An auto maker ‘clearly in a different place'

has become a ray of hope amid the Detroit Three's gloom.

Ford's stock is up 36 per cent since early February, and this week investors were grabbing its bonds �like paparazzi after Brangelina,� quipped debt analyst Shelly Lombard of Gimme Credit. The company, she said, has become the unlikely �rock star� of a decidedly motley crew of U.S. auto makers.

Ford stands alone in not seeking cash from the U.S. and Canadian governments. And its market share is growing on the strength of gas-miserly new models such as the Ford Fusion, while Chrysler and GM continue to lose ground.

Of course, Ford still faces enormous challenges. It's using up cash at a rate of more than $1-billion (U.S.) a month because of continuing losses. And its vital network of suppliers, which it shares with its ailing rivals, is at the mercy of what happens to GM and Chrysler.

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But analysts agree that Ford is much better positioned for an inevitable rebound in car sales.

Ford chief executive officer Alan Mulally's secret isn't so much what he's done, but when. Ford made many of the tough choices in 2006 that GM and Chrysler are only now tackling.

Ford was first to restructure its debt, first to win deep concessions on legacy costs from the United Auto Workers and first to slim down its roster of brands.

�We're clearly in a different place,� Mr. Mulally told CNBC recently.

�We are well down that restructuring route and we have the cash to continue this transformation.�

The company worked out a deal with lenders 21/2 years ago, when Wall Street still had an appetite for car maker's debt, assuring itself a nice cash cushion when the chassis later fell out of the global auto market.

Mr. Mulally was quick to dump non-core luxury brands Jaguar, Land Rover and Aston Martin, while buyers were still interested. Contrast that to GM, where its Saab subsidiary is in bankruptcy protection and Opel needs a bailout from European governments.

Ford also moved last fall to work out a deal with workers to fund ballooning retiree health care costs. Chrysler and GM are only now tackling those issues. Ford also has contracts with much more flexible work rules, which makes it easier to assemble multiple models under one roof.

�Ford has done some impressive things,� agrees Harley Shaiken, a professor and auto industry expert at the University of California at Berkeley. �The overall picture is of a company that has taken risks and is succeeding.�

Much more so than GM and Chrysler, Ford accepted the UAW as a partner in the restructuring of the company, Prof. Shaiken said.

�They view the UAW as an asset, not a burden,� he pointed out.

Ford is also producing higher-quality cars, with better fuel economy than its rivals, Prof. Shaiken pointed out. He cited the 2010 Fusion, which comes in a hybrid version, and its efficient Ecoboost engine as the examples of Ford's growing technological edge.

�It shows the technological prowess and vision of U.S. industry at its best,� Prof. Shaiken said.

But even Mr. Mulally acknowledges Ford still has a long way to go in the face of a dramatic decline in U.S. auto sales � to below 10 million this year from nearly 17 million earlier this decade.

Ford, like nearly all car makers, continues to lose money but insists it won't need to seek government cash. And also like its rivals, sales are continuing to tumble (down 33 per cent in March from a year earlier).

The company ended the first quarter with $21.3-billion in cash, after posting a loss of $1.4-billion.

Ford points to its cash �burn rate� as evidence that the worst may be over. The company burned through $7.7-billion in the third quarter of 2008, $5.5-billion in the fourth quarter and $3.7-billion in the first quarter.

Mr. Mulally doesn't expect Ford to return to profitability until 2011. That means Ford is a little like a driver with a maxed-out credit card, slowly running of gas on a long trip. At the current rate, Ford would run out of cash by the end of next year.

Unless the car market picks up soon, some analysts warn that Ford may have to seek a bailout as early as the end of this year. FORD (F) Close: $5.69 (U.S.), down 29�

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