Ford reports $1 billion 3Q profit

[Ma Deuce]

...but it's proving to be a double edged sword, since it seems to have prompted the UAW (who are proving they're still as shortsighted as ever) to reject their proposed cost-cutting deal that would match that given to GM and Chrysler. This will probably prompt Ford to move more production to Canada (where the CAW recently approved a cost-cutting agreement with them) and Mexico.

http://www.freep.com/article/20091102/B ... pectations

Ford posts $997M 3Q profit, beats expectations

BY BRENT SNAVELY
FREE PRESS BUSINESS WRITER


Ford Motor Co. has come a long way from the nearly $30 billion in losses it racked up between 2006 and 2008.

After closing more than 10 plants and slashing 45% of its workforce in its long ailing North American division since 2006, the Dearborn-based automaker today reported net income of $997 million, or 29 cents per share, compared with a net loss of $161 million, or 7 cents per share, a year ago.

Even the company’s long-struggling North American division reported a pretax operating profit of $357 million — its first profitable quarter since the first quarter of 2005. The company improved its cash position by $2.8 billion, ending the quarter with $23.8 billion in cash.

What’s more, Ford said it “expects to be solidly profitable in 2011,” excluding special onetime charges, “with positive operating-related cash flow.”

Ford said a strong customer response to its new cars and trucks, cost reductions and improved results at its financing and lending arm, Ford Motor Credit Co., contributed to the result.

The result was especially impressive because Ford’s third-quarter revenue was $30.9 billion, down $800 million from the same period a year ago.

“Our third-quarter results clearly show that Ford is making tremendous progress despite the prolonged slump in the global economy,” Ford President and CEO Alan Mulally said in a statement.

Ford reported an operating profit of $1.1 billion, excluding special items, during the third quarter, easily outperforming Wall Street’s expectations. An operating profit is a company’s earnings from ongoing operations before interest and taxes. This is the company's first profit on a pretax basis since the first quarter of 2008.

Analysts, on average, were expecting Ford to report a loss of 12 cents per share, before onetime charges, for the three months ending Sept. 30, according to estimates from Thomson One Analytics.

Lewis Booth, Ford’s CFO and executive vice president, today told the Free Press that the company’s sales boost was partly driven by government incentive programs in both the United States and Europe that lifted overall industry sales. However, he said Ford expects to report a positive cash flow again for the last three months of this year, too.

“It’s a huge deal,” Booth said. “We expect to have positive cash flow in the fourth quarter.”

Booth declined to comment on the rejection of proposed modifications to the company’s labor agreement with the UAW, saying Ford plans to wait until the UAW announces official results of the vote. However, he said the company was pleased that it reached an amended labor agreement with the CAW.

The Dearborn automaker’s credit arm, Ford Motor Credit, also reported an improved performance. Ford Credit reported a net income of $427 million compared with a profit of $95 million a year ago. Ford said the improvement was due to better resale values of leased vehicles and lower operating costs.

[[R_H]]

Wasn't the UAW leadership in favour of the cost cutting measures?

[KrauserKrauser]

They may have given lip service to the idea of cost cutting but as usual are content with bleeding their golden goose instead.

Too bad with a Dem majority in two branches of government breaking up the UAW behemoth won't get any sort of attention.

[MKSheppard]

Also, I believe it is a law in Michigan, that you cannot run an auto plant without employing the UAW. I suspect Ford will begin to move much of their operations to southern states, e.g. reopen their old F-150 plant in Virginia and update it; while closing down sections of their Detroit operations until only a vestigal stub, like the Corporate HQ, the Ford Museum (or whatever they call it), etc is in Detroit; and everything important is in South Carolina, Virginia, etc.

[Stark]

Seriously? Do you mean you have to have some union workers, or all union workers? I know you guys are pretty well informed about the auto industry, but is this a part of the whole 'Motor City' thing? Why would the unions want to kill their golden goose (being Michigan state law in this case)?

[Sea Skimmer]

I’m pretty sure the UAW doesn’t allow mixing of union and non union workers in the same plant, ever. This has caused the big three to in many cases build entirely new plants rather then upgrade existing ones or even just convert them to making different models, because they’d be stuck with the exact same number of union workers forever no matter what the work level is.

The union members just never believe anything but what the union tells them, so they literally won’t believe companies are crumbling, or at least sure didn’t until maybe two years ago when the shit hit the fan for real. The union bosses meanwhile, who get rich as hell, never mind the raw political power, have had little incentive to be honest. Now that they are at last slightly trying to work with the companies, well the union members were raised on a diet of bullshit and don’t want to hear different.

[Stark]

So do you think these recent shortsighted decisions are because the union bosses might understand what's happening, but have created such a momentum in their members that they can't 'back down' from their previous rhetoric?

