Anybody else watch the news? Ford losing billions

[bmxmon]

Im wondering if the US govt would let Ford/Gm be bought out by foreign auto manufacturers. I dont know what the exact situation was with the airlines, (I dont think anybody wanted to buy them) but I wonder if the govt would step in, though they did nothing for Chrysler. Just a thought.

[Unit 5302]

Originally Posted by bmxmon

Im wondering if the US govt would let Ford/Gm be bought out by foreign auto manufacturers. I dont know what the exact situation was with the airlines, (I dont think anybody wanted to buy them) but I wonder if the govt would step in, though they did nothing for Chrysler. Just a thought.

The answer to this question is no. They might be willing to find a way to help bail Ford out of a bankruptcy situation if there were no suitors like was Chryslers situation a couple times in the 80s, but they would not step in to block a large Japanese or European auto manufacturer making an outright purchase of or aquiring controlling interest in Ford Motor Company. They might step in and make it difficult if they felt the purchaser was not financially able to absorb Ford's operations which would result tens of thousands of US jobs being on the line. It's also likely that some legislators would make lip service arguments against it to console their constituents filing complaints, but ultimately, there isn't a whole lot the government could or would want to do.

[bmxmon]

Yeah, thats what I thought. Almost too bad, until you realize they put themselves in this position.

[Mr 5 0]

Just for historical context:

back in 1979, the U.S. government (then running under the Carter administration) agreed to gave the financially sick Chrysler Corporation 'loan guarantees' of 1.2 billion dollars. In effect, the U.S. government 'co-signed' Chrysler's loans. If Chrysler defaulted, the government (via our tax money) paid Chrysler's creditors. The officially-named Chrysler Corporation Loan Guarantee Act of 1979 also helped Chrysler 'restructure' it's huge debts by basically paying their creditors about 30¢ on the dollar and laying off tens of thousands of workers. Just about everyone financially connected with the government bailout lost in some way - except Chrysler (and the U.S. taxpayers). Tough luck if you happened to be a Chrysler line worker or had extended credit to the company. You got hosed.

Then-Chrysler Chairman Lee Iacocca, the guy Henry Ford II foolishly fired in 1978 because Mr. Ford 'just didn't like him' was highly instrumental in securing the government bailout. Of course, the U.S. economy was in bad shape then but, against all odds, Chrysler did rebound, mostly due to the introduction of the FWD K-car and the then-innovative and new minivan. The Chrysler Corporation was solvent within 4 years and the government never had to spend any taxpayer money to 'save' Chrysler.

The Chrysler bail-out was a matter of much controversy at the time. I seriously doubt such a deal would ever find acceptance by Washington politicians - or the taxpaying public - today. Besides, judging by recent sales figures, most Americans like foreign cars, especially Japanese cars. The old WWII-era aversion to things 'made in Japan' has died off as the WWII generation died off. It's a different world, today. I suspect that only a minority of Americans would make a big fuss about a popular and highly successful Japanese car company merging with Ford, assuming (as Unit 5302 mentioned) most of the U.S. auto plants - and workers - were retained along with the Ford name. Unionization could be a stumbling block as could Ford family resistance to giving up control of 'their' company, but where there's a will, there's a way - and the jobs that would be lost if Ford simply went out of business would be huge when you count the many suppliers and Ford franchise owners (dealers). All that would make a Toyota/Ford merger look pretty good, considering the consequences of simply watching Ford fold up like a cheap umbrella. Unfortunately, if a prospective Ford/Toyota merger failed, Ford would likely go under, and they don't have a Lee Iacocca - or a minivan - to save them, this time.

I don't know what will actually happen but if Ford does fold or has to merge or drastically downsize, the losses can be traced back to clueless management and Ford fam)ly arrogance that couldn't be 'fixed' this late in the game. The auto business has evolved, like most other big businesses. When that happens, a company has to adapt and change - or die. Ford tried, but floundered around too long with bonehead management decisions like the aforementioned dumping of the Taurus name, now being reclaimed, but probably too late.

I certainly have no desire to see Ford go under but I don't like seeing stupidity rewarded, either, and Ford management has been incredibly stupid over the past dozen years or so. If Ford can't pull out of its current financial death spiral, it will be the fault of senior management that couldn't seem to find a successful way to compete with the Japanese car companies in design, innovation, build quality and value. Just having the Ford nameplate on your latest model doesn't guarantee sales, anymore. Buyers have been disenchanted with some of the Ford cars and some of the problems they have encountered with them. Enter the Japanese. While their cars are not 'bulletproof' as some seem to imagine, they are well thought out, usually economical, well made and tend to hold their value. Just what America wants in a new car. I think it's likely too late for Ford to 'come back' without some major restructuring. I hope they survive but I'm long past worrying about it. Nothing personal, it's just business.