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11 Comments on “Bailout Watch 560: Bill Ford: “God Bless Uncle Sam”...”
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He’s certainly right about the loans keeping many suppliers afloat in the short term. Such was the sad state of GM and Chrysler that they couldn’t even pay them.
Had the suppliers gone down, there would probably be a Ford Zombie Watch on this site as we speak.
Seems like a lousy justification to me. Why not spend the same amount of money in loan guarantees to the suppliers so that Ford doesn’t go down, while letting obsolete failed businesses die? I’m sure the suppliers are not happy with Chrysler production shutdowns now, even though they were technically bailed out.
The supplier thing is so bogus. If GM and Chrysler go down, then they’ll just start making more Ford parts to keep up with a massive amount of market share that Ford will have gained. Also, the entire industry is overcapacitated. Who cares if they can’t get parts for a while; they need to burn through all of their excess inventory.
Ford only supports this because they may end up asking for a little sugar themselves. It’s a big mistake in my opinion. They should be championing the fact they they aren’t on the government teat. Defeat GM and Chrysler and take their market share.
I would have considered a Ford, but if they’re going to play pattycake with the bailout boys, they can pike off.
Also, why would all of the suppliers go bankrupt? They’ll still have Ford’s business. They’ll have to make cuts, but they aren’t going to disappear. The prices may increase, but I think car prices will probably increase universally once we’re settled into this lower volume market. Even if they did die off, if Ford needs parts, someone will sell them parts because there is money to be made. Get hooked up with Toyota and Honda’s guys. Whole industries don’t get wiped out overnight because 1 or 2 players die off.
Oh wow, I moused over the word “bailout” in my last post and Vibrantads pulled up a GM advertisement. Funny stuff.
People who think GM/Chryco suppliers can just up and start making Flex/Mustang etc. parts on a dime are misunderstanding the whole underlying “Suppliers going bankrupt” issue. Suppliers operate on shoe string margins, they can’t afford to lose the business long enough for them to retool to Ford’s parts. This is also assuming that Ford can absorb and will absorb all the GM/Chryco business. This will not happen so the suppliers that are already near bankruptcy would go to BK if they lost out on any significant cashflow, even for a short amount of time.
“Suppliers operate on shoe string margins, they can’t afford to lose the business long enough for them to retool to Ford’s parts.”
We’re talking about suppliers that make Ford parts as well as GM or Chrysler. They already have what they need for that. I don’t see why these businesses would have to be liquidated. Just cut out the portion of the business that served the zombies and increase prices to cover anything that was being saved through scale.
Someone will make parts for Ford. The automotive industry does not end with GM and Chrysler.
If Ford keeps taking the high road they’re going to end up falling off the mountain.
I doubt I’d have said one thing differently were I in Bill’s shoes.
Too bad I despise their North American products, cause lately I’ve been feeling kinda warm and fuzzy towards Ford (for the first time ever). The management team seems to have played the same lousy hand infinitely better than did their chief rivals.
We’re talking about suppliers that make Ford parts as well as GM or Chrysler. They already have what they need for that. I don’t see why these businesses would have to be liquidated. Just cut out the portion of the business that served the zombies and increase prices to cover anything that was being saved through scale.
You say that as if you’re willing to accept these price increases being passed on to you as you shop around for a new Flex.
This also assumes that whatever extra business they get from Ford will actually cover the revenues lost from not having Chrysler or GM to do business with, or be enough to keep them sustainable.
Any disruption of revenue on a company operating on low margins is usually disastorous. Losing GM and Chrycho would not result in business instantly turning to Ford. If GM/Chryco go under then many suppliers probably wouldn’t make next month’s rent, let alone the lead time of replacing GM/Chryco business w/ new Ford business.
There is a chance I’m mistaken but I’m fairly certain suppliers these days are more on the ropes then the auto makers.
After my F150 burned in my driveway, just 25 feet from my house, due to a falty Speed deactivation switch, I have given up on the US auto industry. All I want is a dependable car. I did not hear that word out of his mouth.