Dire Times for the Auto Industry


AtomicGT

GT Owner
Mark IV Lifetime
Le Mans 2010 Supporter
Apr 12, 2006
3,033
Los Angeles
 

Gill Jr.

GT Owner
Aug 7, 2007
117
Orange County, CA
Anyone have any thoughts on buying Ford stock?
 

B O N Y

MODERATOR & FGT OWNER
Mark IV Lifetime
Sep 5, 2005
12,110
Fresno, Ca.
Buy F yesterday!
Under valued!
 

Gill Jr.

GT Owner
Aug 7, 2007
117
Orange County, CA
Buy F yesterday!
Under valued!

I was thinking the same thing, but I know next to nothing about the stock market. It seems unfathomable that the government would let any of the major automakers fail, and I know that Ford has some great products coming on line in the next few years. I have never purchased a stock before, but I was thinking now may be the time to start.
 

ChipBeck

GT Owner
Staff member
Mark IV Lifetime
Le Mans 2010 Supporter
Feb 13, 2006
5,783
Scottsdale, Arizona
Uncharted waters.

Anyone have any thoughts on buying Ford stock?

Gentlemen,

These are most distressing circumstances. I have been a long-term holder of Ford Motor Company stock for over 20 years. I have lost more money in this stock than I paid for my last home. :ack Like many Americans I have an emotional attachment to the Ford Motor Company and its history that goes beyond my fondness for their automobiles. I had hoped that they would be able to shed enough union workers during the last series of buyouts to put FMC on solid financial footing. The current mortgage debacle and the entire stock markets melt down however, has overwhelmed the efforts of Alan Mullally. He's probably the most talented CEO that FMC has ever had. The current price of Ford and General Motors stock represents nothing more than an option on the potential of those companies to avoid bankruptcy. There are no business fundamentals to be evaluated here. Only the great unknown of potential governmental involvement. Will they or won't they bail out these companies and what form with that bailout take. How much will current shareholders be diluted by whatever stake our government takes in a bailout, nobody knows.

In this Democrat administration protection of union jobs and contracts will certainly be paramount. Those contracts are, unfortunately, the number one thing that will need to be shed for these companies to become competative again. This Congress is not going to bust those union contracts however, so any bailout will most likely evolve into a permanent transfusion of taxpayer funds to protect union jobs.

Bankruptcy would take care of the Union problem, but would wipe out the Ford familys (and all shareholders) stake in the company. Bankruptcy would also dump the massive pension liabilities of the big three onto the taxpayers. There are no palatable options here. Perhaps some divine intervention.

Chip
 
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Kingman

GT Owner
Mark II Lifetime
Aug 11, 2006
4,072
Surf City, USA
Buy American!!

You would be surprised at how it affects YOUR business
_________________________________

“If you don’t learn from history, you are bound to repeat it”

Steel
Electronics
Technology
Etc....
 
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BlackICE

GT Owner
Nov 2, 2005
1,416
SF Bay Area in California
Sad, but true, well said Chip.
 

AtomicGT

GT Owner
Mark IV Lifetime
Le Mans 2010 Supporter
Apr 12, 2006
3,033
Los Angeles
Chip,

Right on, sad affairs. Almost wish we could turn back time and make some different decisions. Can't believe GM and Ford are in such a sad state. Unions have got to see the light or bankrupt the country and let the congress handle it. You are right, the nwe congress will be sympathetic to the unions and we will see no union reform.

I need a Mai Tai x 4
 

B O N Y

MODERATOR & FGT OWNER
Mark IV Lifetime
Sep 5, 2005
12,110
Fresno, Ca.
The only way to discharge the legacy costs is to go BK. No doubt the Ford family would not be very happy about that direction. In my mind the current CEO of F is one of the most capable business leaders in the corporate world.
 

Cobrar

GT Owner
Mark II Lifetime
Jun 24, 2006
4,027
Metro Detroit
Bankruptcy is not an viable option for an automaker if it will try to remain a 'going concern'. If you think making sales are tough now, try to market/sell product from a Chapter 11 company. Heck, why not just seed remaining market share to the New Domestics and accelerate the process of transitioning out of the industrial economy into the 'service' economy? Only trouble is, no jobs to support spending in the new service economy. Grand planning...
 

