Ford reports surprise $1 billion profit

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DEARBORN, Mich. - 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.

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.
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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
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Ford reports surprise $1 billion profit - Autos- msnbc.com

:hmm:
 
It is great news for two good reasons:

1) They are only the carmaker that did not need bailout money from the U.S. government.

2) The stock holders have made some good money off from this huge profit.
 
Sadly, the union people probably negotiated their jobs out to Mexico by refusing to accept the current state of their company. A lot of the long time union people feel like they have some power, and they fail to accept the new world. They can bitch about how much the big wigs are making, but those big wigs will continue to grant themselves huge salaries, so the union should look around and accept that they have good jobs right now. Last time I looked, Michigan unemployment was over 15%. I bet those 15%ers would accept HALF the wages of the current UAW members.
 
One thing, Ford had to do some serious cutting and restructuring prior to even the clunker deal came out. They already cut almost $4.6 billion dollars in expenses. Secondly, Ford is already $27 billion dollars in debt, which is higher than GM and Chrysler, and plus an additional $8 billion in retiree benefits on top of that. The clunker deal played a minor role. Not everybody went out and bought a Ford automobile. Something to think about.
Ford's No Clunker - Barrons.com
 
Smartest move Bill Ford ever did was to hire Alan Mulally away from Boeing to become Ford's CEO. Now that's $ talking and I feel proud to be a long time Ford fan (even tho Im now driving an Isuzu).

Mulally really pulled the impossible for Ford by mortgaging everything even including the Blue Oval and not asking the Gummint for a dime. Henry Ford II would be smiling down at Mulally from Heaven. Reason was that Henry Ford II had to step in for his Grandaddy (the original Henry Ford) after World War II and his bringing in the Whiz Kids totally saved Ford from bankruptcy in the late 1940's.

Now will Ford just hurry up and get the damn Fiesta in so I can buy one :) ...I'll take mine with a 4 banger EcoBoost and the DSG paddle-shift tranny ;) Makes me wonder if the Fiesta is the 1949 Ford for the 21st century...hmmmmm...
 
PowerON said:
USA is the most influence of our culture to the world. Without us, the world would be very sad.
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Only because the world needed a bipolar superpower-- USSR and United States. No USSR... no opposing superpower-- I am not surprised the US is decaying 15-20 years after the fall of the Soviet Union. One can only stay a unipolar superpower for so long without buckling under its own weight.

Most influential in the world is actually long established in ancient time. ;)
 
souggy said:
Only because the world needed a bipolar superpower-- USSR and United States. No USSR... no opposing superpower-- I am not surprised the US is decaying 15-20 years after the fall of the Soviet Union. One can only stay a unipolar superpower for so long without buckling under its own weight.

Most influential in the world is actually long established in ancient time. ;)
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it's not only about politic :eek3:
 
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