About James Bryant

Ford’s recent announcement that it is indeed looking at options for its Land Rover and Jaguar brands is being described in automotive circles as the worst-kept secret in Detroit.

The secret, as such, is hidden in the nuances of a deal struck late last year whereby Ford mortgaged its future to the tune of about $18 billion in secured loans that put up as collateral many of Ford’s domestic properties, and even entire subsidiaries (including Volvo and Ford Motor Credit). The not-so-secret secret lies in what Ford didn’t put into hock — namely Jaguar and Land Rover.

Suspicious minds, well, suspect that Ford CEO Alan Mulally and Chairman Bill Ford didn’t come about this arrangement by accident — they laid plans for a Jaguar/Land Rover exit strategy back in 2006 on purpose.

But why Jag and Land Rover and not Volvo (Ford has already sold uber-lux Aston Martin to rich English racing guys and even richer Kuwaiti investment guys)? The problem is efficiency. Volvo has been more successful at the all-important “creation of synergies” with its Detroit parent. In Europe Volvo shares a platform and parts with Ford models. No such cooperation ever emerged at Jaguar or Land Rover, so ditching them for some quick cash would be logistically less nightmarish.

But who would be interested in buying Land Rover and/or Jaguar? Of course Cerberus Capital Management’s name is being tossed around — the private equity fund that has inked a deal to buy Chrysler. BMW and Hyundai are also supposedly interested; other industry watchers think a billionaire from Russia or Asia could pop up and strike a bargain. Even former Ford CEO Jac Nasser’s name is being brought up (via his association with One Equity Partners).

Whoever buys Jag and Land Rover, watchers tend to agree that the combined sale would fetch about $8 billion. By 2006 standards that will assuage Ford losses for about 8 months.

Normally I come to you as Hoover’s resident automotive guy, but I also cover companies in the aerospace and defense industries. With wars raging in Iraq and Afghanistan, and another potential one looming in Iran, defense is attracting a lot of attention — and a lot of money. 

Now that President Bush has signed the latest war funding bill, I thought it might be terrifyingly fun to look at a couple of companies at which the US Department of Defense is spending your money. You’ve probably never heard of these companies, but once you have you may lose a little sleep, or invest a little money. I’m not here to judge. 

Metal Storm is a cheekily named company out of Australia and they have invented a gun that makes a Thompson submachine gun look like a super soaker. With partners including Electro Optic Systems Pty Limited and ST Kinetics, Metal Storm is developing a fearsome technology. The Redback weapons system is designed to detect a threat, acquire the target, then pepper it with 40mm projectile fire — hence the storm of metal. The Redback utilizes Metal Storm’s electronically initiated (read: no firing pin) stacked projectile system. Aside from the projectiles spitting out the muzzle, the actual gun has no moving parts — and it shoots so quickly that it has a theoretical rate of fire approaching one million rounds per minute (dang, my shoulder hurts just thinking about it!). One practical use for the Redback would be to protect military vehicles from rocket propelled grenades. Other uses being tested are the weaponization of unmanned ground and aerial vehicles - think RoboCop without the hackneyed one-liners. 

Ionatron is also working on making the weapon of the future. The company is developing a Laser Induced Plasma Channel directed-energy weapon, or put in layman’s terms — a ray gun. The company describes this weapon as shooting “man-made lightning” that is aimed by a laser beam similar to the laser sights used on conventional weapons. The intensity of the lighting bolt can be adjusted to either kill or merely stun an adversary (”He’s dead, Jim“). The weapon has been tested in the lab, but will not be fielded in battle for years, if at all — thank goodness.

Ford Motor chairman Bill Ford Jr. found himself in the hot seat — again — at the company’s annual meeting last week. Bill Ford Jr., great-grandson of Henry Ford, removed himself as CEO last September and named former Boeing executive Alan Mullaly as his replacement. Ford has remained executive chairman, but many of the 80 or so shareholders in attendance opposed Ford’s reelection to the board.

One particularly P.O-ed shareholder, Sam Joanette, who claims Ford’s dwindling stock price has cost him $1 million, said to Mr. Ford, “You are a failure. … You are the worst chairman and CEO to ever lead the company.” Ouch.