B O N Y

MODERATOR & FGT OWNER
Mark IV Lifetime
Sep 5, 2005
12,110
Fresno, Ca.
Agreed, what we have to recognize is that Honda, Toyota, BMW and Mercedes are building wonderful automobiles in the USA, as are the Big 3, but without the legacy costs.

From what I have read and study there is no such thing as a bail out of the Big 3, rather a move to stall off an untenable situation.
 

shesgotlegs

GT Owner
Mark II Lifetime
Jul 20, 2006
1,183
Bankruptcy is not an viable option for an automaker if it will try to remain a 'going concern'. If you think making sales are tough now, try to market/sell product from a Chapter 11 company. Heck, why not just seed remaining market share to the New Domestics and accelerate the process of transitioning out of the industrial economy into the 'service' economy? Only trouble is, no jobs to support spending in the new service economy. Grand planning...

Well said. What a conundrum :ack
 

Kingman

GT Owner
Mark II Lifetime
Aug 11, 2006
4,072
Surf City, USA
Agreed, what we have to recognize is that Honda, Toyota, BMW and Mercedes are building wonderful automobiles in the USA.

So are the 'Big 3'. :bored

The crux of the matter is that the $'s paid for a Honda, Toyota, BMW and Mercedes leave the country (USA). The majority of the content for the final product is produced overseas - thus the 'real' $ flow contributes to less $'s staying in this country to pay for the products/service we ALL peddle.

The falacy (Bl0 J*b) started 10 years ago was that our superior production of 'intellect', educated here, would sustain the next generation of people in their 'knowledgeworker' job, thus mitigating the loss of the industries like steel and electronics. The consituency bought this load of crap too. Instead what the US has become is a service oriented economy producing/delivering very little tangible 'product' for the world market which is getting less and less each and every year.

Economics 101 tells you that a thriving company (i.e. economy) is continuously developing 'new' products and expanding the client base. Investing 101 tells you to look at the composition of a company's revenue to determine long-range viability. A company (i.e, economy) that is only maintaining/servicing the current client base (no further gains in market share) has little value in the stock market (i.e. long-term viability indicates failure).
 
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B O N Y

MODERATOR & FGT OWNER
Mark IV Lifetime
Sep 5, 2005
12,110
Fresno, Ca.
So are the 'Big 3'. :bored

The crux of the matter is that the $'s paid for a Honda, Toyota, BMW and Mercedes leave the country (USA). The majority of the content for the final product is produced overseas - thus the 'real' $ flow contributes to less $'s staying in this country to pay for the products/service we ALL peddle.

The falacy (Bl0 J*b) started 10 years ago was that our superior production of 'intellect', educated here, would sustain the next generation of people in their 'knowledgeworker' job, thus mitigating the loss of the industries like steel and electronics. The consituency bought this load of crap too. Instead what the US has become is a service oriented economy producing/delivering very little tangible 'product' for the world market which is getting less and less each and every year.

Economics 101 tells you that a thriving company (i.e. economy) is continuously developing 'new' products and expanding the client base. Investing 101 tells you to look at the composition of a company's revenue to determine long-range viability. A company (i.e, economy) that is only maintaining/servicing the current client base (no further gains in market share) has little value in the stock market (i.e. long-term viability indicates failure).


King...

You have taken my qote out of context... no MAKERS MARK for you:wink
All what I meant is that Honda et al have no legacy costs and are building great cars with American labor...

Nighty night, off to dinner:biggrin
GBA,
daniel
 

RALPHIE

GT Owner
Mar 1, 2007
7,278
Getting back to the question of stock purchases, I tend to think that the current market values for Ford and GM are an investment bargain, in that the value of all their assets - properties, etc. - are worth more than the outstanding shares. Thus, one would make a profit if it were divided and sold, should that be the outcome of a bankruptcy....
 
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FB GT40

GT Owner/B.o.D
Mark IV Lifetime
May 30, 2006
812
Folly Beach, SC
GM

GM's market cap was $2 billion yesterday!

