Only Detroit automaker dodging stimulus turns $1 Billion profit.
Capitalism WINS, socialism loses. Again.
http://finance.yahoo.com/news/Ford-surprises-with-1B-profit-apf-3471782507.html?x=0&sec=topStories&pos=7&asset=&ccode=
Ford, the only Detroit automaker to dodge direct government aid and bankruptcy court, surprised investors with net income of nearly $1 billion in the third quarter and forecast a "solidly profitable" 2011.
In this photo made wi
More..th a fisheye lens on Oct. 29, 2009, the Mustang logo is shown on ...
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{"s" : "f,mtlqq.pk","k" : "c10,l10,p20,t10","o" : "","j" : ""} The automaker said Monday earnings were fueled by U.S. market share gains, cost cuts and the Cash for Clunkers program, which drew flocks of buyers to showrooms this summer. Ford's shares rose 53 cents, or 7.6 percent, to $7.53 in afternoon trading.
The latest results signal that Ford's turnaround is on more solid ground. The company lost more than $14.6 billion last year and hasn't posted a full-year profit since 2005. While it made a profit in the second quarter, that was mainly due to debt reductions that cut its interest payments.
Ford, based in Dearborn, Mich., reported third-quarter net income of $997 million, or 29 cents per share. Its profit forecast for 2011 was a step above previous guidance of break-even or better for the year.
Ford's key North American car and truck division posted a pretax profit of $357 million, the division's first quarter in the black since early 2005. Ford cited higher pricing, lower material costs and increased market share for the improvement.
Excluding one-time items, Ford earned 26 cents per share, blowing away analysts' expectations of a loss of 12 cents.
The earnings came despite an $800 million revenue drop. But Ford said it cut costs by $1 billion during the quarter, accomplished through layoffs in North America and Europe, reduced pension and retiree health care costs and improvements in productivity and product development.
Chief financial officer Lewis Booth said the company took in $1.3 billion more than it spent in the quarter, an improvement over its $1 billion cash burn in the second quarter.
"That's a huge deal," Booth said.
Ford's plan to create demand and get better prices for its products, coupled with cost cuts, gave the company confidence that it will make money in 2011, Booth said.
But Ford still faces obstacles in its turnaround. On Monday, the United Auto Workers union said its members overwhelmingly rejected a deal that would have brought Ford's labor costs in line with rivals General Motors Corp. and Chrysler LLC.
Seventy percent of production workers and 75 percent of skilled tradesmen such as electricians and pipefitters voted against it. The union said it would not return to the bargaining table.
Ford said in a statement that it will keep working with the union to make sure it stays competitive so it can keep making commitments to invest in U.S. factories.
Workers objected to clauses limiting their right to strike and freezing entry-level wages, and felt the company was healthy enough and didn't need further concessions. The rejected deal also would have changed rules so skilled tradesmen work in teams and perform more than one task.
Rejection of the deal isn't likely to place Ford at an immediate cost disadvantage to its crosstown rivals because savings from the concessions are longer-term, said Gary Chaison, a professor of labor relations at Clark University in Worcester, Mass. Neither the company nor the UAW has released any cost savings numbers.
The third-quarter profit makes it extremely unlikely that the company will push to head back to the bargaining table before the current UAW contract expires in the fall of 2011, and union leaders also are unlikely to take another deal to the membership, Chaison said.
"I think the company has no credibility asking for concessions now, and I think the leadership is quite embarrased for making a case for concessions," he said.
Chaison said Ford could make some noise about moving new vehicle production to Canada, where unionized workers on Sunday approved a package of concessions, but it's more likely that Ford will live with the current contract until 2011.
The other area where Ford has a cost disadvantage is debt. Ford reported $26.9 billion in debt, up $800 million from the second quarter.
The company avoided the same fate as rivals Chrysler and GM by mortgaging its factories and even the familiar blue oval logo to borrow $23.5 billion before credit markets froze last year.
Ford didn't quantify the impact of Cash for Clunkers, which offered buyers rebates to trade in their vehicles. The program helped Ford cut costly incentives and raise production.
It also won buyers; the fuel-efficient Ford Focus sedan and Ford Escape, a small SUV, were among the top five sellers under clunkers. Ford sales climbed 17 percent in August thanks to the program.
Ford's revenue fell $800 million for the quarter, to $30.9 billion, due mainly to its financial services arm, Ford Motor Credit, making fewer loans.
But the division still posted a pretax profit of $677 million, and revenue from auto operations rose slightly to $27.9 billion.
