Ford Motor Co., which has lost more than $2 billion in the past 18 months, will come close to breaking even in the second quarter of 1981, Chairman Philip M. Caldwell told the Ford annual meeting here today. 1
Caldwell did not forecast Ford's performance for all of 1981 -- most financial analysts see a substantial loss at year's end -- but the company's recent improvement permitted him to talk with more hope about the future.
He said it might not be necessary for Ford to increase its short-term borrowing substantially to meet its plans for investments in new products for the 1980s, although analysts generally expect that Ford will have to borrow heavily in the year ahead.
He cited the strong sales of the subcompact Ford Escort and Mercury Lynx, a campaign to reduce operating costs by $2 billion this year, the success of Ford's overseas and aerospace subsidiaries, and a joint quality improvement program with the United Auto Workers as keys to the company's current pickup.
"Last month and for the first 10 days of May, Escort was the best-selling car in America," Caldwell told a full house at the Ford auditorium on the Detroit riverfront. "We are selling all of these small cars we can produce. By a year from now, we will have about doubled our capacity for them."
Ford also is profiting from its joint venture with Toyo Kogyo Motor Co. of Japan, Caldwell said. The two are producing the Laser subcompact passenger car for sale in 19 Asian markets. Ford has a 25 percent share of Toyo Kogyo's earnings.
Ford Aeorspace and Communications Corp., which built and operates the Houston Mission Control Center used in the space shuttle flight, won a $5 billion contract from the Defense Department last week for an advanced military defense system -- another profitable subsidiary.
Taken as a whole, the company is "fundamentally healthy," Caldwell said. But its U.S. auto operations remain in serious trouble, and Caldwell said his concern has been heightened by the latest jump in interest rates, which raises Ford's borrowing costs and leads to higher financing charges to its auto customers.
He said current economic conditions indicate that U.S auto sales by American and foreign producers will total about 9 1/2 million this year, an improvement over last year's 9 million figure, but still too little to return the U.S. industry to a healthy condition.
Caldwell used that assessment to underline the company's push for wage and benefit concessions by the United Auto Workers. "The hard reality is that U.S. automotive companies have exceeded what they can afford to pay if they are to continue to be major producers in this country," he said. "There is a growing recognition of these facts among our employes."
Speaking to reporters after the meeting, Caldwell would not disclose what Ford would give up in return for union concessions. He did not rule out the possibility of profit-sharing or UAW representation on Ford's board of directors, but implied that the next move should come from the union. UAW President Douglas Fraser has said there will be no discussions of concessions until a new auto contract is taken up next year.
Caldwell said that concessions would not be one-sided. Compensation of top company officers for 1980 was reduced by 47 percent compared with 1979. His salary this year is $400,000 compared with $370,000 in 1980. However, the last year, he received $250,000 in additional compensation as a bonus for Ford's performance in 1979. There is no supplementary compensation for 1980.
The company's slate of shareholders was elected with only token opposition, including two members, Michael D. Dingman, chairman of Wheelabrator-Frye Inc., and John B. Connally, the former Treasury secretary in the Nixon administration and now a Houston attorney.
Connally was chided by John Gilbert, a veteran cross-examiner of management at annual meetings, for not owning any Ford stock. Invited to speak to the annual meeting on that point, Connally said he intended to buy Ford Stock, adding, "I suspect I'll own more than you, Mr. Gilbert." That gave Gilbert, who owns 100 shares, the opportunity to retort, "It's what you do with your shares that counts."