Give Ford (NYSE:F) this much: It is no anxious prophet. Nor is it bound by the chicken-hearted tradition of companies that scale down at the first sight of economic trouble.
Ford, by high contrast, announced a bumptious expansion into Europe yesterday. But the stock market, perhaps jolted by the sight of a brash act in the bland world of corporate decision making, all but threw flowers and chocolate in the general direction of Detroit. Ford was up about 3.5% yesterday and was adding to the gains in pre-market trading this morning.
But you'll want to go against the grain and leave the lovefest for those who have too much confidence in the European economy and ascribe all of Ford's strength in America to management savvy.
A chunk of that strength, especially in the past 18 months, had to do with the near disappearance of Toyota (NYSE:TM) and Honda (NYSE:HMC) from the competitive landscape. The Japanese automakers are only recently coming back to life, after the earthquake and tsunami in March 2011. In the aftermath of that tragedy, even General Motors (NYSE:GM) temporarily looked like it had regained its footing. It hadn't. It was just temporarily enjoying life without its major tormentors.
Granted, Ford is not a company without considerable strengths. It has improved its vehicle fleet and tweaked it, though not enough as needed to sustain it long term toward smaller, more fuel-efficient vehicles. Its August sales were up 13%, although that does not factor in discounting or the fact that with jobs numbers like the one just reported this morning (an anemic 96,000 created), the auto companies will be cutting prices to ribbons. Ford has one of the few truly talented and free-thinking CEOs in corporate America today in Alan Mullaly, joining the pantheon of Starbucks' (NASDAQ:SBUX) Howard Schultz and -- well, if you can name another, please do.
Several years ago, of course, Ford took the road less traveled in America, putting money into its cars when all looked lost economically in 2008. And when taking handouts from the government was in vogue, the company refused, building goodwill in the process.
But this is different. In terms of economic troubles, Europe's issues make America's look like finger painting. Car sales are at the lowest point in 15 years and the debt troubles at the root of it appear intractable. Relief is a long way off, even for Ford, which stands to lose more than $1 billion there this year, leading to a sharp drop in its overall 2012 operating profits set against last year.
With apologies to the stock market, apparently taken up with fantasy despite realities from Europe's systematic troubles to today's jobs report, a lot of money on a handful of line alterations in new-model cars won't combat all that. "But it worked last time in America," Ford stock chasers are saying. Yes, but it needed a big assist from the flukish disappearance of its competition. And the economy is far worse in Europe than it ever was in the United States.
That's not to say Ford is not an admirable company. It is. And Mulally clearly deserves praise for seeking his own path. But this path through modern-day Europe is pockmarked with potholes and speed bumps, which is why we are, all told, going against the grain and selling Ford.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.