Ford Earns 6.6 Billion; Profit Sharing Checks to Average $5000
To fuel your love of cars,
visit the Autos section.
INTERVIEW: WWJ AutoBeat Reporter Jeff Gilbert talks about the earnings with Ford CEO Alan Mulally.
DEARBORN (WWJ) – Ford posting a $6.6 billion profit for 2010, meaning profit sharing checks averaging five thousand dollars.
“I think it’s good news for Ford, good news for Detroit, and all the workers,” said J.D. Power analyst Jeff Schuster.
Fourth quarter profits were $190 million, depressed by one time charges. You take all of those charges out, and Ford would have made $8.3 billion in 2010.
“Great year, a fabulous year, and our guidance says we’re going to deliver an even better year in 2011,” said Ford CEO Alan Mulally, in an interview with WWJ AutoBeat Reporter Jeff Gilbert.
Ford says it expects to “deliver continued improvements in pre-tax operating protit, and automotive operating-related cash flow in 2011.”
Ford made money in all areas of the world, earning 5.4 billion in North America, an area where the company lost money in 2009.
One time charges kept Ford’s fourth quarter earnings to 190 million dollars. Without those charges, Ford would have earned $8.3 billion.
Ford generated positive cash flow of over a billion dollars.
“We have reduced our debt, for the full year, by 14.5 billion dollars,” said Mulally. “That’s a forty three per cent reduction in our debt, which means we are going to save in interest payments over a billion.”
Mulally promising that money would be put back into product development. Analysts says strong products, and strong sales are the main reason behind Ford’s positive earnings.
“They have a lot of momentum with sales, with product launches, a lot of new product activity with Ford that is just out, or soon to be out,” said JD Power’s Schuster.
Schuster says Ford’s biggest risks going forward include increased competition, including brands like Hyundai that are growing, and companies like GM and Chrysler, which reduced debt, and are actively developing new products.
Ford does have one brand which has been underperforming.
“One of the risks, I think in the near term, is the Lincoln term,” said Schuster. “I think as they look to rejuvenated and redefine what Lincoln is, there’s that period of product lull.”
But Mulally says the money Ford once spent on the now defunct Mercury brand, is being spent on Lincoln, and he promised that drivers will see the results in the coming years.
“I’ve seen the vehicles, myself, already, and they are knockout gorgeous.”
The five thousand dollar profit sharing checks will be distributed in the coming months. There are different formulas for manufacturing and salaried employees. Ford froze wages for white collar worker this year, giving them performance based incentives instead. Mulally saying worker pay has to be tied to Ford’s performance.
“I think it’s absolutely key, and we’re continuing to figure out how to align all of our employees with the success of Ford,” he said. “I think this is a tremendous first step.”
Enhanced profit sharing is expected to be a major part of this summer’s contract talks between the UAW and the big three. Ford is the only one of those automakers that does not have a “no strike” pledge from the union.
follow Jeff Gilbert on Twitter @jefferygilbert