Folks – I’ve always said that the Federal Government cannot run a business. It’s not that they don’t have the capability to do so – they just have different…ah…motives. People who are IN business – are so to make money…lots of money. Those however in our Government…basically anyone elected from the local dog catcher to the President of these here United States are in it…well…to be frank…they are in it to get re-elected!
In order to make money one must make wise business decisions – i.e. you MUST be profitable! These decisions are not always popular with your employees – but – the important thing is the bottom line and making sure that the company is around tomorrow.
To get re-elected one must make wise / shrewd political moves – in other words, you must make the majority of your voters (people) like you. Running THIS company has nothing to do with the bottom line, or profits – you MUST make not only the employees happy, but the press and more importantly those voters!
So, here we have a situation – the Federal Government for all practice purposes is running General Motors and Chrysler. Ford on the other hand did not receive nor did they ask for any bailout funds – so they are still running their own company without any interference from the Fed.
So here I have a problem – the Fed gave billions of dollars to GM, and to Chrysler – and even the folks that those two companies owed money too! According to CNN Bailout tracker…
Auto Supplier Support Program:
Program to help stabilize auto suppliers by guaranteeing debt owed to them for shipped products, and providing financing to continue operations.
The Parts makers have about $5 billion out there of which $0.00 has been paid back.
Automotive Industry Financing Program:
- Program that provides capital on a case-by-case basis to systemically significant auto and auto-financing companies that are at substantial risk of failure.
General Motors: $49.9 billion - of which they have paid back…$361 million
Chrysler: $15.2 billion – of which they have paid back…$280 million
GMAC: $13.5 billion – of which they have paid back…$0.00
Chrysler Financial: $1.5 billion which is now paid back %100
So how is our investments doing?
General Motors:
November 16th, 2009 General Motors reported:
- Operating actions result in EBIT loss before special items of $261 million and managerial net loss of $1.2 billion
Note:
- GM closed out the Pontiac and Saturn brands, sold Hummer to a Chinese company and have put Saab up for sale
- Put 1100 dealerships out of business – which some have estimated put a minimum of 100,000 dealer employees out on the street.
BTW: They didn’t terminate any of the dealers – which would have cost GM (US) billions of dollars – they simply let these dealers contract lapse into oblivion. This little move allowed them to circumvent any issues with the contracts themselves – AND – any federal or state laws governing the lay off of so many people at one time.
Chrysler Group…
- Closed over 400 dealerships
- Will now be IMPORTING Fiat Vehicles – but I guess that they also will be building a Fiat badged vehicle makes this a wash?
In November of 2009, Chrysler Group reported…
- Sales declined 25 percent versus November 2008. The company finished the month with 176,282 units in inventory, representing a 64-day supply. Inventory is down 56 percent compared with November 2008.
Now…a quick look at Ford…YESTERDAY – they reported…
- Full year net income of $2.7 billion, or 86 cents per share, a $17.5 billion improvement from a year ago. Pre-tax operating profits of $454 million, a $7.3 billion improvement from a year ago++
- Fourth quarter net income of $868 million, or 25 cents per share, a $6.8 billion improvement from a year ago. Pre-tax operating profits of $1.8 billion, a $5.5 billion improvement from a year ago++
- Ford North America fourth quarter pre-tax operating profits of $707 million, a $2.6 billion improvement from a year ago++
- Reduced Automotive structural costs by $500 million compared with the fourth quarter 2008, bringing the total 2009 reduction to $5.1 billion, exceeding the target of about $4 billion
- Strong products drove full year market share gains in North America, South America and Europe as well as continued improvements in transaction prices and margins
- Ended the year with $25.5 billion of Automotive gross cash and $34.3 billion in Automotive debt
- Achieved positive Automotive operating-related cash flow of $3.1 billion for the fourth quarter. Full year Automotive operating-related cash outflow was $300 million, a $19.2 billion improvement over 2008
- Ford Credit fourth quarter pre-tax operating profits of $696 million, a $1.1 billion improvement from a year ago
- For full year 2010, Ford plans to be profitable on a pre-tax basis excluding special items, for North America, total Automotive and total company, with positive Automotive operating-related cash flow, based on its assumptions
How is it that Ford is doing so well - and the others doing so poorly? Is it really as simply as they have a better product and better management? What disadvantage does GM & Chrysler have v. Ford?
All the answers to those questions are VERY simple – maybe that is why so many people can’t seem to figure it out – how does that old saying go…they can’t see the forest because of the trees?
Think about my friends and be afraid…be very afraid!
