Ford reports surprise $1 billion 3rd quarter profit

[Tim-H]

DETROIT— Ford Motor Co. reported a third-quarter profit Monday on cost cutting and a turnaround in its North American business and said it would be "solidly profitable" in 2011.

The North American unit recorded its first operating profit in more than four years, helped by higher pricing and increased market share, though Ford warned that the end of government incentives in Europe could severely dent industry sales next year.

The company on Monday posted profit of $997 million, or 29 cents a share, compared with a year-ago loss of $161 million, or seven cents a share, a year earlier. The key North America automotive unit posted a pretax profit of $357 million.

Positive cash flow of $1.3 billion contrasted with a $7.7 million cash burn a year earlier.

Revenue fell to $30.9 billion from $31.7 billion.

The back-to-back quarterly profit provides the first real evidence that Ford may have turned the financial corner and will meet its goal of turning a full-year profit in 2011.

The Dearborn, Mich., auto maker changed its full-year 2011 forecast for the whole company and its North America operations from "break-even or better" to "solidly profitable" on a pretax basis, excluding items, and with a positive automotive operating cash flow.

Challenges remain this quarter and for the start of next year. Government-backed incentives, which sparked sales around the world, including in the U.S., are over. The economic recovery remains slow in the U.S. and sales have hit historic lows in Russia.

"While the company has confidence that the global economy will be improving, the near-term growth outlook remains rather uncertain," Ford said. "Looking at 2010, there is a high likelihood of a substantial decrease in European industry volumes. This decrease could more than offset U.S. sales volumes which may improve somewhat from this past quarter's results."

Ford has culled billions in dollars of costs, but the United Auto Workers are expected to announce Monday a rejection of contract concessions by the union's rank and file.

Chief Financial Officer Lewis Booth said the near-term outlook remains challenging and that the company won't know until next year the full impact of how sales will fare without the "cash for clunkers" incentives that several governments offered this year. Still, he expects the auto maker to report positive cash flow and that the Ford Credit finance arm will remain profitable in this quarter.

He declined to comment on the UAW contacts and said the company remains in talks to sell its Volvo unit to China's Geely Automobile Holdings Ltd.

Ford for the third quarter reported profit in all its divisions except Volvo, which narrowed its pretax operating loss to $135 million from $458 million a year earlier.

The North America unit, which accounts for 42% of Ford's overall vehicle sales, reported pretax operating profit of $357 million compared with a loss of $2.6 billion a year earlier. The improvement came from job cuts, lower costs for materials and consumers buying more high-end models equipped with technological features.

The South America unit's profit fell to $247 million from $480 million because unfavorable currency-exchange rates. The unit's revenue fell 22% to $2.1 billion.

Europe's pretax operating profit rose to $193 million from $69 million. Revenue fell 21% to $7.6 billion.

The Asia Pacific Africa unit's profit jumped to $27 million from $4 million. The company cited cost reductions, higher vehicle pricing and reduced incentives to buyers. Revenue fell 11% to $1.5 billion.

Ford Credit's earnings rose to $427 million from $95 million.

The auto maker forecast full-year 2009 U.S. industry sales of 10.6 million new vehicles, consistent with the Ford's prior outlook. For Europe, the company increased its forecast to 15.7 million vehicles.

The Wall Street Journal

[Hites]

http://finance.yahoo.com/q?s=f

EDIT: OMG DIE UAW!

[Tim-H]

This certainly is odd news, because I could have sworn someone told me VW was the most profitable company in the 3rd quarter....

I stand by my statement that they need to re-evaluate their strategy. If Ford can come from a loss for 3.5 years straight to ~$1billion, no good auto manufacturer should have sliding profits.

You can bet the VW is looking over what they are doing. If you're smart, you don't wait for the losses to show up, you look at the warning signs.

/back on topic

[bal00]

Originally Posted by Tim-H

This certainly is odd news, because I could have sworn someone told me VW was the most profitable company in the 3rd quarter....

