Ford Chairman Says Firm Still Seeking Acquisitions
Ford Motor, sitting on a $7.1-billion pile of cash, remains interested in a major non-automotive acquisition, Chairman Donald E. Petersen says.
“We bid on Hughes, so that says we believe we have the ability to consider an acquisition of substantial size. So, the intent is clearly yes,” Petersen said in an interview.
“But our posture is one of patience, and I have no predictions,” he said.
Ford, the No. 2 U.S. auto maker, was one of the losing bidders last year for the defense electronics giant Hughes Aircraft, which General Motors purchased for $5.1 billion.
Chrysler Corp. Chairman Lee A. Iacocca announced in July that the No. 3 U.S. car maker had called off an 18-month search for a multibillion-dollar high-technology acquisition because the right company couldn’t be found without engaging in a hostile takeover fight.
Aerospace, Electronics
Iacocca’s statement that Chrysler looked at “probably every good technology company in the United States” brought into question Ford’s ability to find one.
But Petersen said Ford still is hunting and considers aerospace, electronics and financial services the three major diversification areas that “make the most sense for us. . . . We believe it’s a sound idea for the company to seek good, meaningful diversification of its earnings.”
A high-tech acquisition could be combined with the wholly owned subsidiary Ford Aerospace & Communications Corp. A financial services purchase would fall under Ford Motor Credit Co., which last year absorbed First Nationwide Credit Corp., the holding company for the nation’s eighth-largest savings and loan that Ford bought for $493 million.
Petersen also said Ford plans to reduce its North American salaried staff by “20% to 25%” over the next five years in an efficiency move.
He said the company would rely more on Ford of Europe’s expertise in small-car design and engineering because “we have felt for years that as we try to make ourselves more efficient, it really doesn’t make a lot of sense to have totally duplicate design and development capability.”
But Petersen downplayed recent trade journal reports that closer work with Ford of Europe or with Japan’s Mazda Motor, of which Ford owns 25%, could mark the beginning of the end of Ford’s U.S. small-car engineering and production.
“I think there’s a tendency for people to think in terms of extreme answers--totally this or totally that,” Petersen said.
“There’s been a spate of articles where you’d swear the whole thing is locked up and sealed that they’re going offshore--100%--they’re gone. Down Detroit. Down Ford. It’s not true. It’s simply not true.”
South Korean Car Maker
Ford has purchased 10% of the South Korean car maker Kia Motor Corp., and it will import in the next year to the United States Mazda-designed cars from Kia and from a new Ford factory in Mexico.
But Petersen said Ford wants to manufacture the next generation of its top-selling car, the subcompact Ford Escort, domestically, and he indicated that the Escort would continue to come equipped with an engine made in Dearborn.