Worse than Jac “The Knife” Nasser, who many feel brought about the beginning of the end with ill-advised acquisitions like Land Rover and Kwik-Fit? Worse than Henry Ford II, who veteran auto journalist Brock Yates once referred to as being “occasionally sober”? Only history can determine who will be judged the worst Ford CEO of all time, but I think Bill Ford Jr. will be in the top three.

As for the rest of his family, there seems to be some dissension in the ranks as to what should be done with the Ford family’s 40% ownership of the company. Detroit News reported that in April some members of the Ford family met with Wall Street deal wizards Joseph Perella and Peter Weinberg to pick their brains on the matter. The paper reports the family decided against actually hiring the deal gurus’ firm, Perella Weinberg Partners, but the fact that such ideas are even being considered is a sign that the family is growing impatient — and worried.

Impatient and worried, too, are Ford’s common stock shareholders, who for the last three years have issued largely symbolic annual meeting proposals to convert Ford Class B stock (which the family holds) to common stock. One share of Ford Class B stock gives the right to cast 16 votes versus the one vote per share that comes with Ford common stock. In 2005 the proposal garnered 25% of the vote, in 2006 23%, and this year 27% of shareholders voted for the proposal. Of course the Ford family’s Class B stock essentially gives them veto power over such a move.

In the midst of all the turmoil, Ford CEO Alan Mullaly is constantly trying to put out fires, insisting the Way Forward turnaround plan is showing signs of success, but he insists progress is going to take more time. However, with the Ford Family and the rank-and-file shareholders in a tizzy, time may be in short supply for Bill Ford Jr. If Ford does not meet some benchmarks with the Way Forward soon, Bill Ford Jr. will likely be on his Way Out of the chairman’s office by this time next year.

Now that I have caused you to have an annoying Queen song stuck in your head, I will get to the point.                       

The numbers are in for Q1 2007 and it’s official: Although an eventual unseating of GM has been predicted for some time, Toyota beat out GM in global sales much earlier than anticipated. Toyota’s sales for the quarter were 2.35 million vehicles compared to GM’s 2.26 million. GM still sells more cars in the US, but Toyota has opened the floodgates by beating GM on the global stage. As Toyota continues to increase global production while GM’s shrinks, the leading Japanese carmaker is on track to beat GM for the entire year, bringing an official end to the reign of GM as the world’s biggest carmaker.

Depending on what metrics you choose, Toyota has already overtaken DaimlerChrysler and Ford in the US. Toyota beat out Ford for the first time in monthly sales tallies in July 2006. Last year also marked the year that Toyota beat DaimlerChrysler in full-year US sales and market share.

So, before I leave you with the idea of Toyota being able to sing a different annoying Queen song, I’d like to congratulate GM on a good run. You held the title for a whopping 76 years. That’s no small feat. Being the leader has to be stressful, so maybe losing to Toyota comes with a measure of relief — like finally going to the dentist after weeks of suffering with a bad tooth.

Last week Toyota Motor North America (TMNA) president Jim Press became the first non-Japanese person in Toyota history to be named to the company’s board of directors, and the move comes at a pivotal time for Toyota, and for the industry. The promotion does not officially take effect, however, until it is approved by shareholders at the annual meeting in June.

Current Toyota board members have recently expressed concern that an all-Japanese board might be sending the wrong signals. While wishing to appear more international, the company also would like to avoid any bad blood like that which spawned the “Buy American” consumer backlash of the 1980s when worries of a Japanese invasion of trade and investment were the flavor of the month.

Concern of a backlash stems from Toyota’s relentless gains in market share and sales in the US. Toyota currently has a 16% share, a mere one point behind Ford, and within spitting distance of GM’s 22%. In fact most industry watchers think that Toyota will topple GM as the world’s largest carmaker within two years. As the Detroit Three contract their operations, Toyota is growing on their home turf. The company recently announced the building of a new assembly plant in Mississippi, bringing the total number of US plants to eight.

The decision to promote Press is also due in no small part to his experience in guiding Toyota’s success on US shores. Press started with Toyota in 1970 after a two-year stint with Ford. Since that time he’s had a steady rise, becoming president of Toyota Motor Sales in 2005. He became president of TMNA in mid-2006 after his predecessor, Hideaki Otaka, became embroiled in a sexual harassment suit and resigned. He is also the first non-Japanese executive to run TMNA.

Bringing Press into the fold as a director coincides with the expansion of Toyota’s board from 25 seats to 30. Over time this may mean the addition of even more international faces.