Ford Furor

To the Ford Motor Co. it looked like a simple business deal: Ford wanted to buy complete control of its British subsidiary by paying about $20.50 per share for a stock that was selling in London for $12.88 per share. But as the stock price soared nearly $7 on the news last week, British tempers soared even higher. "Kill this sellout. Britain's economic independence is at stake," screamed Lord Beaverbrook's Evening Standard. Intoned the Daily Express: "The British Empire comes before the Ford empire." The Financial Times warned soberly that since British Vauxhall is already wholly owned by General Motors, the Ford move would put half the British auto industry in U.S. hands.

Expensive Advantages. Ford Chairman Henry Ford explained that the U.S. company wanted absolute control of the British company, in which it already owns 54.6% of the stock, to give "greater operational flexibility and enable us better to coordinate our European and American operations." Ford owns 99% of Ford of Germany, recently increased holdings in Ford of Canada to 75%. U.S. automen figure that overseas markets will grow faster than the U.S. market, since there is now only one car for every 32 persons in the world to one car for every three people in the U.S. With full ownership Ford would be able to move faster in the competitive race, coordinating the operations of its world network of plants without worrying about possible objections from local minority stockholders. In addition, it would no longer have to put out an annual report, opening itself to complaints from local politicians about profits--a problem G.M. faced in Australia before it bought all of its subsidiary's stock.

Though Ford is willing to lay out $363 million for these advantages, its offer came at a bad time for British morale. Their auto industry's lucrative export business to the U.S. has been sharply cut by U.S. compacts. British Motors was forced to put 70,000 on short work weeks; Standard-Triumph had to dismiss 1,700 of its 8,000 workers; British Ford slashed overtime for 30,000. Pleas to the government to spur domestic sales by easing tight credit restrictions have been turned down by Chancellor of the Exchequer Selwyn Lloyd, who ruled that any encouragement of domestic sales would reduce the incentives to boost exports, which the British economy so desperately needs to maintain a favorable balance of trade.

$113 Million Windfall. Lloyd, who must approve the Ford offer before it can proceed, was attacked in Parliament by Laborites who argue "that if the deal goes through there is a real danger that British production and employment will be sacrificed to Detroit and to West Germany." Lloyd's concern is just the opposite: if the government does not approve the Ford offer, the company might concentrate its expansion in its wholly owned German subsidiary, leaving the British out.

At week's end it looked as if government approval would be forthcoming. British investors had a windfall of more than $113 million on their stock.

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