Ford CFO: The Turnaround Completed

DETROIT ( TheStreet) -- Once a turnaround story, Ford ( F) today is something more, a company that fixed itself during a near-depression and now believes it is uniquely positioned to grow.

In retrospect, everything changed in late 2009, when the automaker began to produce operating cash flow and its executives came to realize they no were no longer swimming against the tide.
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Ford CFO Lewis Booth

"When we got into positive operating cash flow in the third quarter , we began to think that we were on our way to profitability and that we needed to make sure we were not just paying down debt and investing in new products, but also investing in growth opportunities," said CFO Lewis Booth, in an interview with TheStreet.

"We were beginning to get our thoughts together," said Booth. "We had plans for Brazil ... Now, we're investing heavily in growth."

Ford's share price reflects the transition. In 2009, shares rose 335%, the kind of appreciation that often occurs when investors abandon the perception that a company is a bankruptcy candidate -- Ford traded as low as $1.01 in November 2008 -- and realize it is going to survive.
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This year, Ford shares are up about 25%, while the Standard & Poor's 500 is up about 1% -- a sign that Ford's growth prospects are being recognized.

So where will Ford's growth come from? Perhaps the most compelling potential resides in Asia. Ford holds only a 2% market share in China and a 1.4% share in India. China is already the world's largest auto market; India is going to be third. In both countries, Ford faces exactly the same competitors it faces everywhere else in the world, making it believable that at some point, Ford's share there would be in double digits, the same as it is elsewhere.

A Tough 'Road' to Hoe

But there's more to success in China than simply showing up. The Ford story does not necessarily translate easily into Chinese, said Gerald McDermott, an associate professor at the University of South Carolina Moore School of Business. "It's amazing how quickly a company can go into a place like China and set up production," McDermott said. "But over time, there are always questions about quality especially for U.S. automakers whose philosophy has been to seek efficiencies rather than qualities from suppliers."

Additionally, even though Ford landed there at the same time as competitors did, it committed fewer resources . Today, Booth said, Ford's biggest constraint is limited production capacity; Ford is planning two assembly plants in China by 2012 and has doubled capacity at a plant in India.

"I'm not saying that Ford can't do this," said McDermott. "But like other auto companies, they have a mixed record on international operations, and we all know that big organizations take a long time to change."

Booth noted, "I don't think we would ever say that market-share gains are easy. But both India and China are benefitting from increased focus. We survived a downturn, and now we are improving the business and we are seeing growth opportunities globally and we are focusing on them ."

>>Also: Must-See Charts: Ford, GE, Microsoft

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