the bailout:  http://www.marketwatch.com/news/story/Auto-makers-get-more-17/story.aspx?guid=%7BFCB003C5%2D730B%2D42CC%2DA6B8%2D33A8192480BF%7D

 

 

Ford says no thanks:  http://www.breitbart.com/article.php?id=081219150605.tto9ush5&show_article=1

 

 

OK, while polls indicate that most are unhappy about government assistance--bailout, specifically, though it is technically a loan--for domestic automakers (GM, Chrylser and Ford).  However, the idea that they just be allowed to slip into bankruptcy isn't a good one either.  While emerging from bankruptcy would yield smaller, healthier, more competitive companies with much, much less debt, better labor agreements, and sane retirement plans in place of ridiculous pension plans, it would mean hundreds of thousands of lost jobs.  Now, no matter what jobs will be shed in times like these, but the answer is not to just let them linger in bankruptcy, but to expedite the reorganization that happens there.  This is what this talk of a pre-pack is all about, and this is what an orderly bankruptcy means.  This is because it is an industry, not a company.  Though the case of Ford being in far better shape (albeit not great) proves that Detroit can compete and survive--but more on this in second. 

 

Globally, governments are aiding their auto industries since that is key to manufacturing and the industrial might, or capability of any nation.  Cars are still the most complex collection of parts brought together to form a single product, and one that hasn't got big profit margins.  Yet the first thing industrializing nations do is start car companies, because it's a measure of ability, it matters.  Our government ought to take the unique role that only they can in breaking open the contracts that have put our domestic makers at a severe disadvantage--bad labor agreements, insane pension plans, legacy costs and benefits, and gluttony on the payroles (from executive pay and perks to union fat that is embedded thanks to classification)--so we can emerge on a truly level playing field. 

 

Now, Ford has succeeded in not needing money to survive like GM and Chrysler have been begging for because, to his credit, Bill Ford removed himself from the position of CEO and went outside the auto industry to find the right fit to turnaround his company.  They got Alan Mulally who previously turned around the mess at Boeing who had been getting their lunch eaten by Airbus.  Mulally has done a great job so far at Ford and they aren't accepting any bailout money as the other two are requiring to continue operating.  Ford's interest has been in getting access to a line of credit should they need it.  Ford's sold off their luxury brands Jaguar, Land Rover, and Aston Martin and are mulling over selling Volvo as well.  I think they may be selling their stake in Mazda as well.  They've also been able to borrow against their assets and of course have implemented an effective cost cutting program and eliminated wastes where they can.  I think the CEO is responsible for this largely because he is from the outside of the auto industry.  Sometimes in industries groupthink takes control---look at media as the best example, one comes up with a phrase or a story, and they all copy it--and originality fades away but more importantly so does independence and initiative.   This is why a car czar was and is a good idea to act as a powerful overlord of the relationship between the industry and the government.  It seems less likely that management of GM and Chryslyer will be changing.  That is bad news.  Unlce Sam's given them a check to see what they do with it over the next quarter of a year, and so we'll see if these guys can get their act together. 

 

But for now, I'm buying Ford.