Ford Fusion Helps FoMoCo Achieve Third-Quarter Profit

In March of 2005, the Blue Oval sold 305,172 vehicles, including nearly 25,000 Ford Explorers, more than 80,000 Ford F-150s, and almost 10,000 Ford Expeditions. But the big news, according to the company's press release, was that car sales stayed level year-over-year, with the "new" Ford Mustang, Ford Five Hundred and Mercury Montego all setting sales marks.

That month was also notable for another reason, too: It closed out the last quarter in which Ford turned a profit in North America — until now, that is.

Yes, it's true, Ford saw a pre-tax operating profit of $357 million in North America through the third quarter of 2009, driven by an increasingly customer-focused product lineup that also significantly boosted the company's market share.

Overall net income was $997 million, up $1.2 billion over the same time last year, with overall pre-tax operating profit shooting up $3.9 billion to reach $1.1 billion in the quarter. This performance, along with a reported positive cash flow, also has put a damper on those worries over Ford's cash burn, as the company actually boosted its gross cash stockpile by $2.8 billion over the 2009 second-quarter level, and is currently sitting on $23.8 billion.

Part of this good news comes from the fact that Ford has been aggressively and effectively cutting costs — to the tune of about $4.6 billion during the first three quarters of this year, an amount that already tops Ford's expected total cost cuts for all of 2009.

And while Ford's profit is certainly a powerful story, what's more significant is that the company has done so while also increasing market share.

Historically speaking, this has been a fine — and difficult — line for OEMs to walk, especially in a challenging business environment. Think of the old General Motors, which was long the market share leader in the U.S. despite actually running in the red for years. GM was selling a lot of vehicles, but costs, including high incentives, meant the company wasn't actually turning a profit on what it was selling.

Alternatively, companies such as Porsche often have shown a profit in the past by ignoring market share and simply building a limited number of high-profit, low-volume niche products.

Things are even trickier in today's business environment, yet Ford has not only gone green — profit-wise — but has boosted market share 2.2 points, with Ford, Lincoln and Mercury all seeing year-over-year sales gains.

And speaking of "green," it's particularly impressive that sales of Ford's hybrid products — Ford Fusion, Ford Escape, Mercury Milan and Mercury Mariner — are up 73 percent in 2009, especially when one considers that the overall demand for hybrids has shrunk by 14 percent during the same time.

In fact, the Fusion hybrid would make an ideal poster child for Ford's success: More than 60 percent of its buyers are coming out of non-Ford products.

But that's far from the only positive product news. The Ford Transit Connect — showcasing its 22 mpg city rating — has gotten off to a strong start in the U.S. This bodes well for the upcoming launch of the new Ford Fiesta and Focus, which share the small truck's global design ethos. Plus, on the other side of the ledger, products such as the new Ford Flex, Ford Taurus and Ford F-150, as well as the Lincoln MKT and Lincoln MKS, are making a positive impact among buyers who prefer more traditional vehicles, i.e., those who like somewhat larger rides.

Ford's bigger vehicles are and will be benefiting from the company's EcoBoost engine technology, too. And while I think Ford could be even more aggressive on the fuel-efficiency front with these EcoBoost engines, they're definitely a step in the right direction and another clear differentiator in the marketplace.

Of course, as that well-known American philosopher Bret Michaels once wrote, "Every rose has its thorn."

For Ford, that would be the UAW. The union has clearly and convincingly rejected Ford's recent contract proposal, which calls for granting the company approximately the same concessions the union is providing to General Motors and Chrysler.

To the union's way of thinking, Ford shouldn't get the same concessions because the company isn't in the same dire straits as the other two OEMs — witness all today's good news. Now, in the past, the UAW has stuck to what is called "pattern bargaining": First establishing a contract with one of the Big Three and then expecting the other two companies to fall in line with the same terms.

On the one hand, I guess some things have changed in the industry; on the other, well, I suppose the union sticking it to Ford when the latter is still struggling for success does show some kind of pattern.