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  • July 25, 2008 11:06 AM EDT by Liz Claman

    To quote Steve Miller, "You know you got to go through Hell before you get to Heaven.."

    Ah yes, from one of my all-time favorite songs, "Jet Airliner" we get to the heart of the current Ford experience. And right now, folks, Ford (F) is going through the 'Hell' part of those lyrics. I'm just back from covering Ford's second quarter earnings disaster. I woke up at 4am yesterday to hop a flight to Detroit. First thing I noticed when I arrived at the airport was that, among all the Chili's, Max and Erma's eateries and the newsstands, were two stores: one was called "The Henry Ford" and the other, "The GM Collection." If ever there were a company town, Detroit is IT. I rushed out to the company headquarters in Dearborn and the Fox Business crew was already there, running around with Detroit Power and Light to get the shot set up on the front lawn. It was t-minus 2 hours before Ford's CEO Alan Mulally would be rushing from his earnings announcement to our shot location. Our secret weapon in the Midwest-- brilliant producer/photographer Bob Ray-- had convinced Ford to drive a bunch of their vehicles right onto the lawn so they could be in our background shots. As we were rushing around putting up gigantic reflectors, cameras and monitors, inside Ford Mr. Mulally was facing the media to break the bad news: Ford had suffered a record loss of $8.7 billion dollars. What was so disappointing for many shareholders was that just a quarter ago, Ford has surprised Wall Street by posting a $100 million dollar gain. TINY by Fortune 50 standards but a nifty trick because steel and oil prices were skyrocketing. So there was hope things might be turning around. Hardly. Fuel prices continued to stair-step upwards and Ford simply doesn't at the moment have a bevy of fuel-efficient vehicles. Forget it. This quarter was doomed.

    But now let's move to the "getting to Heaven" part of Steve Miller Band's song: Mulally outlined a sweeping plan to totally overhaul its North American plants. These plants currently churn out trucks and SUVs but will now make small cars. Gang, get ready for the Euro cars!!! Because that's exactly what these plants (which have been belching out gigantic Expeditions and Navigators) will be popping out: the sleek and shiny European version of the Ford Focus, Fiesta and something called the Transit Connect... a compact delivery van that's selling like hot-cakes in Europe. Oh, and the retooling of these plants? That begins a short four and a half months.

    Do you guys have ANY idea how radical this plan is? Radical because the U.S. auto industry makes changes at a snail's pace. In the past, they couldn't change the paint on the walls in the cafeteria without a union panel hashing it out with management for half a year. But Mulally isn't playing that old game. He came from Boeing where he was known to deftly deal fairly but firmly and quickly with all groups involved. When he came to our cameras at 12:40pm ET (see the clips below), he literally jumped out of the car with a huge smile on his face. He looked like a guy who had endured the worst but was now ready for the best. Please listen hard to some of his comments deeper into the interview. He says this time, change is for real and it's for good. As in, PERMANENT. I really drilled down on Ford's liquidity (cash) position. These auto companies burn through cash at a frighteningly fast rate and it's important for you to know as an investor whether Ford will have enough money in this environment of change and commodity drama that makes visualizing even a measly 2 months out difficult. And all you SUV lovers (myself included) ?? Don't worry. You'll hear in the interview what he says about those who think Ford is abandoning making larger vehicles. Let me know what you think. Do you buy the new plan? Do you think one day *you'll* be driving a Ford? Lemme tell ya, I drive an Acura SUV but that Escape Hybrid is looking pretty good to me right about now with gasoline in my town hitting $4.05 per gallon.

    Listen, stay tuned to the blog because I'll post some photos of our crew later so you can get a sense of the behind-the-scenes effort we made to bring you what *I* believe is the earnings story of the quarter. So far. I mean, I think we can all agree, ANYTHING can happen in this market. Here are the clips.

    --Liz

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Cats

The so-called "Big 3" have arrived at this sad juncture because of a combination of arrogant management and tunnel-visioned unions that simply never believed that the likes of Toyota, Subaru, Nissan, Honda, Kia and Hyundai would ever rain on their parade. Each one of these "foreign" manufacturers has set up manufacturing facilities in this country and they are flourishing. Volkswagen has recently announced that it will add a plant to the mix. The "Big 3" managements and their union cohorts have brought themselves to this point and are solely to blame for the mess they've created. By the way, our family drives Subaru Imprezas and a Hyundai Accent; they are wonderful, reliable cars and Subaru's full-time all-wheel drive can't be beat in winter snows.