Noone said that.

[JC]

I should have bought more stock when it was $2/share.

[BlaineWasHere]

Can they sell us the Focus RS then?

[AWDspider]

Originally Posted by JC

I should have bought more stock when it was $2/share.

i bought 3k shares when it was like a 1.70 ish. hopefully it gets to 10$/share when my year mark rolls around

[sxotty]

Originally Posted by Hites

http://finance.yahoo.com/q?s=f

EDIT: OMG DIE UAW!

Do your posts ever make any sense?

[paul_shark]

Originally Posted by Tim-H

This certainly is odd news, because I could have sworn someone told me VW was the most profitable company in the 3rd quarter....

You heard correctly, VW is doing very well especially considering the current economic climate. Jan-Sept 09 they generated 1.5 billion euros of operating profit. Their Audi group posted a 348 million euro operating profit in the 3rd quarter.

Here's an article regarding thier performance in the first half of the year. I couldn't find anything specific to the 3rd quarter for all of VW
http://www.vwvortex.com/artman/publi...cle_2646.shtml

[Hites]

Originally Posted by sxotty

Do your posts ever make any sense?

Everything is good for Ford, but the UAW is still bitching and moaning and wanting more and more and more. Can you not read?

[sxotty]

Originally Posted by Hites

Everything is good for Ford, but the UAW is still bitching and moaning and wanting more and more and more. Can you not read?

Yes I can read. The UAW should want more. The management is getting more why should the workers who actually make products not get more? Rewarding people for good work is supposed to be the way capitalism works. Can you not think?

[Tim-H]

Originally Posted by paul_shark

I couldn't find anything specific to the 3rd quarter for all of VW

You weren't looking very hard.

http://forums.nasioc.com/forums/show....php?t=1874325

[Hites]

Originally Posted by sxotty

Yes I can read. The UAW should want more. The management is getting more why should the workers who actually make products not get more? Rewarding people for good work is supposed to be the way capitalism works. Can you not think?

Do you just not know anybody who works for the UAW? I'm thinking you don't, because you just came off as being quite ignorant.

[JC]

Originally Posted by sxotty

Yes I can read. The UAW should want more. The management is getting more why should the workers who actually make products not get more? Rewarding people for good work is supposed to be the way capitalism works. Can you not think?

Entitlement and a fundamental misunderstanding of the way business work is killing American labor.

See also the 787...

Boeing Co. will open a second assembly line for its long-delayed 787 jetliner in South Carolina, expanding beyond its longtime manufacturing base in Washington state to take advantage of economic incentives and a nonunion work force.

Boeing also has long complained about the business climate in Washington and frequent strikes by production workers. At Boeing's plant in North Charleston, workers last month voted against continued representation by the International Association of Machinists.

Boeing ultimately could decide to move all 787 production away from Everett, said analyst Scott Hamilton of Leeham Co. The failure of Boeing and the union to reach a no-strike agreement meant Charleston was "a foregone conclusion."

More ominously, Boeing is expected to decide in three to five years on replacement planes for its best-selling 737 and 777 models and where they will be built.

"Over the course of the next decade and-a-half you could see Boeing being just a shadow of itself here," he said, referring to Washington.

http://www.google.com/hostednews/ap/...ZW9SgD9BKEFS85

[bal00]

Originally Posted by Hites

Everything is good for Ford, but the UAW is still bitching and moaning and wanting more and more and more. Can you not read?

The UAW gave concessions in 2007, 2008 and March 2009, including annual bonuses, two holidays, some layoff benefits, raises, tuition reimbursement and cost of living increases.

8 months later Ford is back asking for more concessions.

[Italiano]

I'm with JC on this

..... the Boeing example is spot on.



-------------
Kudos to Ford, well done in the 3Q


-------------

there are hundreds of thousands of people on this earth
without a job, many WISH they were in UAW member's shoes...
those people atleast still have jobs

[sxotty]

Originally Posted by Hites

Do you just not know anybody who works for the UAW? I'm thinking you don't, because you just came off as being quite ignorant.

