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Ford Upbeat After Q2 Results, But Wary Supplier Issues Could Still Cripple Industry

Black ink can't disguise some significant concerns.

by on Jul.23, 2009

 “Clearly, the road ahead remains challenging.  The recovery is likely to be more modest than many of us had hoped," says Ford CEO Alan Mulally, shown here accepting new incentives, last month, to help develop advanced powertrain technology.

“The recovery is likely to be more modest than many of us had hoped," says Ford CEO Alan Mulally, shown here last month.

For Ford Motor Co., the glass might seem half-full, right now.  But despite some good news, in the second quarter, company officials made it clear, during a call with reporters that they continue to worry that it’s actually half-empty and continuing to drain out.

Ford surprised industry observers by announcing a pre-tax operating loss of only $424 million in the second-quarter, a $609 million improvement over the same period a year ago.  The automaker’s ability to shed more than $10 billion in debt, combined with the ability to reduce annual cash interest payments by more than $500 million during the quarter helped propel overall profits to $2.3 billion, a $10.8 billion improvement versus year-ago numbers.

You're top source for automotive news!

You're top source for automotive news!

These results would be more than a cause for celebration during normal business cycles, but Ford is being very cautious about its success as it tries to determine whether the global automotive downturn has come to an end.  The automaker expects full-year total U.S. industry sales to end at between 10.5 to 11 million units, roughly in line with original planning.  European market sales are expected to end between 15 and 15.5 million units, due in large part to the success of vehicle scrapping incentive programs.


Why Whitacre?

GM's new Chairman may not know cars, but he's got the drive and a succesful track record helping ailing giants.

by on Jul.16, 2009

"I'm a hands-on walk around type of guy."

"I'm a hands-on walk around type of guy."

Eyebrows rose when Edward Whitacre, Jr., General Motors’ new Chairman admitted that he had little knowledge of how the auto industry worked.

“I don’t know anything about cars. A business is a business, and I think I can learn about cars. I’m not that old, and I think the business principles are the same,” the 67 year-old Texan told Bloomberg News.

Known as “Big Ed,” Whitacre gained notoriety as the man who worked his way up from humble beginnings as a facility engineer at Southwestern Bell, in 1963, to become the top executive at the reconstituted AT&T. He earned a $158 million retirement package, in November 2005, after leading Baby Bell SBC’s acquisition of its one-time parent company – whose name the telecomm company adopted.

Experts say Whitacre’s experience at dealing with government oversight via the Federal Communications Commission, along with his extensive relationships with members of the House and Senate, made him the perfect choice for the GM post, as it works its way through government ownership.

We're Hands On too!

We're Hands On, Too!

“At the policy level he will be a very effective Chairman when it comes to cutting through the government bureaucracy,” says David Cole, Chairman of the Center for Automotive Research in Ann Arbor, MI, who does not expect Whitacre to stay at the helm of GM for an extended period of time, possibly leaving when the government sells off its stake in the company.


High Pay Auto Jobs Without Education Will Vanish

President announces American Education Initiative in Detroit.

by on Jul.15, 2009

President Barack Obama tells Michigan workers the era of high pay without an education is coming to an end.

President Obama tells Michigan workers the era of high pay without a good education is ending.

U.S. President Barack Obama entered what could be labeled the belly of the U.S. economic beast on Tuesday when he visited the campus of Macomb Community College, in Warren, Michigan, to announce his new American Graduation Initiative, which will provide $10 billion in government backed loans to renovate community college classrooms across the country.

It’s part of the President’s plan to have America achieve the ranking of having the highest college graduation rate of any country within the next decade – something critical for American competitiveness, Obama told the crowd, since the jobs of tomorrow are going to require an Associates Degree at minimum.

The president warned the estimated 2,000 people attending the speech that the jobs the auto industry treasured for so long — working on the line for $65,000 a year with just a high-school diploma — were long gone.

Interest Free!

A learning experience.

“Some of the jobs that have been lost in the auto industry and elsewhere won’t be coming back,” he stressed.  “They’re the casualties of a changing economy.  In some cases, just increased productivity in the plants themselves means that some jobs aren’t going to return.”