Thursday, December 24, 2009
Ford; Rising from the Wreckage
The "Detroit 3" domestic auto makers have all "survived" what was arguably the worst year in their collective history. Chrysler and General Motors declared bankruptcy. Chrysler was basically told by the Obama administration to merge with foreign automaker Fiat. GM now has the Obama administration sitting on their Board and "advising" them how to run their business and telling them what products they can and cannot build.
The only domestic automaker to avoid some level of government control is Ford Motor Company. Ford had the forsight to line up $23.5 billion in private financing in 2006, before the mortgage/banking collapse that dried up commercial credit. While Chrysler and GM tried to avoid bankruptcy by seeking government guaranteed loans, Ford was able to "ride out the storm" and avoid the "pact with the devil" that both GM and Chrysler entered into with the Obama Administration. The downside to Ford not filing bankruptcy is that their 2 domestic competitors were able to shed BILLIONS of dollars in debt that Ford is still carrying and will have to pay off.
The irony for GM and Chrysler was the fact that after accepting the conditional government loans, they had to file for bankruptcy after all, prompting alot of people, including myself, to say "They should have just declared bankruptcy without accepting a dime from the government" They'd be much better off.