Yes I know some UAW workers as my brother lives in Lansing, and you just came off as quite arrogant. I could simply reciprocate your insults, but where is the fun in that.

Originally Posted by JC

Entitlement and a fundamental misunderstanding of the way business work is killing American labor.

See also the 787...

See child labor, see slave labor, see reducing worker pay means more profits, see a race to the bottom, see ignorance destroy the American way of life. There are many things to see. One of those is that if "saving American labor" means not paying people a living wage then it isn't worth saving.

It isn't entitlement to think that people deserve to get paid better for doing better work. The question people should be asking is whether ford's success is due to people doing better work, who those people are, and so on. Nothing suggests that it is not the engineers, designers, or management that deserve the credit. Boeing is in all sorts of trouble now, it therefore makes sense that they would seek to reduce operating costs and risks (and they can get more tax incentives by moving facilities, WA state has given them all sorts of breaks, but is tired of constantly subsidizing them). If Ford is doing great, suggesting that they need to hurry and shaft their workers makes no sense.

The UAW and management are two forces that are fighting over who gets what piece of the pie. And the lack of incentives for good work is precisely one of the problems for the UAW. Executives salaries are extremely tightly tied to performance.

People love to whine and complain about unions, but they have certainly made this country a far better place to live than it was under the rule of the robber barons. As long as the interests of the stockholders and management are ignoring the interests of workers there will be a need for unions to exist. The non-union workers are already benefiting tremendously from the union ones b/c their benefits contracts are modeled on the UAW ones and they don't have to pay the opportunity cost of being involved in a union.

[JC]

Originally Posted by sxotty

See child labor, see slave labor, see reducing worker pay means more profits, see a race to the bottom, see ignorance destroy the American way of life. There are many things to see. One of those is that if "saving American labor" means not paying people a living wage then it isn't worth saving.

Child AND slave labor? Wow South Carolina has really gone down hill since I was there last. UAW folks make way more than a living wage. If they want to make more money they should go to school, improve their skills, and get a better job like the rest of us. We live in a global economy now you need more than a high school education to get a good job now, unless you are in the UAW of course. Then you just need to throw a hissy fit and stomp your feet.

Originally Posted by sxotty

It isn't entitlement to think that people deserve to get paid better for doing better work. The question people should be asking is whether ford's success is due to people doing better work, who those people are, and so on. Nothing suggests that it is not the engineers, designers, or management that deserve the credit. Boeing is in all sorts of trouble now, it therefore makes sense that they would seek to reduce operating costs and risks (and they can get more tax incentives by moving facilities, WA state has given them all sorts of breaks, but is tired of constantly subsidizing them). If Ford is doing great, suggesting that they need to hurry and shaft their workers makes no sense.

Nothing you just said really makes sense. People should absolutely get paid better for doing better work but that's not what the UAW is fighting for. If they were talking about shifting their labor model to a pay for performance model I would be 10000% behind them. However they are fighting for annual raises for everyone and wage floors. Those have nothing to do with how good you are at your job, just how much you can extort your company.

Originally Posted by sxotty

The UAW and management are two forces that are fighting over who gets what piece of the pie. And the lack of incentives for good work is precisely one of the problems for the UAW. Executives salaries are extremely tightly tied to performance.

Absolutely, this is precisely why the UAW sucks.

Originally Posted by sxotty

People love to whine and complain about unions, but they have certainly made this country a far better place to live than it was under the rule of the robber barons. As long as the interests of the stockholders and management are ignoring the interests of workers there will be a need for unions to exist. The non-union workers are already benefiting tremendously from the union ones b/c their benefits contracts are modeled on the UAW ones and they don't have to pay the opportunity cost of being involved in a union.

