The Ford-as-Survivor meme has properly taken hold in the mainstream media. But how much of the cheerleading is wishful thinking? Matt Debord of thebigmoney.com figures there’s no reason to get to excited about Ford’s $300 million stock offering, and indeed Ford’s stock is down considerably today. But Ford’s troubled supplier Visteon turned a $2 million Q1 profit, insists the Freep. The first quarterly profit since 2006! What you have to read in the whole piece to find out is that the profit comes courtesy of Visteon’s spun-off and bankrupted UK facilities. Meanwhile, Automotive News [sub] reports that Visteon financial filings admit the firm’s “ability to continue operating as a going concern is, among other things, dependent on the success of discussions with the lenders.”
Visteon’s abandonment of its UK facilities is a story unto itself. The Belfast Telegraph reports that workers there received six minutes notice of their termination, setting off protests and sit-ins that The Guardian wistfully describes as part of a “global wave” of direct worker action. For the Freep the story is far more simple. “When Visteon put its operations in England and Northern Ireland into bankruptcy, Visteon shed that division’s assets and liabilities. Because the liabilities outweighed assets, Visteon was able to record a gain during the first quarter,” goes the Freep‘s only explanation of how Visteon actually made a profit. Incidentally, Delphi also turned a profit. By cutting salaried retiree health care and life insurance payments. Mamas don’t let your babies grow up to be suppliers.
Meanwhile, one of the lenders that Visteon admits being “dependent on” is Chrysler, who owes the supplier $26 million. Good luck getting that money. Meanwhile, other financial disclosure filings reveal that Visteon will be fine. As long as the entire economy fixes itself overnight. To wit:
The Company continues to develop and execute, as appropriate, additional actions designed to generate liquidity. The success of the Company’s liquidity plans depends on global economic conditions, levels of automotive sales and production, trade creditor business conduct and occurrence of no other material adverse developments. Additionally, various macro-level factors outside of the Company’s control may further negatively impact the Company’s ability to meet its obligations as they come due. Such factors include, but are not limited to, the following:
Sustained weakness and/or continued deterioration of global economic conditions.
Continued automotive sales and production at levels consistent with or lower than first quarter 2009.
Bankruptcy of any significant customer resulting in delayed payment and/or non-payment of receivables.
Bankruptcy of any significant supplier resulting in delayed shipments of materials necessary for production.
Meanwhile, Ford accounts for nearly a third of Visteon’s business. If its major supplier goes under (which seems likely—you can’t dump divisions and screw workers for a profit every quarter), Ford is facing a walk of shame to the government handout line in short order. Which would wipe out any imagined advantage it might have over its Detroit competitors.
Ford is not nearly as strong as they are currently trumped up to be. They have all the same problems as GM and Chrysler. Just have Mulally and the foresight to loan billions before the cash crunch. I can’t see how they can compete with 2 companies that are receiving unlimited funds from the government.
Keeping chrysler and GM artificially alive means Ford is also going down the tubes.
God Lord Mister Ford!
Does anybody remember Country Star Ray Stevens song from the early 90s “We’ll All Be Working For the Japanese”? I don’t think that’s going to happen but I remember a line from the song.
“Chrysler fights for survival, so does General Motors, Ford perseveres with better ideas n everybody drives Toyot-ers”
Remember folks, everything old is new again.
Meanwhile Ford works tirelessly to move its parts manufacturing to China, and still holds several former Visteon plants (and union and salaried workforce) under the holding company ACH-LLC. At least Delphi has some killer tech. What does Visteon offer to anyone other than high cost parts and an engineering staff that would leave if they could. Still, in one of the ultimate examples of investor intelligence, their stock was as high as $5 this time last year.
you can’t dump divisions and screw workers for a profit every quarter
Haha I haven’t laughed so hard in a long time
Well said bluecon.
By Edward Niedermeyer
May 12, 2009
The Ford-as-Survivor meme has properly taken hold in the mainstream media. But how much of the cheerleading is wishful thinking?
Maybe MSM is cheerleading for Ford. But Obama and Co. is certainly hammering Ford by injecting billions into GM/Chrysler.
In a conventional market economy, GM/Chrysler would liquidate and Ford as the last American automaker would be able to borrow enough from the capital market to buy them both.
Matt Debord of thebigmoney.com figures there’s no reason to get to excited about Ford’s $300m stock offering, and indeed Ford’s stock is down considerably today.
300m shares = $1.5b, not $300m
In a conventional market economy, GM/Chrysler would liquidate and Ford as the last American automaker would be able to borrow enough from the capital market to buy them both.
Exactly!!! I made a similar comment in another post and nobody even batted an eye!
The way this is all going, we’ll be lucky to have a domestic-based auto industry when it’s all said and done. (No, having transplants is NOT the same thing!).
Unless it’s directly supported by tax dollars, that is.
SpeedRacerrrr:
Exactly!!! I made a similar comment in another post and nobody even batted an eye!
Yeah. The administration dropped the ball – especially in not liquidating Chrysler. Ford is still slower than the transplants. And least able to outrun the Chrysler and GM zombies.
(No, having transplants is NOT the same thing!).
Having lived in UAW areas, it’d say it’s better.
(No, having transplants is NOT the same thing!).
Having lived in UAW areas, it’d say it’s better.
I wasn’t thinking in terms of comparing transplant factories with factories of the domestic auto makers. I was thinking, rather, that it is better to have the creative, intellectual and financial base here, owned and managed by US citizens. This is true for a number of reasons.
A major reason a company will locate a plant here is to reduce its costs. If all we as a nation want to offer or can offer the automotive world is cheaper labor and land, then I submit we are shorting our future. Not a good thing to do.