Ford Posts Profit of $997 Million, Union salivate.
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Ford Posts Profit of $997 Million, Union salivate.
DETROIT — While its crosstown rivals stumbled through bankruptcy this summer, the Ford Motor Company pressed its advantage, and delivered surprising news on Monday that its cost-cutting efforts and improving sales helped it earn nearly $1 billion in the third quarter.
But now it faces new challenges in maintaining that lead. Both General Motors and Chrysler, with the stigma of their bankruptcies receding, are moving ahead with their own comeback plans.
Under prodding from a new board, G.M. is aggressively marketing a 60-day money-back guarantee on its vehicles that most likely will result in market share gains to be announced on Tuesday.
And Chrysler and its new partner, Fiat, on Wednesday will disclose an ambitious five-year plan to streamline its product lineup and introduce more fuel-efficient models.
Ford is also running into resistance from its unionized work force as it tries to cut costs further.
Its improving fortunes were the main reason cited by the United Automobile Workers on Monday for rejecting another round of labor concessions that would have roughly matched concessions that workers at Chrysler and General Motors approved in the spring.
The U.A.W.’s president, Ron Gettelfinger, and its vice president in charge of the Ford unit, Bob King, said in a statement that the carmaker’s third-quarter profit was “evidence of the contributions that Ford workers have made.”
Ford, which earned $997 million in the third quarter and made money in North America for the first time since 2005, has turned itself around largely by cutting costs and introducing cars that consumers want to buy, rather than resorting to deep discounts to lure shoppers into showrooms.
But Ford also took advantage of the unfavorable perception that many consumers had of G.M. and Chrysler, which have needed huge infusions of federal aid to survive. Even Toyota has been losing money and, after significant recalls, been forced to defend its quality.
Toyota, like G.M. and Chrysler, is plotting its own turnaround effort, with a new president, Akio Toyoda, focused on restoring its once-pristine reputation.
“These difficult times have caused us to do some important soul-searching and approach the business in new and better ways,” Bob Carter, head of the Toyota division in the United States, told reporters in Detroit on Monday.
Ford is hardly sitting still under its chief executive, Alan R. Mulally, who joined the automaker three years ago from Boeing and, so far, has been the rare outsider to achieve success in Detroit.
“This is not so much a turning point as it is a proof point of the value of the plan and the strategy we’ve been following for three years,” Mr. Mulally said in an interview.
Ford did not offer a forecast for next year, and said only that it expected “solid profitability” no later than 2011, after previously saying it expected to break even that year. It is also more wary of making such predictions, after being forced to reverse rosy forecasts in the past.
Moody’s Investors Service on Monday raised Ford’s credit ratings based on the “substantial progress” it has seen in the automaker’s performance and financial health.
“The evidence we see indicates that Ford is on track in its plans to re-establish a sustainable and competitive business model,” Bruce Clark, a senior vice president at Moody’s, said in a note to investors.
Ford is also taking more steps to improve its balance sheet and increase the amount of available cash it has on hand.
The company ended the third quarter with $23.8 billion in cash, and reported positive cash flow of $2.8 billion during the three month period.
Ford’s chief financial officer, Lewis Booth, said on Monday that the company also would seek to raise about $3 billion by issuing new stock and equity-linked securities.
The route that Ford has taken thus far to profitability is one that, by all accounts, G.M. and Chrysler need to follow themselves.
When Ford chose not to ask for government loans, the company was freed to continue spending on new products like its Fusion and Taurus sedans.
G.M. and Chrysler, by comparison, had to rein in much of their product development programs to conserve cash while they awaited federal aid.
A report by the Government Accountability Office released on Monday said that the federal government was unlikely to recover much of the $81 billion that was invested in G.M. and Chrysler, their suppliers and related financing companies.
But with cleaner balance sheets and taxpayer cash to spend, G.M. and Chrysler are hoping their own turnaround efforts will take hold.
Ford proved during the third quarter that it can increase revenue and turn a profit even as the overall market slumps. In its core North American market, the company increased revenue by 26 percent, to $13.7 billion. It also reported a pre-tax profit of $357 million, compared to a loss of $2.6 billion in the third quarter of 2008.
“This improvement was primarily explained by favorable net pricing, lower materials costs, structural cost reductions, and improved market share,” the company said.
Ford had the lowest average incentive costs of the three Detroit-based automakers during October, according to the car research Web site Edmunds.com. As the automaker continues to bring out new products, like the coming Fiesta and Focus small cars, its incentive spending could fall even more, as consumers tend to be willing to pay closer to sticker price for new models.
The company also said that it had reduced its costs by $4.6 billion in the first nine months of the year, already exceeding its full-year goal of $4 billion.
But now it faces new challenges in maintaining that lead. Both General Motors and Chrysler, with the stigma of their bankruptcies receding, are moving ahead with their own comeback plans.
Under prodding from a new board, G.M. is aggressively marketing a 60-day money-back guarantee on its vehicles that most likely will result in market share gains to be announced on Tuesday.
