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The pressure that the Administration is putting on the UAW and the creditors at GM (NYSE: GM) and Chrysler may be good for the two troubled car companies, but the help for the two weak companies could hurt the strongest one -- Ford (NYSE: F).
Any cost advantages that come out of deals forced on labor because of the threat of Chapter 11 will cut costs at GM, and might bring those costs well below what Ford has been able to get in concessions on its own. GM could end up with a substantial gross margin lead over the No. 2 U.S. car maker.
What is the solution? Well, as usual, the federal government will have to get involved. It cannot fix GM and Chrysler and in the process break Ford. That almost certainly means that the auto task force will have to go back to the UAW and ask for equal treatment for all three companies. So many auto workers are about to be put out of jobs in the name of making Detroit profitable that there might as well not be any union at all.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
4-02-2009 @ 10:00AM
kaydahl said...
You fail to take into account that while there is a possibility that Ford will end up with higher comp costs than GM, Ford will not owe the feds billions of dollars. You also fail to note the rate at which Ford is increasing domestic market share compared to GM. PS...The government is not fixing Chrysler. They are selling it to an Italian company.
4-03-2009 @ 8:58PM
terry said...
Ford, far and away, is the better prospect. #1 units sold in March, again. They actually have cars that in addition to every thing else are comfortable to drive for some distance.
4-05-2009 @ 12:48PM
dspez said...
a chance to make money on ford--you ain't seen nothin' yet. How about a triple---think about this:
1. Cash for clunkers-only pays for cars with 27mpg and up--that kills chrysler dead
2.Ford has purchased a minimum(probably more) of $11 billion in debt back--thats earnings of $5.50/share THIS quarter
3. their breakeven is down to 9 million car market
4.market share is rising
5. intro of the 41mpg fusion sold out around the world
6.220 million shares SHORT about to get squeezed.
oh there's not a little to be made this is a gusher!!
4-05-2009 @ 9:31PM
Duke said...
The UAW has used pattern bargaining during contract talks for decades. They may do it again in this case to save Ford. However the gum in the works is almost the same as with Delphi. Delphi went bankrupt and Gettlefinger could not get a finger in the door to change the judges mind. A bankruptcy at GM will mean the Gettlefinger has to keep his fingers out of the works in the bankruptcy decisions. The UAW just might get the Ford UAW workers to take a fall but I doubt it. The taxpayer is tired of all this political wrangling the big engage in and are begining to see why the domestic auto industry is in a big hurt. The only thing that will make all the Detroit 3 equal in pay and benefits is if the government steps in. I doubt that wil hapen though. This may make Ford go to the government for a bailout of their own. With bailout burnout, it may mean a taxpayer revolt. So If Gettlefinger can get the same wages for Ford as with GM and Chrysler, if they survive, then it will save grief for the taxpayer but make it for the UAW Ford workers. So Mr. McIntyre is probably right.