[Sea Skimmer]

Pretty much exactly that. The Union bosses realize things need to change, or else they are out of a job, but the union members aren’t such mindless drones that they’ll vote exactly as they are told if a deal is a 180 degree turn on everything they’ve told and voted on before. Now that they see government aid flowing and Ford making a tiny profit they don’t want to hear about change all the more. No one has a more brain-dead sense of entitlement then Union workers.

[Stargate Nerd]

I literally rejoiced when reading the headline.

I hope this is sustainable though and not just a temporary boost due to the rebate programs internationally. I know the article credits those programs at least partially.

[Tsyroc]

I wonder if Ford might have got a little extra business from the "Buy American" crowd because they are the one American company that didn't need bailing out. I haven't bought a new vehicle in ages but if I were to buy domestic I'd be more inclined to trust the company that didn't need to be bailed out.

[Sea Skimmer]

They are certainly benefiting from that. I mean you kind of have to be nuts to buy Chrysler, and while GM may slog on few people trust them to be able to honor a long term warrant. Also I think most people are at least somewhat aware that ford just never dropped the ball on quality and standards so far as the other two.

[Marcus Aurelius]

They are certainly benefiting from that. I mean you kind of have to be nuts to buy Chrysler, and while GM may slog on few people trust them to be able to honor a long term warrant. Also I think most people are at least somewhat aware that ford just never dropped the ball on quality and standards so far as the other two.

Of course Ford is also the one with the most extensive and successful non-American operations, which means that they always remained more in touch with things like fuel efficiency and in general development of small displacement four cylinder engines even after Reagan and Bush Sr. re-established the gas-guzzling entitlement of the US public... It is telling that GM started to regret their decision to sell Opel, but it was too late to do anything about it, especially since the US government would not give aid to non-US operations.

[KrauserKrauser]

While I also enjoy the success, I do not see this as in any way sustainable. Of course Ford, better of going into cash for clunkers than any of the Big 3, will show a profit with a massive sales push but with cash for clunkers now defunct I don't expect to see this trend increase or even stay the same.

I hope they realize how much of this is a one time boost based on government debt because if they start ramping up in the hopes of even higher sales, I fear they are going to be left out to dry in the coming quarters.

[Broomstick]

Also, I believe it is a law in Michigan, that you cannot run an auto plant without employing the UAW. I suspect Ford will begin to move much of their operations to southern states, e.g. reopen their old F-150 plant in Virginia and update it; while closing down sections of their Detroit operations until only a vestigal stub, like the Corporate HQ, the Ford Museum (or whatever they call it), etc is in Detroit; and everything important is in South Carolina, Virginia, etc.

Nitpick:

Ford was never in Detroit, they are and always have been located in Dearborn, Michigan. Which, honestly, is a bit of a quibble.

The museum is the Henry Ford Museum and Greenfield Village.

Yes, I think the corporate headquarters will likely stay in Michigan.

[Broomstick]

So do you think these recent shortsighted decisions are because the union bosses might understand what's happening, but have created such a momentum in their members that they can't 'back down' from their previous rhetoric?

No, I think the union leadership are lying sacks of scum not much different from the mafia. They happily exploit workers/members as much as corporate management ever did. They know damn well what the situation is, but rather than fix the problem(s) they'll bleed off as much money as they can for themselves and to hell with everyone else.

I wonder if Ford might have got a little extra business from the "Buy American" crowd because they are the one American company that didn't need bailing out. I haven't bought a new vehicle in ages but if I were to buy domestic I'd be more inclined to trust the company that didn't need to be bailed out.

Yes, definitely - the irony being that even in the early days Ford used foreign suppliers and outsourcing. The last Ford car I bought was made in Korea, and I think my truck was actually made outside the US as well - so how "made in America" is it after all? On the other hand, we actually do have a Toyota plant in my area, so some "Japanese" vehicles actually are made in America, at least in part. It's no longer so simple to know where a vehicle came from by merely looking at the brand name.

Which is better for the US economy/worker long term - buying a vehicle assembled outside the US under a US brand name, or a vehicle with a foreign brand name that was actually assembled in the US, employing US workers?

[Darth Wong]

All unions are like that. I've worked at two separate plants which were shut down as a result of union greed. In both cases, they told their members that management was bluffing. They had not the slightest idea whether this was true; they simply said it because they were used to saying it.

[Tsyroc]

Which is better for the US economy/worker long term - buying a vehicle assembled outside the US under a US brand name, or a vehicle with a foreign brand name that was actually assembled in the US, employing US workers?

That's really hard to say.

