Bill Ford taps an old hand at saving profits

Carl Reichardt, newly appointed vice chairman in charge of financial affairs at Ford Motor Co., has a reputation as a tough cost-cutter — rather like the ousted Jacques Nasser.

But unlike Nasser, Reichardt’s track record also includes a long streak of improving profits and share prices from his tenure as chairman and CEO of Wells Fargo & Co., a major interstate bank based in San Francisco.

Reichardt, 70, led the bank from 1983 until he retired at the end of 1994. During his tenure, according to Ford Motor, the bank’s stock rose 1,668 percent, more than three times the increase for stocks overall.

In his new job at Ford, Reichardt oversees the automaker’s financial side. Reporting to Reichardt will be Martin Inglis, Ford’s CFO, and Don Winkler, chairman and CEO of Ford Financial Services, which includes Ford Motor Credit Co., the giant captive finance company.

High on Reichardt’s to-do list are the following:

  • Shore up the stock price: Ford’s share price hit a 52-week low of $14.70 on Sept. 21, less than half the 52-week high of $31.42 in April. Ford shareholders aren’t accustomed to such setbacks: From 1982 through 1999, adjusted for splits, the path had been ever higher.

  • Regain higher credit ratings: Credit rating agencies this year have downgraded all of the Big 3, which raises their cost of borrowing money.

  • Slow the cash burn: Ford’s net cash — that is, cash and marketable securities, minus long-term debt — shrank to $1.2 billion on Sept. 30 from $10 billion at the end of 1999. Acquisitions, shareholder dividends and capital spending all cut into cash.

  • Cut costs and grow revenues: At the end of the third quarter, Ford threw in the towel on a couple of its most important 2001 financial milestones. Revenues were down $6 billion after nine months, compared with a goal at the beginning of 2001 of growing total revenues by $5 billion this year. And North American Automotive Operations have lost $1.2 billion year to date compared with a goal of achieving a 4 percent return on sales.

    Ford also will fall short on cutting costs by $1 billion for the year. After nine months, it has trimmed only $200 million, not counting Firestone-related costs.

    Despite his 24 years at Wells Fargo, Reichardt is a veteran of Ford and Ford boardroom politics: He joined the Ford board in 1986. Even before his present assignment, he was a member of the powerful finance committee.

    With his new appointment, Reichardt succeeds Bill Ford as finance committee chairman.

    “He (Reichardt) knows the car business. He knows Ford’s business very well.

    “He’s been an important part of their processes for a long, long time,” said Dick Schliesmann, the Wells Fargo executive vice president who runs the bank’s auto finance division.

    Under Reichardt as chairman, the bank began a major push to expand its auto finance business nationwide, instead of confining itself to the West Coast.

    “He has a reputation for being tough,” Schliesmann said. “But I have to say he’s the fairest man I ever met.”

  • You can reach Jim Henry at autonews@crain.com

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