Ford’s Temporary Miracle

Right now Ford (F) is sort of the JPMorgan Chase (JPM) of the car industry, or at least the remnants of the American headquartered car industry. Alan Mullaly, the Boeing (BA) veteran that came into restructure the company, is garnering the same sort of praise as Jamie Dimon. Both are viewed as adults who avoided the excesses of their competitors and now stand to reap the benefits of being dominant survivors.

Mullaly came to Ford in 2006 after a 37 year carreer with Boeing. Originally derided for not being a “car guy” he set about rationalizing the company as well as preparing it for the fire storm that came. He shuttered plants, shed 50,000 workers, reduced the size of the product line from 97 to 20 and most presciently mortgaged just about everything Ford owned in order to build up a cash cushion of $23 billion.

The most obvious result of his labors is that Ford has been able to avoid the clutches of the federal government and has ample funds to see it through the recession. It’s first quarter loss of $1.4 billion was exceptional when compared to GM’s (GM) loss of $6 billion and Toyota’s (TM) $7.8 billion gusher of red ink. It’s U.S. market share has risen to 13.2% from 12.2% a year ago and it is number two in European sales versus three a year ago.

Still, for all of that one has to think that Mr. Mullaly must have recurrent nightmares about what the future is going to look like for Ford. All the cash that it raised comes with a price. The company has $28 billion in debt, about the same as GM with its $27 billion millstone. But, of course, that’s about to change.

Mullaly has to look down the road and see a GM and Chrysler waiting for him largely relieved of debt service and owned by an amalgamation of the same union with which he must negotiate and the federal government. Two parties with something to prove and limitless resources with which to prove it.

Make no mistake, the government will not allow GM to fall on its face. For better or worse the Obama administration has over-committed to the rescue of the industry and cannot produce less than its survival. Chrysler is and always will be an afterthought — if push comes to shove it can be folded into GM — but GM will succeed no matter the cost.

So Mullaly will be left to do battle with his streamlined company, dynamic new products and at least for a time probably more trust from the car buying public. He will be up against a government unafraid to rewrite the rules of the game at any time and a union that might well prefer to control his company as well.

Will Mullaly and Ford persevere and prosper? Not if team Obama want GM to persevere and prosper.

Tip your hat to Alan Mullaly, for he’s done a masterful job. In another era he might well have had a small niche in industrial history. Most likely he will end up as a footnote.

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