Ford Motor Co's restructuring is on track to bring a profit as soon as 2011, without the need for emergency government bridge loans, executives told stockholders on Thursday at the automaker's annual meeting.
Ford shareholders also approved the company's funding plan for a healthcare trust for United Auto Workers union retirees and rejected a challenge to the share voting structure that gives the Ford family control of the automaker.
The meeting, in Wilmington, Delaware, came just two weeks after Chrysler filed for bankruptcy protection and amid industrywide concerns that General Motors Corp could follow Chrysler into court within weeks.
On a day where Chrysler announced plans to terminate 789 of 3,181 its dealerships, Ford Chief Executive Alan Mulally said the company has an incredible dealer network and would continue to address excess capacity in urban areas.
Ford Executive Chairman Bill Ford said the industry environment was the toughest he had seen in his three decades in the business, but he remains confident of the automaker's restructuring plan.
Much of the tremendous progress we have made has been overshadowed by the economic crisis of historic proportions that began last year, he told shareholders. We are undergoing the most rapid and far-ranging transformation in our history.
Mulally said Ford remained committed to matching capacity worldwide to demand and would continue a multiyear program of dealership consolidations in urban areas.
We are confident that we will not only survive this downturn but that we will emerge as a lean, globally integrated company poised for long-term profitable growth, Mulally said, adding that the automaker was on track to be at or above break-even in 2011 excluding special items.
Ford is the only U.S. automaker that has not required U.S. government emergency loans and expects to be able to steer clear of the industry collapse now swallowing GM and Chrysler.
U.S. auto industry sales have been running at about a 27-year low in 2009, but Ford has seen stability in its retail market share.
The automaker's stock was up 31 cents, or 6.25 percent, at $5.27 on Thursday afternoon on the New York Stock Exchange.
SHAREHOLDER INITIATIVES FAIL
The annual meeting attracted 98 Ford shareholders, up from 56 last year, including the Rev. Jesse Jackson.
We cannot afford to lose a manufacturing base and maintain our security, Jackson said during the meeting. With 600,000 job losses a month and 2.2 million homes in foreclosure ... we must stop the hemorrhage and then add the stimulus.
Jackson said later that he came to the meeting because he was concerned about the manufacturing base in the United States and the impact on jobs at automakers, suppliers and dealers.
The reindustrialization must be comprehensive and Ford is moving rapidly it seems ..., Jackson said.
An advisory vote requesting that the automaker eliminate its preferred voting structure that has given the Ford family control of the company since it went public in 1956 failed for a fifth consecutive year.
Under that structure, Ford family members hold a 40 percent voting interest through 70.9 million Class B shares, while the automaker had more than 2.3 billion common shares outstanding as of March 18, according to its proxy statement.
The motion received 25.05 percent support when it was brought in 2005. It had received more than 27 percent support the past two years but received 19.5 percent on Thursday.
I think for many of us the strength and the history of the Ford family is a major attraction to investing hard earned money in Ford Motor Company, said Joe Baker, a shareholder from Mississippi.
However, William Thrower, a Texas shareholder proposed unsuccessfully that executive compensation be limited until Ford shows a profit for two consecutive years. He said executives could be rewarded amply after that.
All employees of the company should forgo bonuses until the company is firmly on profitable ground again and that should start with our executive leaders, Thrower said.
Ford posted a company record net loss of $14.7 billion in 2008 and losses totaled $30 billion over the last three full years. It posted a first-quarter net loss of $1.43 billion.
Still, analysts see the Ford debt restructuring, the union agreements and the automaker's ability to issue more stock as signs that it could make it through the industry downturn and out the other side without seeking government emergency loans.
The automaker has completed a debt restructuring, raised $1.6 billion in cash from a stock offering and reached a deal with the UAW to cut labor costs and reduce Ford's cash obligations to a union retiree healthcare trust.
Those actions have helped Ford keep pace with the government-mandated restructurings at GM and Chrysler, which have moved more slowly on all fronts.
(Reporting by David Bailey, editing by Dave Zimmerman, Matthew Lewis and Steve Orlofsky)