Ford Refuses Bailout Money, Makes Profit
by Big Dog on Jan 28, 2010 at 21:45 Political
Ford Motor Company was the only US big three auto maker to trun down the government’s offer of a bailout. The company was in financial trouble just as Chrysler and GM were but decided against taking taxpayer money.
GM and Chrysler took the money and their companies became government property with labor unions owning part of them. Neither has shown a profit and they both continue to bleed money. It is hard to see how they will survive and how taxpayers will ever get their money back (well, the banks will have to pay for it with a fee).
Ford showed a profit of $2.7 billion, its first annual profit in four years.
The company took action in the tough market and worked on a business plan that allowed it to make money, on its own and without politicians, (few of whom have business experience) running the show.
This is what happens when the free market is allowed to work. Ford would have failed on its own or succeeded on its own and that is how it should be. No business is too big to fail.
[note]One could argue Ford benefited from the cash for clunkers program but all auto makers had equal access to that program[/note]
I don’t think that Congress will catch on and neither will the progressives because they do not care about success, they care about control.
I love my Jeep but will not buy another. I will not buy a vehicle from a company that took my tax dollars and I really don’t care if they go belly up. I will buy from a company that was responsible and did not take tax dollars.
Looking at the financial status of the big three, it looks like I am not the only one who feels that way.
Ford makes some nice SUVs…
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Tags: bailouts, chrysler, ford, gm, government, taxpayers, unions
Bigd: “The company was in financial trouble just as Chrysler and GM were but decided against taking taxpayer money.”>>
DAR
Good heavens, that’s ridiculous! Entirely to their credit, Ford wasn’t NEARLY in the trouble Chrysler and GM were in. No comparison. If they were, they would have taken the money too, or they would be toast, as GM and Chrysler would have been.
The last time we propped up Chrysler (government back loan guarantees) they paid it back seven years early, with interest. Sometimes socialism propping up capitalism is a good thing.
D.
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“We’ve got a gang of clueless bozos steering our ship of state right over a cliff, we’ve got corporate gangsters stealing us blind, and we can’t even clean up after a hurricane much less build a hybrid car. But instead of getting mad, everyone nods their heads when Bush say, ‘Stay the course.'”
–Lee Iacocca, who supported Dubya in 2000 but now gives him an ‘F’ in leadership, excerpted from his 2007 book.
I second this. To suggest Ford was in the same boat as GM is incredibly ridiculous.
Ford profits in billions:
2005: +$1.4
2006: -$12.7
2007: -$2.7
2008: -$14.6
GM profits in billions:
2005: -$10.6
2006: -$2
2007: -$38.7
2008: -$30.9
Ford posted a loss of just 2.7 billion in 2007. They were hit in 2008 because of the downturn. Meanwhile even before the downturn GM was rolling out insane losses. They lost more in 2007 than Ford lost in many of their previous bad years combined.
The bailout is tied to this. GM and Chrysler took the bailout and then had an advantage after filing for bankruptcy. Ford did not and had to manage their own debt which the other two had restructured or eliminated in bankruptcy court. Investors got screwed over in favor of unions in the GM and Chrysler deals where as Ford had to manage its own debt and did not screw investors.
Who will ever invest in them again? Will any of the people who lost money in this ever buy their products?
My next vehicle will likely be a Ford but it will definitely NOT be a GM or Chrysler.
“The bailout is tied to this.”
Based on what evidence? It’s like comparing Germany’s quick road to recovery to the US despite the fact that Germany did not have a housing bubble. You made that comparison without evidence as well.
The bankruptcy proceedings allowed GM and Chrysler to dump debt and screw over investors by not having to pay them all they owed. This came after the taxpayer pumped billions in to get them stable. Ford enjoyed (if you can really use enjoy as part of this process) none of this and did it one their own.
I also think that Ford had more customers driven to it by disgust over the bailout for the other two.
Germany and other countries are healing more quickly because they refused to use huge sums of taxpayer money to bail the country out.
We had a housing bubble that effected the entire financial markets in many countries, a bubble I miight add that was caused by Democrat policies.
What is their unemployment rate? How are they doing financially? So they did not have the housing bubble we had, they don’t have the wealth we have and they do not have the GDP we have but they managed to crawl back up.
You can keep shilling for this but history shows us that it is bad policy.
Wait until the inflation hits.
You think those things, yes. You have still not offered verifiable evidence that Ford is running profits this year because
they did not take taxpayer money like GM and Chrysler.
