Ford officials have said the company's nearly US$900 million in first quarter earnings -- topping Wall Street forecasts -- is an indication the turnaround plan is working.
But skeptics remain.
In a new report, UBS Warburg analyst Saul Rubin says either Ford or rival General Motors Corp, the world's largest automaker, could go into Chapter 11 bankruptcy in the next five to 10 years because of heavy debt and dwindling opportunities.
Rubin did not speculate on who was most vulnerable but said, ``A mere continuation of current trends and strategies combined with moderate performance in equity markets would push Ford to the brink.''
One of the negative trends Rubin cited was market fragmentation -- that is, the end of a period when one company could dominate a market, such as the Explorer's reign over SUV's, or the Taurus' position among mid-sized sedans.
This is not lost on Bill Ford. ``There are so many entries and the markets have sort of sub-fragmented to the point where it's hard to sell enormous increments of anything,'' he said.
As such, Ford said, it's critical to scrutinize any investment in new markets or technologies, such as vehicles that run on cleaner fuels like hydrogen. The price tag for such forays can be in the billions of dollars.
``I think it's a very exciting time for us,'' Ford said. ``But it's also one fraught with peril. Wrong decisions can be fatal.''
David Cole, director of the Center for Automotive Research in Ann Arbor, said he's bullish on Ford's chances of emerging from its restructuring a stronger company because of its vast resources.
``But they have to shrink to survive,'' Cole said. ``Victory is not assured because of your last name or because of the history of the company.''
In the near term, Bill Ford said it's important to ``slavishly'' tackle the current restructuring plan, which calls for cutting 35,000 jobs, closing five plants and discontinuing four models. Later this year, Ford said, he'll lay out his longer-term vision for the company, which is likely to entail thoughts on new technologies and geographic markets.
``But it will always be about the car and truck business and the financing of it,'' Ford said. ``Don't expect any great pronouncements that we're all of a sudden going into some ancillary business or some unrelated business. We've tried that, and we don't do that very well.''
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