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Mon, Aug 28, 2006 - Page 10 News List

Key resignation sparks Ford rumors

END OF AN ERA?Whispers that the Ford family are willing to loosen their tight control to try and save the struggling firm are rife since Robert Rubin quit on Friday

AFP , DETROIT, MICHIGAN

The resignation of a key outside director has prompted speculation that the Ford Motor Co's ruling family might be thinking of loosening up its tight control over the automaker.

Former US Treasury secretary Robert Rubin said on Friday he had resigned from the board of troubled motor giant Ford to prevent a potential conflict of interest from his involvement at Citigroup.

Citigroup, the leading US banking group, is advising Ford Motor on its strategic options as the Detroit giant battles to overcome mammoth losses and a steep loss of US market share.

Proposals welcome

William Clay Ford said in an interview published by Business Week this week that he was willing to entertain any and all proposals that would help to turn the company around, including selling some units such as Jaguar and Land Rover.

Meanwhile, another report in the Detroit News on Saturday indicated that Citicorp could be interested in acquiring Ford Motor Credit Co.

The sale of Ford Motor Credit would represent a major shift in policy since up until now Ford executives such as Bill Ford and chief financial officer Don Leclair had insisted that the finance company was not for sale.

But Rubin, in his letter of resignation, indicated that the automaker was preparing for major changes beyond those outlined in the "Way Forward" turnaround plan it outlined in January. The plan called for closing 14 plants and eliminating 30,000 jobs by the end of 2009.

One analyst with excellent contacts in the industry who asked not to be identified said it was clear the threat of an alliance between General Motors and Renault-Nissan has jolted Ford's leadership and the Ford family.

For the first time in history, the Ford family could be willing to share control of the company, the analysts said.

For more than a century, the Ford family has kept a tight grip on the company through good time and bad. During World War II, the US government sent the young Henry Ford II home from his berth in the US Navy to serve as the company's top executive after his father died.

Arrangement

After the company stock began trading on the New York Stock Exchange, the Ford family kept 40 percent of the company's voting shares and the arrangement has remained intact for more than half a century.

Ford family members have been active members of the board of directors throughout the company's long history. Bill Ford and his cousin Edsel are still members of the board.

Other members of the Ford family also hold positions in the company.

Nevertheless, the steady decline in the company's market share, coupled with the failure of a turnaround plan launched in 2002 have undermined confidence in the company's leadership.

Meanwhile, the competitive pressures have been intense. Ford announced earlier this month it was planning to trim production by 21 percent during the fourth quarter.

The temporary shutdown will idle workers at 10 different plants including four that build the company's pickup trucks, which represent 30 percent of the company's sales.

GM and the Chrysler Group also have announced production cuts but Ford's cuts are the largest temporary plant closings in the industry since the recession of the early 1980s.

Tom Hoyt, Ford spokesman, said the company would not comment on speculation that Rubin's resignation signaled even larger changes in the control of the company.

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