GM and Ford: The corporate America challenged

If you look to the figures, they develop a similar pattern. Why? Because, they are facing same challenges. Industrial America is facing a tremendous challenge, in the era of globalisation: to be an active member in the major industry, or not....

We believe the inheritors of Sloan and Henry Ford will make the necessary turnaround. Otherwise, "corporate America" will be devastated in coming years. The Lou Gerstner story will fit like a glove in the American auto industry.

Finally, remember GM market value is only 21 billion and Ford is less than 16 billion.

Detroit: a chaos

Ford is in turmoil. GM is trying to survive. Daimler-Chrysler is in trouble, too:

• DaimlerChrysler AG could lay off up to 4,000 at Freightliner, its North American truck operations next year, Andreas Renschler, a member of the automaker's board of management who heads its truck operations.

Is it a reason to think that Henry Ford, Alfred P. Sloan and Lee Iacoca, did not have any successors?

Ford: a nightmare?

We are people that admire the icon Ford and the entrepreneur Henry Ford.

Nevertheless, we think Ford is in crossroads: the turnaround or the end.

Read this:

• Ford is losing market share in the U.S. for the 11th consecutive year.
• Its U.S. sales tumbled 9.6 percent last month as the automaker lost business to rivals.
• The automaker reported a loss of $6.99 billion for the first nine months of 2006.
• its shares have fallen 7.25 percent this year to $7.16.
• The automaker's U.S. decline this year has been led by some of its best-selling vehicles, such as the F-Series pickup, down 10 percent through November, and the Explorer sport-utility vehicle, whose sales fell 26 percent.

But the markets have given them, enough money to support the turnaround:

• a new $18.5 billion loan agreement, will provide the Dearborn, Michigan-based automaker with enough money to eliminate 40,000 jobs and close nine factories.
• The $4.5 billion of 4.25 percent bonds (convertible bonds) due in 2036 .

....but the market is making a warning:

• Fitch Ratings on Dec. 6 cut Ford's unsecured debt one level to B- from B.
• Moody's rates the notes Caa1 and S&P gave them an equivalent ranking CCC+.
• Bonds rated below BBB- by S&P and Fitch and Baa3 by Moody's are considered below-investment grade

This will be a fine management lesson, for the future: the excellence or the complete failure.