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Ford/GM post 2nd Quarter Profits, yet both restructurings have a long way to go

Posted in Ford, GM by will bee | August 1st, 2007 | Leave a Reply |

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As quarterly reports began to emerge at the end of the second quarter we see that both Ford and GM posted positive numbers. For GM it was their third profitable quarter in a row, while Fords second quarter profits came as a mildly pleasing surprise to market anaylists.

Both Ford and GM are still deep in their individual restructuring schedules that have resulted in numerous plant closings and early retirements. The process is expected to take time as shedding the gluttony of decades past is a messy business, and the recovery from such system shocks requires patience.
GM’s profits ($891 million for the 2nd quarter) are credited to their strength in foreign markets and their cut-back in fleet sales and less incentive spending, which have helped to retain a higher sales value. The improved sales value of their cars is helping to off-set the lower sales figures of their truck/SUV division; the bread and butter of profits in the 1990’s and earlier this decade.
Fords profit shocker ($750 million for the 2nd quarter) has a lot to do with the sale of Austin Martin and was aided by a cut-back similar to GM’s in fleet sales. While no one with Ford is under the impression that they are out of the water, it does give some credence to the path they have taken.

The next hurdle ahead of Ford and GM is the contract negotiations that are underway with the United Auto Workers Union (UAW). If Detroit is to compete with the Asian and European auto manufacturers they will need the UAW to come down to an equitable level. And if the UAW wants to continue working in the automotive industry some concessions will be necessary.

Ford and GM are reshaping the way America builds cars, but it is still to early to prognosticate what that shape will be.

Source[DetroitNews – FordGM]

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