I've heard some people argue that the buying a foreign owned company's vehicle even if it's manufactured locally still sends more money over seas than buying a domestic company's vehicles built outside the US. I'm not sure that I believe that. Plus, I'd rather see my money support the local workers by helping to ensure they have jobs than I would like contributing to the profit margins of the over all corporation.

[Alferd Packer]

While I also enjoy the success, I do not see this as in any way sustainable. Of course Ford, better of going into cash for clunkers than any of the Big 3, will show a profit with a massive sales push but with cash for clunkers now defunct I don't expect to see this trend increase or even stay the same.

I hope they realize how much of this is a one time boost based on government debt because if they start ramping up in the hopes of even higher sales, I fear they are going to be left out to dry in the coming quarters.

I saw on NBC Nightly News last night that Ford is stating they would've actually turned a profit without the Clunkers program, it just would've been less. Of course, Ford would say that, but they followed up with the notion that they expect to be solidly profitable in 2011.

[[R_H]]

All unions are like that. I've worked at two separate plants which were shut down as a result of union greed. In both cases, they told their members that management was bluffing. They had not the slightest idea whether this was true; they simply said it because they were used to saying it.

Why is there such an adversarial attitude between unions and the management? It just seems so, well, juvenile to be honest.

[Azazal]

Also, I believe it is a law in Michigan, that you cannot run an auto plant without employing the UAW.

Not sure about that one being law here, but the UAW does have contract clauses with the big 3 that plants need to have UAW employees. Honda, Toyota, etc could open up facilities in Michigan with out the UAW, just rightly decided not to so that they can avoid all the shit from the UAW for having non-union shops.

As for how greedy the UAW can be, well anecdotal, take as you will.

Back in fall of 02 I was working for EDS at the GM Fairfax Assembly plant outside on Kansas City. Was onsite for 6 weeks as part of their migration to Windows 2000 from 95. First day there the onsite EDS guys were giving me a tour of the place we walked by a pretty cool looking break room. It was roughly 30' x 30' in the middle of the factory floor, glass walls,a pool table, a couple of over stuffed recliner chairs in front of a large screen TV, coke machine, snack machine, bathroom, etc.. I pointed out that it was the best break room I had seen on the floors of the various plants I had been at. Without a missing a beat the local EDS guy told me it was the UAW shop steward's office. I laughed, figuring he was messing with the new guy, we turned the corner and walked past the door to the break room. Right there on the door was a placard, UAW Shop Steward with the steward's name right below and a "Know Your Rights" UAW bulletin board.

[aerius]

Why is there such an adversarial attitude between unions and the management? It just seems so, well, juvenile to be honest.

In many cases it comes down to tradition and because they can.
Also, maintaining an adversarial relation is how the parties keep a hold over their members.

[Darth Wong]

All unions are like that. I've worked at two separate plants which were shut down as a result of union greed. In both cases, they told their members that management was bluffing. They had not the slightest idea whether this was true; they simply said it because they were used to saying it.

Why is there such an adversarial attitude between unions and the management? It just seems so, well, juvenile to be honest.

People are juvenile. I've become increasingly convinced that only a very small proportion of the population is capable of intelligent reasoning. The rest just run on instinct and use logical-sounding talking points to paper over their complete lack of reasoning.

[Norseman]

All unions are like that. I've worked at two separate plants which were shut down as a result of union greed. In both cases, they told their members that management was bluffing. They had not the slightest idea whether this was true; they simply said it because they were used to saying it.

Why is there such an adversarial attitude between unions and the management? It just seems so, well, juvenile to be honest.

People are juvenile. I've become increasingly convinced that only a very small proportion of the population is capable of intelligent reasoning. The rest just run on instinct and use logical-sounding talking points to paper over their complete lack of reasoning.

You know in Norway there are centralized negotiations between the Confederation of Norwegian Enterprise and the Norwegian Confederation of Trade Union. If they can't hash something out between them there can be strikes, but only under certain circumstances, and if they can't come to a reasonable conclusion the government may force arbitration or even dictate terms. Of course this assumes a government that is scrupulously honest and nigh impossible to corrupt, so it probably wouldn't work in the USA.

[Darth Wong]

Part of America's problem is scale. Norway is a tiny country with a miniscule population: there are quite a few cities in North America whose population is greater than the entire population of Norway. It's more difficult to govern such a large nation.

[Questor]

All unions are like that. I've worked at two separate plants which were shut down as a result of union greed. In both cases, they told their members that management was bluffing. They had not the slightest idea whether this was true; they simply said it because they were used to saying it.

Why is there such an adversarial attitude between unions and the management? It just seems so, well, juvenile to be honest.

I know it isn't there in my union.

I think unions that take an adversarial turn shoot themselves in the foot. Especially in public service. It's not like management in public service wants to screw us.