GM and Ford were not on the same footing and a comparison is not adequate to draw your conclusions. Same as with Germany.
I think digging holes is a good example. So I dig a 30 foot deep hole and you dig a 10 foot deep hole. We start filling them back in at the same time. If you finish filling yours back in while I’m still working on me would you draw the conclusion that since I haven’t finished in the same time you have that you must have been filling your hole in better?
To clarify my point, your assertion that the bailout is tied to Ford’s profits and GM’s decline is without any strong evidence. You’re drawing conclusions that aren’t supported by anything.
And any conclusion that GM or Chrysler would be in worse shape or have gone belly up WITHOUT the stimulus lacks evidence as well. In face, this applies to about any claim about things that are good or bad. There is no evidence that the stimulus helped in any fashion you claim.
There is only correlation, not causation.
And in your hole story I cannot determine because the definition of better is not available. I might have filled it in better if after you are done yours is not tamped properly and is uneven. I don’t know.
However, given the advantage of having debt removed, which GM and Chrysler did 9and Ford did not) they had to overcome more debt because they were responsible and paid theirs back.
If they did not take stimulus they would either fail or succeed on their own (the assetrtion I made in the post about Ford) and with stimulus they will either succeed with help or fail anyway.
The business should succeed or fail on its own. As for Chrysler in the past, the government is not a bank and does not belong in that business. Just because it worked out does not mean it was the right thing to do.
I know that Ford did not take taxpayer money and they have a profit this year. Is that the reason, I believe so.
GM and Chrysler are not making money and they took a lot of money and had their debt drastically reduced. Is that the reason, I think so.
They should have been allowed tro fail and be taken over or bought out by a better company. If they fail now we will have the same results with a lot more wasted money.
And since the government said it does not expect GM to pay back our money we will have lost it no matter what.
“There is no evidence that the stimulus helped in any fashion you claim.”
Nice slight of hand. So let’s ignore your inability to back up your claims by pretending there are claims I can’t back up?
Unfortunately you’re telling lies again. I present documentation with my argument that the stimulus has worked unlike you who has stated your belief in this case but don’t present any evidence. You can refuse to accept that or argue against my documentation but don’t lie and say there is no evidence.
In this instance I’m not that interested in what you believe happened. I just want to know that when you present an argument we are able to discuss it in terms of verifiable facts or information or even expert opinion. When you work outside those boundaries I guess there’s not much to continue arguing about.
Sorry Adam, you have presented NO evidence that the stimulus helped GM or Chrysler. We are not talking about your other distorted “facts” we are talking about auto companies.
“There is no evidence that the stimulus helped in any fashion you claim.”
…
“Sorry Adam, you have presented NO evidence that the stimulus helped GM or Chrysler.”
Since I haven’t argued the stimulus helped GM or Chrysler I assumed you meant my arguments about the other stimulus. My only argument is that you do not have evidence to prove Ford is doing better than GM because it DIDN’T take the stimulus. So, when you get evidence let us know…
Your saying that Ford and GM are apples and oranges has SOME validity, in that Ford did NOT take bailout money, while GM did- but there the analogy stops, because in the end it is all about product and marketing, and Ford had it, and GM did not-
I like the Chevys, but after all of this, I will not buy another GM product as long as they are tethered to the gubbmint by financial apron strings.
People know when a product is falsely propped up by government means, and they are rightly wary of an association such as this, but they DO value independence, and the trait of self- reliance, and that counts for a lot, hence Ford’s profits, vs. GM and Chrysler’s continuing troubles.
Whitacre claims that GM will have paid back all the gubbmint money by summer- we shall see.
Just like Big Dog, when you have any way to substantiate your assumptions about why Ford is making profit now compared to GM just let us know…
I have purchased 3 Suburbans over the past 10 years. Decent SUV’s but I am sickened by the bailout money provided GM, Chrysler and AIG. Nearly all of the unpaid stimulus funds are losses generated in these bailouts….about $90 billion. Obama tries to make the banks look bad so he can attempt to recover these losses that occurred because of his poor decision to bailout these firms. I too will not buy a GM or Chrysler product so long as we continue to subsidize the operation thru taxpayer dollars. The mechanisms were in place to allow for an orderly chapter 11 proceeding that would have achieved the same end result that we now see, without the loss of $90 billion in bailout money. I just purchase a Ford F-150 Platinum edition truck. Great vehicle plus I feel good about my decision to take my business away from GM.