Unions definitely had their time and almost no one will argue they were needed badly in the time of the industrial revolution. However they are antiquated and way past their usefulness. Government organizations like OHSA not to mention the expansion of the media pretty much render their benefits moot. All they do now is force companies to overpay for underperformance.

[bal00]

Originally Posted by JC

However they are fighting for annual raises for everyone and wage floors.

Actually they gave up annual raises a while ago.

[sxotty]

Unless you need a skilled workforce a company will move from South Carolina to China, to Myanmar, to wherever eventually. That is how this stuff works. I don't even really like the UAW (for a myriad of reasons). I just don't like anti-union turrets that people seem to have. Even in today's world I find nothing that suggests unions are not needed. Healthcare would disappear immediately from so many professions if they were not unionized. And yes they should work out agreements where there is some benefit to performance. There are plenty of union jobs where there are benefits already. If the management cannot convince them of the usefulness of such incentives that is a failing of management. The fiasco with the UAW is just a problem of management saying "Well I won't be here when the ***** hits the fan, so I will agree to anything to get them off my back." That is poor management. The reason it happened goes back to money again, there was no disincentive for them doing that b/c the problems are dealt with by someone else.

[Hites]

So you're basically saying that unions WERE necessary but now AREN'T. Thanks for proving my point. I would love to see the ratio of union to non-union corporations that are going under or are in serious financial trouble.

Btw, if you want to throw around credentials, then I can point out that my grandfather worked for Ford, my father for Honda (non-union, of course), and I've worked for GDLS as an engineer. My stint at GDLS was my first experience working with UAW members. The abundance of laziness, greediness, and resistance to do any sort of extra work was staggering. I now refuse to work for any unionized company, because the lack of efficiency sickens me.

I'm also reminded of a story my friend told me of an occurence that happened about a month ago. He works for a unionized chemical company. Coworker of his came in late. Boss caught him as he was trying to sneak by and pulled him into his office. Coversation. Coworker flings the door open, cussing out his boss and slams the door shut. Boss tells him to leave or he'll be escorted out. Coworker files a grievance. Boss gets suspended.

Gotta love unions...

[mh_WRX]

If a union is truely serving it's members to a REASONABLE manor, then great. But the UAW has taken things to the extreme.

You have a fairly non-skilled labor force getting an average of $28 an hour, average of 5 weeks of vacation, 17 holidays and then personal days. On top of that is not just health care, but free health care for life. This includes dental and prescriptions. Then there are additional benefits for retirement, relative tuition, super low rate personal loans, and so on.

Their list is huge compared to most of the rest of the US work force. The list of "concessions" is laughable considering what they are already receiving.

[sxotty]

Originally Posted by Hites

So you're basically saying that unions WERE necessary but now AREN'T. Thanks for proving my point. I would love to see the ratio of union to non-union corporations that are going under or are in serious financial trouble.

Btw, if you want to throw around credentials, then I can point out that my grandfather worked for Ford, my father for Honda (non-union, of course), and I've worked for GDLS as an engineer. My stint at GDLS was my first experience working with UAW members. The abundance of laziness, greediness, and resistance to do any sort of extra work was staggering. I now refuse to work for any unionized company, because the lack of efficiency sickens me.

No you want to throw around credentials, I never did. But great work on tossing them. Nor did I say they are unnecessary, in fact I specifically said I think they still have their place, but you apparently missed that. Your story reminds me of a story... once there was a person who told a story to prove his point. The listener thought, "gee anecdotal crap is meaningless".

[onelove221]

Unions definitely had their time and almost no one will argue they were needed badly in the time of the industrial revolution. However they are antiquated and way past their usefulness. Government organizations like OHSA not to mention the expansion of the media pretty much render their benefits moot. All they do now is force companies to overpay for underperformance.

There is a sane, rational, argument to be made for a modification in the way organized labor and corporate management interact in a modernised economy.

This unfortunately, is not that argument.

