- The Washington Times - Friday, July 24, 2009

ANALYSIS/OPINION:

It is unusual to hear the words “automaker” and “profit” in the same sentence these days, so many were surprised when Ford Motor Co. announced a second quarter net income of $2.3 billion. The black ink was achieved largely through debt restructuring, and it may be difficult to continue this run next quarter. Still, in these uncertain times, it is welcome news that an American car company can actually make money.

When federal auto-bailout mania hit Washington last February, we praised Ford for not accepting government money and all the strings attached. We likened the situation to an experiment similar to West versus East Germany, or South versus North Korea. We doubted that the automakers who accepted federal largesse — and the inevitable bureaucratic meddling and backroom political dealing that goes with it — would fare better than a family-run company seeking long-term stability.

Six months later, the numbers are in. Since our Feb. 20 editorial, Ford stock has gone up 325 percent. General Motors Corp. stock was down 74 percent when trading ended on May 28, before GM declared the biggest industrial insolvency in U.S. history. GM is now traded under the name Motors Liquidation Co., a moniker that wouldn’t exactly look very good on the trunk of your car. When GM declared bankruptcy, President Obama offered some of his trademark empty rhetoric about making sacrifices “so that your children and all of our children can grow up in an America that still makes things.” Yet Ford kept rolling along without a handout.

Auto sales, in general, are down from this time a year ago but are tending upward since January. Ford sales have declined much less during the past year than its major competitors. In June, the Ford F-series pickup was the No. 1-selling vehicle in America, and Ford had three cars in the top 10. Ford’s share of the U.S. auto market has risen from 14.0 percent in June 2008 to 17.2 percent in June 2009. Ford has moved into second place in domestic sales, surpassing Toyota Motor Corp., whose share declined from 16.2 percent a year ago to 15.3 percent now. In June 2008, Ford trailed GM in market share by almost 8 percent; now the gap is only 3 percent and closing fast.

GM and Chrysler LLC shut down production lines earlier this summer; Ford is increasing production for the first time in two years. If trends continue, Ford is poised to become the No. 1 automaker in America for the first time since Henry Ford himself ran the company eight decades ago.

Some analysts have noted that Ford has benefited from consumer anger over the government bailout cash given to its competitors. That’s only part of it. The government is ill-suited to managing any large corporations, and as we said in February, Washington “brings little to the discussion other than a checkbook and an attitude.” Since then, we have seen shareholders thrown to the curb, successful auto dealers brusquely told to close, and labor unions and the government assuming controlling interests in GM and Chrysler. These strong-arm tactics were unattractive to Americans who believe in free-market principles and fair play in business.

Whether a combination of government and union leadership can produce better products than a traditional corporation remains to be seen, but we stand by our Cold War comparisons. Ford’s gutsy stand for capitalism is now reaping rewards, and that is the American way.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide