US auto industry. As the only automaker not needing bailout funds from the government, their stock has risen both figuratively and literally.
In September of 2006, Alan Mulally took over as CEO of Ford Motor Company, displacing what had previously been a family led business since Henry Ford first founded it in 1903. Mulally immediately went to work bringing back the Ford Taurus and figuring out ways to cut costs. His ability to negotiate with the UAW reduced labor costs by 27% and his controversial financial mortgaging of Ford assets proved to be the right decision, keeping Ford from declaring bankruptcy, unlike GM and Chrysler.
Ford has been gaining traction in other venues too, particularly Brazil. A 2.3 billion dollar stake in South America’s largest foreign auto market could pay off big with the end of the global recession in sight. With Argentina and Mexico growing as well, Ford has placed itself in the midst of it all with more production plants underway; remaining a competitive force in the region.
Fifteen months ago, Ford’s stock price closed out at $1.26 per share. Since then, the price has climbed 865% and looks stronger than ever. Their recent earnings guidance places them at a 2.2 billion dollar pre-tax profit for 2010, and over 4.5 billion for 2011. These figures could turn out to be a conservative guess now that Toyota has lost its place at the top of the global auto pedestal. Ford keeps moving forward, and with traffic clearing ahead, their ultimate destination is anybody’s guess.
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
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