Ford to Pentagon: No, Thanks -- Keep Your Money

Has there ever been a company as stubbornly independent as Ford (NYSE: F  ) ?

A few years ago, if you recall, when Washington offered Detroit a historic bailout, General Motors and Chrysler jumped at the chance. All in all, the automakers and their suppliers demanded (and got) a cool $81.7 billion in taxpayer money... then went bankrupt anyway. Ford's reply: "No, thanks. We're good."

This week, the government came knocking once again, and offered Ford a piece of the contract to build Joint Light Tactical Vehicles (21st-century Humvees) -- a contract once rumored to be worth $70 billion. Ford's response: "Pass."

What is it with Ford, anyway? Don't these people like money?

The cash is fine, but this car's a clunker
Actually, Ford likes money just fine. I'll bet what Ford doesn't like are the chances that the Pentagon's JLTV will actually get built. I've been writing about JLTV for several years now, you know -- since 2007, when we first started hearing about this $70 billion boondoggle. At the time, everyone who was anyone in defense contracting (and a few companies that weren't) wanted a piece of JLTV. Northrop, Boeing, Textron -- even Blackwater bid. In the end, though, the Pentagon selected three teams to build JLTV prototypes for testing:

  • General Dynamics (NYSE: GD  ) / AM General
  • Navistar (NYSE: NAV  ) / BAE
  • Lockheed Martin (NYSE: LMT  ) / BAE (Yes, BAE bid so nice, they selected it twice.)

Ford, as you may have noticed, wasn't on that list. In fact, Ford didn't even bid for JLTV. But this week, the Pentagon asked it to team up with a company that lost the first round of bidding, Raytheon (NYSE: RTN  ) , to try to build a more survivable jeep, but hopefully one weighing less than an M1-A2 main battle tank. (Oh -- and try to keep the sticker price below $250,000 while you're at it.)

Ford declined. Why? Partly, I suspect, for the same reason that the Pentagon asked it to bid in the first place -- because the prototypes General D, Navistar, and Lockheed have come up with weigh too much and cost too much. Partly because the Pentagon is already halfway to killing the whole project.

Ford knows a government boondoggle when it sees one -- and it knows better than to get involved.

Other companies can't afford to be so picky -- but the government can't afford to do without 'em either. Read the Fool's new report on the defense industry, and we'll tell you about "2 Small Caps the Government Won't Let Go Broke."

Fool contributor Rich Smith does not own (or short) shares of any company named above. The Motley Fool has a disclosure policy.

The Motley Fool owns shares of Textron, Lockheed Martin, General Dynamics, Ford, Raytheon, and Northrop Grumman. Motley Fool newsletter services have recommended buying shares of Ford and General Motors, as well as creating a synthetic long position in Ford.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.


Read/Post Comments (2) | Recommend This Article (20)

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  • Report this Comment On February 08, 2012, at 4:29 PM, wolfman225 wrote:

    Just another reason to like (and buy) Ford.

  • Report this Comment On February 09, 2012, at 4:51 PM, Hawmps wrote:

    I've been historically a Chevy guy (as a gearhead) but I like what I see with Ford managment's ability to navigate through the past few years and come out of it with strong products; and the image behind not needing to be bailed out doesn't hurt either. One of the best things they did was to kill some of their own brands that competed with Ford.

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