Is Ford getting the crankshaft by the government?
By JR Hoeft | Tuesday, March 31st, 2009 | PolicyWSJ has a great report on how Ford Motor Co., who has been trying to do the right things to trim costs, take care of its labor force, and not take a financial bailout, is facing serious consequences if Chrysler and GM declare bankruptcy, as President Obama is suggesting.
A bankruptcy reorganization by either General Motors Corp. or Chrysler LLC — as suggested by President Barack Obama this week — could damage the networks of suppliers and dealers shared by Detroit’s three auto makers, throwing uncertainty into Ford’s parts deliveries and its retail operation.
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Ford, which is trying to engineer a turnaround on its own, has already reached agreements with its union to reduce wages and restructure retiree health care costs. It also offered bondholders a deal to shed some debt. The company has said the steps will put it in a better position than competitors to ride out the recession.
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“I think the Obama announcement is a near-term depressant on auto sales and the economy,” said one Ford official Tuesday. “It introduces uncertainty and confusion among most consumers. And it’s the uncertainty that’s driving consumers into the cave.”To reassure jittery customers, Ford on Tuesday introduced a plan that will cover car payments for up to a year if a customer loses his or her job. Under the program, Ford also is offering 0% financing on some vehicles. The job-protection program started at Hyundai Motor Co. and was quickly matched Tuesday by GM.
To be sure, Ford has been able to move much further and faster in trimming costs and debt than its two domestic competitors, which are propped up by $17.4 billion in U.S. loans approved in December. And it also has started to see some promising sales trends, with more consumers gravitating from the other car makers toward Ford’s vehicles.
Folks…this is why centrally-planned economies are bad! Here’s a company doing all the right things getting punished because the government intervened. All I can say is “BUY FORD!!!”
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Conservative to the core; liberal with his opinion! J.R. has been involved in politics for over a decade and has worked on several campaigns in Hampton Roads. He has served on the Executive Committee of the Republican Party of Chesapeake and the Central Committee of the Republican Party of Virginia. He is also the director of “Blogs United” in Virginia. E-mail J.R.. Follow J.R. on Twitter.
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3 Responses to "Is Ford getting the crankshaft by the government?"
I have a Ford, and I own stock in both Ford and GM. I’m not giving up on the auto industry, Michigan or on our nation having some heavy industrial base in our future!
And yes, I’m still scratching my head at just what Obama was thinking with the Rick Wagoner thing. Especially the day after he met with a bunch of Wall Street buffons who – unlike Wagoner – were actually in charge of their institutions when the decisions were made which wrecked the world (and GM).
PS – I agree centrally planned economies are terrible, but I don’t think we are headed down that road regardless what Gov Huckabee says or pretends to believe…
We are heading down that road. That saddest part is that we are demanding it. The American people are demanding executive salaries be limited, though they realize not what it implicates. They said that when America falls into tyranny it will not be by force, it will be at the demand of its electorate. I hate to say it, but the majority (or close to it) of Americans are demanding draconian measures from the government and will riot if they do not receive them. Why do you think the AIG bonus clause was put in the stimulus bill? It was to purposefully enrage Americans so that congress could move forward with these punitive taxes and salary caps. This is how our government operates; they create an artificial issue, be it 9/11 or this crisis, then they propose an artificial solution, nationalizing banks, invading countries, and then play it perfectly so that the people demand it happen.
Because the government intervened? They only delayed the inevitable here. Ford would have faced that hardship had the Feds done nothing and let the other majors go into bankruptcy. Chapter 11 under Bush or Chapter 11 under Obama, the difference is what? We allowed the companies to continue operations, pay their vendors, their debt-holders, and their employees for another few months. This was to give them the chance for an out-of-court restructuring and prevent the very large impact a bankruptcy would have. Turns out the stakeholder need more than a gentle nudging in order to get them to give.
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