Ford predicts investor loss after GM public offering

By Jim Hagerty
Staff Writer

Ford Motor Co. announced last week that investors may reduce significant holdings in the company to buy shares in General Motor’s recent IPO.

General Motors Co. filed documents to reduce the U.S. Treasury’s 61 percent share in the company, marking GM’s return to public trading.

According to Ford Executive Chairman Bill Ford, the offering could reach approximately $16 billion, but should not be a factor in whether the company his great-grandfather founded in 1903 will remain profitable.

“Some money will be rebalanced into GM, but look: our company and GM ultimately are going to succeed or not based upon performance,” Ford said Friday, Aug. 20. “It doesn’t make any difference to me where our shares are or their shares are on any given day.”

Ford stock fell by 7 cents as of last Friday morning stalling a 19 percent increase throughout the year.

Meantime, Ford execs don’t expect the announcement to affect UAW members, who agreed to 2009 contract changes based on a company promise to save $500 million per year by reducing raises and bonuses.

“I’m confident that as we go through negotiations we’ll work it out,” Ford said. “Any negotiation is a big deal, but I feel very good about our relationship with the UAW.”

Ford remains the only of the Big 3 to avoid bankruptcy. Before the markets stalled, Ford borrowed $26 billion, which has allowed the company to pay debts and focus on widening its Lincoln line and boosting sales of the Taurus and Fusion.

Ford reported $4.7 billion profit for the first half of 2010, the largest six-month total in 12 years. Sales in the U.S. were up 23 percent, passing the industry average by 8 percent.

From the Aug. 25-31, 2010 issue