Ford has confirmed employing Goldman Sachs’ Kenneth Leet as strategic advisor to chairman and chief executive officer Bill Ford.
The official announcement – on the day the automaker almost doubled its earlier reported second quarter loss – said only: “Leet will report directly to Bill Ford and work closely with senior management in exploring a broad range of strategic alternatives for the company.”
The announcement made no mention of a review of specific brands, including struggling Jaguar.
On Wednesday, the Wall Street Journal (WSJ) said that Leet, who led mergers and acquisitions teams at Goldman Sachs Group and Bank of America, would spearhead a major review of Ford operations and noted that Bill Ford is under pressure from the car maker’s board to take more dramatic steps in his restructuring efforts.
Early reports on Wednesday noted that Ford last month reported an unexpected second-quarter loss of $US123m after starting a restructuring programme six months ago that includes closing 14 plants and cutting up to 30,000 factory jobs in North America.
Later on Wednesday, the news got worse as Ford, in a filing with the US Securities & Exchange Commission, said it was widening its net loss by $131m to $254m, or 14 cents per share, as it raised its estimates for its pension curtailment loss – it had reported $205m in such costs in its second-quarter results last month.
According to Reuters, Ford said its full-year 2006 pension curtailment expense is now estimated at $1.2bn, up from $1bn, with full-year 2006 special items to be $3.8 bn.
Ford also said it expects its luxury unit Premier Automotive Group will be unprofitable in 2006, based on recent sales trends.
Previously, Ford said it would be profitable, but close to breaking even on a pre-tax basis, excluding special items, Reuters noted.
The PAG group of European premium brands – including Jaguar – swung to a pre-tax loss of $162m for the second quarter from a pre-tax profit of $17m.
The Daily Telegraph on Thursday said Leet had been directed by chairman Bill Ford to assess and value all of Ford’s brands, with the loss-making Jaguar brand “expected to be top of the list”.
He would also look at the other PAG brands Land Rover, Aston Martin and Volvo, the paper added.
Jaguar spokesman Don Hume described Leet’s appointment as “very much a Ford US announcement” and said queries were being handled by Ford staff in Detroit.
He noted, howver, that Leet was no stranger to the corporate world and would serve as a personal adviser and counsel to Bill Ford and the automaker’s board.
Meanwhile, Ford spokesman Tom Hoyt earlier told Reuters that Leet was coming on board to help review the automaker’s overall business.
“Bill Ford has said that everything is on the table,” Hoyt reportedly said. “We are reviewing the business. This doesn’t change that.”
Goldman Sachs analyst Robert Barry told the news agency: “Ford has been under pressure to take more drastic actions given its [Detroit rival GM] has been announcing big cost cuts and asset sales.”
Reuters noted that Jaguar was still losing money and that, in an interview on 20 July, Bill Ford said Jaguar would take time to turn around, but he was considering all options for the brand.
The news agency also noted that investors have long speculated that Ford may also spin off its finance arm, Ford Motor Credit, which has seen borrowing costs rise after its debt ratings were cut to junk status though Ford spokesman Hoyt said the automaker has no plans to sell the unit.
The Daily Telegraph noted that Jaguar has struggled ever since Ford bought the brand for $US2.6bn in 1989 and, last year, Ford injected $2.6bn to cover heavy losses and investment write downs, on top of the $450m it injected the previous year.
The paper added that Jaguar’s US sales have fallen 30% so far in 2006, despite attempts to revive the business, including the closure of the historic Browns Lane plant in Coventry, the cutting of 1,150 jobs and a withdrawal from Formula One motor racing.
The Telegraph said that Leet’s recruitment is understood to have been sparked by General Motors’ decision to enter alliance talks with Renault and Nissan, potentially giving it an advantage over its Detroit rival.
He was sought out by two former Goldman Sachs executives – Robert Rubin and John Thornton – who sit on the Ford board, the Telegraph noted, adding that Leet knows Ford well because, while at Goldman Sachs, he was responsible for investment banking for industrial companies that included the car maker.
The Daily Telegraph said that, though it was not known what timescale Leet is working to, Bill Ford recently hinted that the company would unveil a new cost-cutting plan within 60 days.
Industry experts told the paper Ford was most likely hang on to Volvo and Aston Martin, and package Jaguar and Land Rover for sale together.