Ford (NYSE: F)'s negotiations with the UAW should be over soon. If it gets a deal that looks like the ones the union put together with Chrysler and General Motors (NYSE: GM), the No. 2 car company should have labor costs much closer to its Japanese rivals. It may have to put $20 billion into a health-care fund for the union, but the firm has almost twice that much cash on its balance sheet.
The New York Times has pointed out that the sale of Ford unit Jaguar is going much slower than expected. The paper says: "Ford's bidding date is now Oct. 30, a person involved in the process said Thursday. That is a month later than bidders originally thought they would be making offers." Several private equity firms -- including Cerberus Capital Management, Terra Firma, and Texas Pacific Group -- as well as India's Tata Motors are rumored to be interested in the British car company and another Ford unit, Rover.
But, taking a step back for a moment, Ford may not sell the Jaguar unit at all. The U.S. company may have needed the money if the UAW payment was going to be onerous. But, the funding of a union benefit plan now seems within Ford's means. It is entirely possible that the car units were being shopped in case Ford needed the money. Now, it does not.
Ford management should have a look at the fact that if a private equity firm can turn Jaguar around, then a big car company should be able to do just as well. If Ford can't get a premium price for Jag, it should not sell it.
Douglas A. McIntyre is a partner at 24/7 Wall St.
