June 23, 2009 • Scott McMurray
Forget about its best-selling F-150 pickup trucks. A strong sense of history, in this case family history, is the most important factor in the relative strength of Ford Motor Company, compared to General Motors and Chrysler. A recent New York Times article notes that the descendents of Henry Ford who hold a controlling interest in the company have provided the auto maker with an invaluable sense of stability and support.
This wasn’t always the consensus opinion. For years Ford’s family approach was seen by some as out of touch with the importance placed on institutional owners who could wring the most value out of such a portfolio of assets, not to mention the global trend toward auto industry consolidation, which witnessed Chrysler fall into the arms of Daimler-Benz. Some of the Ford clan even flirted with finding an adviser to explore cashing out in 2007.
But the family, led by William C. Ford Jr., great grandson of the founder, quickly rallied ‘round their heritage—especially the bet-the-company measures taken by founder Henry Ford. For the first time in Ford’s history, they went outside the auto industry for a CEO, tapping Alan Mulally from Boeing. William Ford handed over the operating reins, but remains chairman and the leading family representative on the Board. Then, Ford mortgaged the company’s assets to the tune of $23 billion. The borrowing was widely derided at the time as a sign of weakness and panicky management.
Taking a lesson from Henry Ford’s long-term view, however, the family had actually helped prepare the company for one of the toughest economic periods since the Great Depression. While rivals took half-measures, Ford hunkered down for the economic storm that was soon to swamp global economies. The company still has enormous challenges to overcome, but with the long-term commitment of its founding family, it is in a much stronger competitive position than bankrupt rivals “Government Motors” or Chrysler con Fiat.
The Ford model doesn’t only apply to automobiles or heavy industry. Take the newspaper business. Many a Dow Jones family member no doubt wishes their collective sense of history had been as strong as the Fords’. If so, they, rather than Rupert Murdoch, might still control the Wall Street Journal. It is too late for the Dow Joneses, but not for the Sulzberger family who control the Times, cash-strapped as they may be. Here’s hoping they read their own Business Section.
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