Ford faces competition; bankruptcy gives rivals benefits

— -- Ford Motorf, the only one of Detroit's Big 3 automakers not in bankruptcy, now could be at a competitive disadvantage for taking the high road.

As with Chrysler before it, General Motors' gm decision to seek bankruptcy reorganization Monday will clear away debt, slash its dealer network and give it a better deal with the United Auto Workers union.

To compete against the reorganized and streamlined GM and Chrysler, Ford will need to achieve the same sort of cost-cutting. But the nation's second-largest automaker will have to make them without the benefit of having a court order behind it. Issues include:

•Labor. Ford will seek additional concessions from the United Auto Workers to try to match givebacks handed to General Motors and Chrysler as both plunged toward bankruptcy.

"Our goal is not to be disadvantaged," Ford spokesman Mark Truby says. "We're going to go back and negotiate aspects (of the contract) with the UAW."

UAW spokesman Roger Kerson said Monday that the union had no comment.

Ford would be "fools not to go back to the union and say, 'Why don't you give us the same deal as you gave (them)?' " says Rebecca Lindland, director of IHS Global Insight's automotive practice.

The UAW acceded to Ford's requests on several fronts as recently as March. At the time, Ford proclaimed it would save $500 million a year and would have labor costs on par with foreign firms making cars in the Americas.

But that was before GM and Chrysler went into bankruptcy-court reorganization and sought even more givebacks from the union.

•Dealers. Ford has 3,700 dealers, 16% fewer than at the start of 2006. Dropping dealers is difficult because they're independent businesses.

But it's much easier for GM and Chrysler in bankruptcy court. Chrysler has told 789 dealers that they will be gone by June 9. GM sent letters to 1,100 recently telling them they will have to give up their franchises next year.

•Debt. Ford stayed out of Chapter 11 by seeking additional capital before the recession took hold. But it now owes $25.8 billion at a time GM and Chrysler are improving their balance sheets. As of March, Ford had $21.3 billion in cash.

"If I were in Ford's shoes, I would be most worried about GM's ability to get rid of debt," says William Kohler, co-chair of the automotive practice of law firm Butzel Long.

Ford has advantages, as well. If buyers shun GM and Chrysler products in fear of being caught up in their financial mess, Ford could become the American vehicle of choice.

"Some consumers are going to flee from a bankrupt automaker, and Ford should pick up some of that business," says Efraim Levy, an equity analyst at Standard & Poor's. GM's decision to ax all but four of its vehicle divisions means more market share is up for grabs for remaining automakers.

Ford has several new fuel-efficient cars in the wings, including a subcompact and a much-touted replacement for its Taurus family sedan, once its flagship vehicle.

Ford is expected to report today that sales improved in May.

Lindland wonders, however, whether Ford will get a larger share. "There are people who will only buy a GM product and would never dream of buying a Ford," she says.