Ford also has benefited from consumer goodwill after it declined government bailout money and didn't go into bankruptcy over the summer as GM and Chrysler did. Ford grabbed sales from its rivals, posting the largest increase in market share of any automaker in September. Ford expects an overall gain in U.S. market share in 2009, a feat it hasn't accomplished since 1995. Less..
Added: Nov 3 2009 In: news_politics
By: HydrogenEconomy 
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Comments - sort by newest to oldest
In the United States it is best to turn a profit.
In the Federal Government Funded by the people of the United States it is best to run like a 3 legged dog, eat up your budget, get those hands right back out there.
America Vs. A Welfare State.... Seen First Hand on our soil with these 3 companies. From CEO to Liquor Store Bum those with their handouts keep getting handouts.
Sadly those of us that need a hand up are missed.
Opportunity all a man needs to succeed in America.
the LAB
Posted Nov-3-2009 by "rclark951" (R)
Are you saying that Ford, being the only automaker in a position to refuse stimulus dollars to begin with, was the only capitlistic automaker in the US? Seems to me the Big 3 are all capitalistic from the get go and failed in the end. Don't get me wrong, I support capitalism, but if two outta three fail?.....then theres a problem with capitalism. It's amazing to watch you politicize everything.
Posted Nov-3-2009 by "joeslummer" (R)
Bailout or not, a lose of confidence in a companies brand is always going to benefit its competitors. But hey, blaming Obama is fun too.
Posted Nov-3-2009 by "willy_lump" (R)
It doesn't quite work that way. It depends on your product too. Ford has revamped, improved and released many more new products than the other American Car Manufacturers. Simple proof to me is that they've actually released a couple of cars that I really do like (I've always just liked Ricers up until recently). I own 3 Honda's ---> Honda Pilot, Honda Ridgeline and Honda Accord. However I would trade my Accord for a Ford Fusion Hybrid and my Honda Ridgeline for a Ford F150 Truck, wouldn't trade the family vehicle though my Wife picked that one.
Posted Nov-3-2009 by "shad295" (R)
"The automaker said Monday earnings were fueled by U.S. market share gains, cost cuts and the CASH FOR CLUNKERS PROGRAM, which drew flocks of buyers to showrooms this summer. Ford's stock rose 40 cents, or 5.7 percent, to $7.40 in pre-market trading."
Cash for clunkers still part of the stimulus package. But Ford chose to add to unemployment to pat their pretax profit. 1 billion in cut costs, not sales, PLUS $357 million in pretax profit = "1.3 billion profit?"
"The earnings came despite an $800 million revenue drop. But Ford said it cut costs by $1 billion during the quarter............,
ACCOMPLISHED THROUGH LAYOFFS in North America and Europe, reduced pension and retiree health care costs and improvements in productivity and product development."
But hay, blame Pres Obama for their unemployment numbers, and then call stimulus a failure. I guess its easier that way than common sense.
Posted Nov-3-2009 by "reefer_n_beer" (R)
Shows you what you know. In capitalism, failure is very much an option... success is not guaranteed. Failure clears the decks for other startups to get a foothold with a better mousetrap. Capitalism works and ultimately is far more fair and evenhanded that some government form of socialism. In the end, it is the government meddling that screws up the works. In the beginning, there were many car manufacturers. Oldsmobile, Buick, Marathon to name a few were all separate companies. When it comes time to fail, as it came to GM and Chrysler, they should fail. A new crop of talent will come along and fill the void. Better products, better organization, less union, etc. It is the government pandering to the unions and voters, in that order, that stops the process. Otherwise, we would be seeing a new generation of manufacturers. DeLorean is a good example of an executive that peeled off and started a new company. Porsche is another. Moral to the story: get government the hell out of the way and watch the capitalistic markets excel.
In the end, capitalism supports equality of opportunity. Not equality of outcome. The liberal/socialist mind simply cannot understand that.
Posted Nov-3-2009 by "copperdog3" (R)
This is great news. Perhaps they will do the right thing and move jobs out of Mexico (Ford Focus) and back to the USA where they belong? ...NAH. I still ain't buying one until they all rate #1 reliability in Consumer Reports.
Posted Nov-3-2009 by "Hitler_Is_Amazing" Premium
And then they go to their workers and ask them to accept less pay. Stay classy Ford.
Posted Nov-3-2009 by "PH-DEE" (R)
No company rates all #1 in CR.
Posted Nov-3-2009 by "PH-DEE" (R)
No company rates all #1 in CR.