Let me explain:

The problem, as sxotty rightly pointed out, in the long term, it is utterly destructive to America's middle class to both have states and workers racing each other to the bottom with subsidizes and by undercutting each other's wages.

In the end, the right-to-work states are going to have their own throats slit by the next emerging labor market that decides it can get by with a less robust tax base and fewer (if any) environmental protections.

It's a race to the bottom in which America as whole ultimately loses.

I have traveled a lot in my line of work and part of my duties have required interaction with unionized tradesmen, both here and abroad.

Allow me to say this:

It is a laughable position to hold that in order to compete with companies such as AIRBUS or VW; companies like Boeing and Ford have to eviscerate domestic unions and constantly demand state subsidies/cheaper workers.

Say what you will about the UAW and American labor, they are absolute pushovers when compared to unionized labor in the EU. Again, I speak from first hand experience. Go to the EU. You will never, ever see the givebacks and concessions American unions like the UAW grants to domestic corporations occuring in places like Germany, France or Italy....or South Korea for that matter.

Know why? Because workers there have accepted the fact that they cannot compete with slave labor, or near slave labor. The big fight over there right now is how best to integrate workers from the former Soviet bloc countries (Estonia, Belarus, etc.) into the economy without irreversably damaging the middle class in the already established industrialized nations.

Unfortunately, the various governors, Chambers of Commerce and workers in underdeveloped, high structural unemployment, low cost, US states are so desperate for investment and jobs that they will do damn near anything to attract and keep companies in their districts.

I say again, this is a sucker's bet, but such are the results of 3/4 of century of propaganda.

As far as the assertion that work by organized labor is of inferior quality, this is not backed by any real evidence.

Unionized Buick for example (and to a lesser extent, Ford) are competetive with unionized foreign brands in terms of quality (if you look at the JD power numbers at least), which might lead one to the conclusion that the problem lies not with the workers, but with the management.

Meanwhile, I recall very distinctly the harsh lesson VW learned when it started building Golfs MKIIIs in Mexico to cut costs (closing its unionized plants in Pennsylvania and Ohio IIRC). The quality was so bad they had to revert production back to Germany, a country where the union will call a general strike if management even sneezes wrong. Yet somehow, they have been able to remain profitable.

I could go on, but I really think there needs to be global consverstion on how we can bring low cost workers into the global workface without ignoring the vast differences in economic, political and social infrastructure between nations.

IMO, it is not just unfair, it is criminal to allow the elites of both the industrialized West and the developing world to use low cost workers, most of whom labor under intolerable conditions and whose access to real democracy is limited, to wage a proxy war against the free citizen workers in the West in what is nothing more than a profit seeking exercise.

Moreover, it is haltingly stupid for the state governments inside the US to mimic this flawed model domestically.

[JC]

Originally Posted by sxotty

Unless you need a skilled workforce a company will move from South Carolina to China, to Myanmar, to wherever eventually. That is how this stuff works. I don't even really like the UAW (for a myriad of reasons). I just don't like anti-union turrets that people seem to have. Even in today's world I find nothing that suggests unions are not needed. Healthcare would disappear immediately from so many professions if they were not unionized. And yes they should work out agreements where there is some benefit to performance. There are plenty of union jobs where there are benefits already. If the management cannot convince them of the usefulness of such incentives that is a failing of management. The fiasco with the UAW is just a problem of management saying "Well I won't be here when the ***** hits the fan, so I will agree to anything to get them off my back." That is poor management. The reason it happened goes back to money again, there was no disincentive for them doing that b/c the problems are dealt with by someone else.

The free market still works you know. Companies that offer higher wages and better benefits will get better workers. Companies have an incentive to treat their workers better. Unions throw a wrench in the system. They force companies to pay higher wages than the market would demand and often for worse efficiency. They only way they usually are able to compete are with tax incentives or tariffs on foreign products. They aren't saving American jobs they are forcing the rest of us to subsidize their wages. If they really cared about American jobs they would stop dragging down our companies with their bull**** demands.