Bill Pierre Ford

For decades, Henry Ford’s company was the world’s No. 2 automaker, a strong runner-up to General Motors and a pillar of American corporate stability. In early 2009, it emerged as the sole American automaker in a position to survive the steepest sales downturn in decades without a government bailout.

The company had been through rough patches before, recovering in the 1950’s from the neglect of its founder’s later years, and fighting in the 1970s and early ’80s to fend off waves of Japanese imports.

The 1990’s were, at first glance, a good time for Ford, as its Taurus was the dominant passenger car of the decade’s early years and sales of its high-margin sport-utility vehicles, minivans and trucks rose and rose. In 1999, the first year under its new chairman, William Clay Ford Jr., and new chief executive Jacques A. Nasser, Ford earned a profit of $7.2 billion. That same year, Ford bought Volvo, adding it to a stable of European brands that included Aston Martin and Jaguar. In 2000, it bought Land Rover and formed the Premier Automotive Group, which it hoped could expand its profits and worldwide sales.

The Troubles Begin

That same year Ford was hit by exploding Firestone tires on its Ford Explorer, which had been the most popular sport utility in the country. For more than a year, Ford traded angry accusations with Firestone over who was at fault for the problem. The situation helped oust Mr. Nasser, who had angered Ford employees with aggressive steps he argued were needed to change the company, and it began a downturn from which Ford has yet to recover.

In 2006 Toyota passed Ford in United States sales. Lower sales and declining margins combined with rising spending on health care and retirees drove all American carmakers into a corner, but perhaps Ford most of all. It reported losing a staggering $12.6 billion. At the start of the year, Ford had announced a restructuring plan involving shedding 30,000 hourly jobs and 14,000 salaried workers, about one-third of its labor force; later that year it raised $23 billion by putting many of its most cherished North American assets up as collateral, including the Ford logo.

In July 2007 it announced that it had earned a profit of $750 million in the second quarter, its first quarterly profit in more than two years. Still, its new chief executive, Alan R. Mulally, brought in from Boeing in late 2006, warned of “substantial losses” looming for the year’s second half, and confirmed that the company was negotiating with possible buyers of Jaguar and Land Rover and was considering selling Volvo as well.

The Losses Mount

In October 2008, a dire new forecast for global vehicle sales battered the shares of auto companies. On Jan. 29, 2009, Ford announced that it lost $14.6 billion in the previous year, making 2008 its worst year in history as a result of the biggest sales slump in decades. Ford maintained that it had enough funds for its business plan and product investments. It finished 2008 with $24 billion in cash on hand but $25.8 billion in debt.

Ford, which is the only American automaker not being propped up by billions of dollars in government loans, said it did not need federal aid unless the economy worsened significantly or a competitor filed for bankruptcy protection. It expects to break even or earn a profit, excluding one-time charges, by 2011.

Working With the Union

The Ford Motor Company can substitute its stock for as much as half of its payments into a retiree health care trust under a deal announced Feb. 23, 2009, by the automaker and the United Automobile Workers union.

The agreement could form the basis for similar deals with General Motors and Chrysler, which need to cut costs and demonstrate that they can survive under the terms of their loans from the federal government.

“The modifications will protect jobs for U.A.W. members by ensuring the long-term viability of the company,” the union’s president, Ron Gettelfinger, said in a statement.

On March 9, the U.A.W. announced that its members at Ford had approved the agreement.The changes also require court approval.

On March 3, 2009, Ford said that its February sales were 48 percent lower than in February 2008. The company also said it would reduce second-quarter production by 38 percent from the same period in 2008.

Revamping Its Balance Sheet

On March 4, Ford said that it hoped to eliminate as much as $10.4 billion in debt by giving cash and stock to debt holders as part of a revamping of its balance sheet.

The moves Ford announced were similar to what General Motors and Chrysler were required to do under their multibillion-dollar loans from the federal government. As a result, Ford would reduce its overall borrowing by 40 percent.

In a reflection of the financial stress on the auto industry, Ford is offering its bondholders far less than the debt was originally worth. But under the terms it is proposing, holders of its debt would still fare better than they would if they sold their debt for its current market value.

G.M. and Chrysler bondholders have been forced to take such losses, but until now Ford bondholders have resisted similar actions. Ford, which has not taken any bailout money, has had more success initiating its restructuring than G.M. and Chrysler have achieved under government edict.

Analysts said that Ford’s debt initiatives, and the earlier agreement it secured with the United Automobile Workers union, reinforce its status as the healthiest of Detroit’s automakers. Ford said it would put up $2.2 billion in cash, including $1.8 billion from its lending arm, Ford Motor Credit, and 500 million shares of stock to persuade bondholders and other creditors to accept its restructuring offer.

Ford said that of its $25.8 billion in outstanding debt at the end of 2008, $20.7 billion is eligible to be restructured.

Major oil companies have reported 2008 profits that would make automakers weep. Perhaps even a few motorists.

In a year that saw the national gasoline price average rise to $4 a gallon, then within a few short months plummet to $2, Exxon Mobil set a record for the most profitable American corporation on $45.2 billion in earnings. And this despite a fourth quarter that saw a 33-percent drop in profits, due in part to dropping oil prices.

Exxon Mobil wasn’t alone in raking in big numbers. Chevron, for instance, reported $24 billion in profits. By themselves, these figures are staggering, though Bloomberg.com put it in an interesting context when it wrote: “Exxon Mobil’s and Chevron’s combined revenue for 2008 exceeded the gross domestic products of all but 16 of the world’s nations.”

Another perspective would be to look at what these firms could buy. For instance, today’s market cap, or present value, for General Motors is about $1.8 billion and Ford Motor Company is $4.4 billion. Despite the significant decline in earnings, Exxon Mobil cleared $7.8 billion in the last quarter—more than enough to purchase both industrial giants and still have money left over to aid in restructuring. Repeat: In just one quarter.

Carrying this theme, Wall Street rewarded itself with a reported $18.4 billion in bonuses for 2008. Quite literally, a Manhattan office pool could buy a troubled automaker these days. In fact, you might even get a division for free. But I digress.

All this has me thinking: What if an oil company bought an automaker? What would it do, and what kinds of vehicles would it produce? What if Wall Street did? I have my thoughts, but would be interested in reading yours in the comments below, or in the forums.