True that. Even Toyota, once the reliability King, has dumbed down. "Despite Ford's improvement, U.S. brands account for almost half the models--20 of 44--on CR's list of "Least Reliable" models. Thirteen are from General Motors, 6 from Chrysler, and 1 from Ford. European makes account for 17 models, including six each from Mercedes-Benz and Volkswagen/Audi. Not all models carrying Asian nameplates are reliable, either. The Hyundai Entourage, Infiniti QX56, Mazda CX-7, Nissan Armada (4WD), Quest, and Titan (4WD), and Toyota Tundra (V8, 4WD) are all on the "Least Reliable" list."
http://blogs.consumerreports.org/cars/2007/10/car-reliability.html
Posted Nov-3-2009 by "Hitler_Is_Amazing" Premium
I still give Ford credit for telling the Federal Government to stick it up thier ass with the stimulus. They can cut as many overblown, overpaid union jobs as they want if it means keeping thier heads above water, more power to them. One of these days Americans will wake up to what unions have done to this country's manufacturing base. Slowly, but surely, unions have priced themselves out of jobs. Unions have outlived thier usefullness. Don't give me the sob story union bullshit either, my brother was a union worker until about 2 yrs ago when he got laid off. Why? Couldn't afford the workers anymore.
Posted Nov-3-2009 by "BfarkinT" (R)
Cash for clunkers still part of the stimulus package. But Ford chose to add to unemployment to pat their pretax profit. 1 billion in cut costs, not sales, PLUS $357 million in pretax profit = "1.3 billion profit?"
"The earnings came despite an $800 million revenue drop. But Ford said it cut costs by $1 billion during the quarter............,
ACCOMPLISHED THROUGH LAYOFFS in North America and Europe, reduced pension and retiree health care costs and improvements in productivity and product development."
But hay, blame Pres Obama for their unemployment numbers, and then call stimulus a failure. I guess its easier that way than common sense.
Stimulus? What F-ing stimulus? My town has yet to see a single penny of the vaunted stimulus.
Posted Nov-4-2009 by "Rob8729" (R)
"Dodging Stimulus"?
They didn't have to "dodge" anything. Chrysler and GM requested money because they were screwed. Ford is diversified with holdings in Volvo, Mazda, and Aston Martin. They also owned Land Rover and Jaguar, which they sold last year.
They also have far more international market penetration than Chrysler or GM.
Ford is doing well simply because they are doing well. It has nothing to do with "dodging" stimulus.
Posted Nov-4-2009 by "too_much_noise" (R)
He's making shit up. Editorializing with a link to a story that has nothing to do with Capitalism vs. Socialism.
You are right. The five people who downdinged you are idiots.
Posted Nov-4-2009 by "too_much_noise" (R)
Cash for clunkers still part of the stimulus package. But Ford chose to add to unemployment to pat their pretax profit. 1 billion in cut costs, not sales, PLUS $357 million in pretax profit = "1.3 billion profit?"
"The earnings came despite an $800 million revenue drop. But Ford said it cut costs by $1 billion during the quarter............,
ACCOMPLISHED THROUGH LAYOFFS in North America and Europe, reduced pension and retiree health care costs and improvements in productivity and product development."
But hay, blame Pres Obama for their unemployment numbers, and then call stimulus a failure. I guess its easier that way than common sense.
Stimulus? What F-ing stimulus? My town has yet to see a single penny of the vaunted stimulus.
All i spoke about is the fact that praising Ford for not taking any stimulus money was a result of their profit is bull shit. They still benefitted from cash for clunkers, but they chose to lay off more than 3,000 people in lue of stimulus.
Saying "Capitalism WINS, socialism loses. Again" as a header to the story is bull shit. And i have no problem with capitalism.
And im not sure were you live, but the fact that practically every state recieved it tells me that u might want to confront your senator if you dont see any evidence of stimulus projects. He might be pocketing it or trying to spend it on a zoo like Providence, RI Mayor Cicellini.
Just look around though, how many public works projects, road works projects and state projects are going on around you? How many work zones are up and down your highways, biways, freeways and interstates are more than likely state funded projects funded by the stimulus? each job most likely employes about 100 - 300 people depending on it's size or type. If you dont see any of this then hell yeah your state officials are dicking you, again since pretty much every state took the White House's stimulus money.
Try driving through Nevada'S US95/I-80/I-15/I-215. Not one square inch of it is without a construction job on it. Thats not including the surface roads.
Posted Nov-4-2009 by "reefer_n_beer" (R)