And Chrysler and its new partner, Fiat, on Wednesday will disclose an ambitious five-year plan to streamline its product lineup and introduce more fuel-efficient models.
Ford is also running into resistance from its unionized work force as it tries to cut costs further.
Its improving fortunes were the main reason cited by the United Automobile Workers on Monday for rejecting another round of labor concessions that would have roughly matched concessions that workers at Chrysler and General Motors approved in the spring.
The U.A.W.’s president, Ron Gettelfinger, and its vice president in charge of the Ford unit, Bob King, said in a statement that the carmaker’s third-quarter profit was “evidence of the contributions that Ford workers have made.”
Ford, which earned $997 million in the third quarter and made money in North America for the first time since 2005, has turned itself around largely by cutting costs and introducing cars that consumers want to buy, rather than resorting to deep discounts to lure shoppers into showrooms.
But Ford also took advantage of the unfavorable perception that many consumers had of G.M. and Chrysler, which have needed huge infusions of federal aid to survive. Even Toyota has been losing money and, after significant recalls, been forced to defend its quality.
Toyota, like G.M. and Chrysler, is plotting its own turnaround effort, with a new president, Akio Toyoda, focused on restoring its once-pristine reputation.
“These difficult times have caused us to do some important soul-searching and approach the business in new and better ways,” Bob Carter, head of the Toyota division in the United States, told reporters in Detroit on Monday.
Ford is hardly sitting still under its chief executive, Alan R. Mulally, who joined the automaker three years ago from Boeing and, so far, has been the rare outsider to achieve success in Detroit.
“This is not so much a turning point as it is a proof point of the value of the plan and the strategy we’ve been following for three years,” Mr. Mulally said in an interview.
Ford did not offer a forecast for next year, and said only that it expected “solid profitability” no later than 2011, after previously saying it expected to break even that year. It is also more wary of making such predictions, after being forced to reverse rosy forecasts in the past.
Moody’s Investors Service on Monday raised Ford’s credit ratings based on the “substantial progress” it has seen in the automaker’s performance and financial health.
“The evidence we see indicates that Ford is on track in its plans to re-establish a sustainable and competitive business model,” Bruce Clark, a senior vice president at Moody’s, said in a note to investors.
Ford is also taking more steps to improve its balance sheet and increase the amount of available cash it has on hand.
The company ended the third quarter with $23.8 billion in cash, and reported positive cash flow of $2.8 billion during the three month period.
Ford’s chief financial officer, Lewis Booth, said on Monday that the company also would seek to raise about $3 billion by issuing new stock and equity-linked securities.
The route that Ford has taken thus far to profitability is one that, by all accounts, G.M. and Chrysler need to follow themselves.
When Ford chose not to ask for government loans, the company was freed to continue spending on new products like its Fusion and Taurus sedans.
G.M. and Chrysler, by comparison, had to rein in much of their product development programs to conserve cash while they awaited federal aid.
A report by the Government Accountability Office released on Monday said that the federal government was unlikely to recover much of the $81 billion that was invested in G.M. and Chrysler, their suppliers and related financing companies.
But with cleaner balance sheets and taxpayer cash to spend, G.M. and Chrysler are hoping their own turnaround efforts will take hold.
Ford proved during the third quarter that it can increase revenue and turn a profit even as the overall market slumps. In its core North American market, the company increased revenue by 26 percent, to $13.7 billion. It also reported a pre-tax profit of $357 million, compared to a loss of $2.6 billion in the third quarter of 2008.
“This improvement was primarily explained by favorable net pricing, lower materials costs, structural cost reductions, and improved market share,” the company said.
Ford had the lowest average incentive costs of the three Detroit-based automakers during October, according to the car research Web site Edmunds.com. As the automaker continues to bring out new products, like the coming Fiesta and Focus small cars, its incentive spending could fall even more, as consumers tend to be willing to pay closer to sticker price for new models.
The company also said that it had reduced its costs by $4.6 billion in the first nine months of the year, already exceeding its full-year goal of $4 billion.
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Re: Ford Posts Profit of $997 Million, Union salivate.
For Only Retarded Drivers
Glad to see a domestic manufacturer doing well, I know the Ford dealer here in hburg stays busy.
Glad to see a domestic manufacturer doing well, I know the Ford dealer here in hburg stays busy.
Last edited by JROW; 11-03-2009 at 07:08 AM.
#6
Re: Ford Posts Profit of $997 Million, Union salivate.
i knew ford was the least troubled out of the 3 domestic brands.
but for posting a profit their stock sure isnt doing all that well today
but for posting a profit their stock sure isnt doing all that well today
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Re: Ford Posts Profit of $997 Million, Union salivate.
The only Ford I dont care for is the focus. And hell that's not even as bad as the last model..
Flex
Fusion
Edge
Mustang
F150
All of these IMO are the best looking in there class. Probably the cheapest too.
Flex
Fusion
Edge
Mustang
F150
All of these IMO are the best looking in there class. Probably the cheapest too.
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Re: Ford Posts Profit of $997 Million, Union salivate.