04 Ford F150

Pressure has been placed on the Big 3 Auto Manufacturers to start cutting costs and Ford is taking the next step by reducing it's over head on interest.  With it's latest action plan, Ford managed to reduce their debt by as much as $9.9 billion.  This one swift move alone will reduce Ford's operating expenses by $500 million in annualized interest.

"Ford is upstaging GM with what its doing, said Pete Hastings, senior analyst at Morgan Keegan. "It's handling things more smoothly than GM and accomplishing what it needs to do without the government getting involved.

It's important to note that Ford is leading the way and showing it is a contender in the world market, with no intentions of failing.  Ford is also the only one that didn't have it's hand out during this last round of bailouts and intends to help itself.  How will this affect the company in todays market?

The government, now having a vested interest in GM, will be most likely offering incentives to buyers.  Is this fair to Ford, who is struggling to fix things themselves?

Would you buy from Ford just because they are operating without a bailout?

I'm a ways from buying new cars, but I do buy a used car about once a year.  The majority of my fleet, though dwindled now, is primarily Fords.  I just picked up an 04 F150 two weeks ago and I'm glad that Ford is getting my dollar, no matter how far down the line.

GM Restructuring

Does the President of The United States of America really know what's best for the auto industry or more specifically GM?  I suspect he does not, nor does his appointed Auto Task Force, but that's not stopping him from taking control and throwing more weight around in the free market than I feel is justified.  It's a difficult political stance to take in the face of growing government and strong liberal support, but I say, let them fail.  But let's take a look at what it means to let domestic car manufacturers, like GM, go under.

The first argument always brought up is the threat of losing so many jobs at one time.  GM, not too long ago was one of the largest employers in the world and going under inevitably meant thousands of lost jobs.  However, this seems to be a misguided opinion on the face of what bankrupt means in the US.  Just because GM may file for some chapter of bankruptcy, does not mean they will stop making cars.  What bankrupt means in the US, is that they will be allowed to restructure, renegotiate, and hopefully get the company moving in the right direction again.

Most important to GM's potential restructuring plan would be the ability to renegotiate their Union contracts.  It's been proven for years that the payout to GM employees per hour is far above what competitors are paying, yet still satisfactory wages.  Pile this unnecessary expense on top of the money they spend on pensions and it spells a huge disaster in a failed auto market.

These are just a few examples of what could potentially happen with GM failing and I don't think it means closing doors and never making cars.  But what kind of impact will Barack Obama have on GM at a time when the automotive market is as unpredictable as ever.  Contrary to popular belief, not everyone is buying little hybrid cars.  So what will the Auto Task Force appointed by Barack Obama instruct GM to do?

For starters, as part of the bail out, CEO Rick Wagoner will be required to step down from his position.  The COO Frederick Henderson will be assuming the CEO's vacated position.  But since Barack Obama specifically asks for Rick's resignment, who really is the CEO of GM if everyone answers to Barack?