Even though the turnaround at Ford Motor Co. has a long way to go, it's encouraging that investor Kirk Kerkorian and his Tracinda Corp. see value in the automaker. But as the financial drama unfolds, it is crucial that Ford Motor stay focused on executing its game plan. A distraction could hamper the fledgling turnaround.
So far, Ford Motor's financial recovery is mostly attributable to cost-cutting. That's a necessary first step in the process, but it is not sufficient to sustain the automaker for the long haul.
The financial results, including a net profit of $100 million in the first quarter, don't reflect victory in the domestic marketplace. Ford Motor has been restructuring its North American operations since January 2006, so it is time that cost savings paid off. There wouldn't seem to be much more that an activist investor reasonably could want to cut just to force more improvement on the bottom line.
Cost-cutting can put a company into a position to prosper — when it has some hit products in a decent market. The modest sales success of the Ford Edge, Ford Focus and Lincoln MKX suggest that Ford Motor may be moving in the right direction. But in the current depressed North American auto market, the company's sales volume and market share remain well below last year's anemic numbers.
As Kerkorian must know, the key to Ford's recovery will be the product development output that comes to market in the next three years. Those vehicles will determine whether Ford Motor can replace its historic huge profits on F-series, Explorer and Expedition sales with proceeds from attractive new products.
To distract the company now and disrupt its product flow could be catastrophic.