July 29, 2008 at 6:52 am

John O

Liz covering news about 'Best Buy Music Center' allows me to ask the following: Does anyone agree with me that Allison Krauss and Liz Clayman are one and the same person??? Liz by day, Allison by nite?

July 28, 2008 at 3:55 pm

Jonathan

Hey Liz. I saw your interview with Mr. Mulally and i was impressed with how he handled the situation his company is in. He seems like the type of leader that a declining company could benefit from. However, we have heard all of this before. The "Big Three" always seem to be years behind the rest of us, and i wonder if it might not be to late no matter who is in charge. Ford Motor Company always manages to screw up whatever they try to do. As an owner of a Ford automobile, i have been very disappointed in the company over the last ten years or so. Perhaps they should concentrate on quality customer service a little more. Maybe that would help their bottom line. Considering how much debt is on the balance sheet, i wish them well. Mr. Mulally has much to do. Thanks Liz!

July 25, 2008 at 10:46 pm

Joseph

Liz, thanks for the great report as always. After I have seen your report, my assessment is why the traditional American car manufacture like GM and Ford are always behind the Japanese automobile business model? Isn't it too late for Ford finally to sell the small and fuel-efficiency cars into American market? Look at Toyota Pirus, every location who is selling them are in very hot demand to the back order situation. Why these American car manufacture companies always a step behind? Why they cannot see their big gas eater mobiles will suffer soon enough? Now, gas is $4 a gallon. Who will buy their cars? If Ford is that smart like the Japanese and roll out their small and fuel-efficiency car long time ago. They would have compete with the Japanese now instead of let the Japanese dominate the auto sales market. Isn't it sad to see these traditional American car manufacture companies like GM and Ford to lay off so many employees and let their stock value gone down so much before they FINALLY get wake up and change their business plan to start selling these small and fuel-efficiency cars into the American market? It's just show how inept these American car manufacture former CEO to do business in auto industry. It just really really SAD... Anyway, Liz, thanks for bring us the update about how Ford will change their business model and hopefully, this new CEO Mr. Mulally will bring his company to the light of the end of this tunnel. Also, just want to let you know that I'm your fans and Martha MacCallum fans since both of you were on CNBC. I usually watch CNBC but once Fox Business has launched their network, I switched to watch from CNBC to Fox Business network and glad that you have moved to work on Fox Business network. You have made a good choice because, Fox News has been always a #1 cable news network for a long time and long time to come. The main reason for their success because they are fair and balanced. Finally, I really enjoy your appearing on Bill O'Reilly Factor TV program and Red Eye TV show. Hopefully, we will see more from you to appear on those shows beside just the Fox Business channel programs. Even better is hopefully, we will see you and Martha on the O'Reilly Factor's Culture Quiz show. If that happens, what a great reunion with you and Martha to appear on the same program since you were both moved from CNBC to Fox News. Keep up the good work! Best wishes, Joseph

July 25, 2008 at 7:12 pm

Reid Wientge

Why are the unions getting a free pass on the issue of the death of American car makers? Nissan, Toyota and Honda all produce cars that Americans want at prices we can afford. Why? Labor costs! No discussion of the Big Three is complete until labor gets its well deserved criticism. Does any American believe that we cannot compete on a level playing field? Labor costs of $65 per man hour at GM (last years number), and restrictive union policies, distort the decision making process and ensure that the best product is not built. Japanese makers pay somewhere between $17 and $25 per man hour. Exorbitant federal taxes and the socialist policies of the State of Michigan do not help.

July 25, 2008 at 12:00 pm

chuck

That's one thing I notice about our auto industry. Like in Europe they have scooters,SmartCars and MiniCooopers. Why hasn't any of the big 3 adapt what the Europeans have done with autos. U know soon the SUVs are going to be a thing of the past. What the leaders of the BIG3 Car companies need is a radically change of think. Especially adapting to constant business changing conditions. Now here in the Southeast we have our own autoplants: Toyotas in Canton Ms and a Mercedes Benz plant in Alabama. I find it interestng that none of the big 3 didn't do what thier competitiors do like build a plant here in the Southeast. U know they could keep up with changing demands of the consumer who is thinking green. I wonder sometime in the future if autoplexes along interstates are going to be a thing of the past too. Has that ever crossed your mind?

July 25, 2008 at 11:41 am

about this blog

  • Liz Claman joined FOX Business Network (FBN) as an anchor in October 2007. Her debut included an exclusive interview with Berkshire Hathaway CEO and legendary investor Warren Buffett.

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