How sad! That's Bill Gates' lunch money!

C'mon USA auto guys...listen to the market. Listen like you should have in 1974...muscle is out...economy is in!

My $2's worth...and yes, that was .02c worth not so long ago!

Hold on...BOHICA!!!
 

AJB

GT
Mark II Lifetime
Le Mans 2010 Supporter
Jun 28, 2006
2,977
Bloomfield Hills, Michigan
Just remember that the common stockholders are the last in line when bankrupcy is declared. No matter what the value of the combined assets that may /could be sold. So typically, the instant bankrupcy is declared, the stock shares hit zero.

Also, the big issue with the Federal Loan or Bailout to GM is that GM never funded the UAW VEBA. Therefore, the first $5 Billion of taxpayer dollars that the government loans to GM immeadiately goes to the UAW for their current and retired UAW members health care coverage...of which by the way, the workers have a co-pay of only 5% ! This really pi%$s people off.
AJB
 

BlackICE

GT Owner
Nov 2, 2005
1,416
SF Bay Area in California
Getting back to the question of stock purchases, I tend to think that the current market values for Ford and GM are an investment bargain, in that the value of all their assets - properties, etc. - are worth more than the outstanding shares. Thus, one would make a profit if it were divided and sold, should that be the outcome of a bankruptcy....

Minus the liabilities, that make the net amount NEGATIVE!
 

GT Tech

Ford GT Team Alumni
Aug 13, 2006
678
Kingman, Arizona
I'd like to throw my side of things into the mix. As a retired UAW-Ford worker, I can see both sides of the discussion.

For many years, the unions asked for the moon, and for the most part got it. They were like pigs at a trough. BUT, who was to blame? The eater, or the feeder. I think it was a wash. In my 30 years as a UAW member, I never once had a real say in what would be in the next contract. I only knew one person who actually was involved with the negotiations.

Do I think Unions are needed? For sure! After living for a year or so, in a state where unions are non existent, I can't believe people can live on minim wage. Perfect example here. My wife worked for a grocery store chain for 22 years in Michigan. She worked hard and moved up the ladder to Head Cashier, running the service counter. As a union member, she made about 16 bucks an hour, with a few benefits. That same job in Arizona pays about 7-8 bucks an hour, with no benefits. Believe me, food in Arizona cost the same as it does in Michigan.

Do the unions need to be realistic as far as what they ask for in negotiations? ABSOLUTELY!! And I believe that the UAW is finally starting to wake up. Over the last few years, they have worked with the company's to get rid of old farts like me, and bring in younger people making half of what I did. The UAW realizes that whats good for the company IS good for the union.
That doesn't mean the union should just lay down and say "please pee on me". How many people on the forum have spent time on an automobile assembly line, in 90 degree weather, with 80 percent humidity, doing some of the most physically challenging, mind numbing work you could imagine? In order to keep your job in station, you have to be actually putting your part on for 56 seconds of every minute. That leaves 4 seconds to pick up your next part and go to the next car. For 10 hrs a day. Need to take a leak? Hold it to break time. I was fortunate in that I spent my last 4 years with Ford building the GREATEST car in the world. Our beloved GT. It was a totally different work environment.

Did the Union and Company do right by Me? I feel they did. I made a good living, raised 2 fine sons, retired and still have a heart beat, and I have a good pension, although that GT in your garage is worth about 5 times my yearly pension. I have a very big stake in what happens with the American auto industry, especially Ford. I just bought more Ford stock at about 2 bucks a share. I remember back in 1980, when Chrysler was going for 2 bucks a share. I couldn't buy food, let alone stocks, but if I had, a few years later I'd have made a pile of money on it.

I've often wondered why no one seems to bash the European auto unions. The Germans work a lot fewer hours a week, have more vacation time , and make a lot more money than their American counterpart. No one says they are over payed. Are the cars they build that much better than ours? Maybe once, but not that much anymore. M-B has some of the highest warranttee costs in the business. I worked as a mechanic on Volkswagon Porshe and Audi's for a few years. I could tell you stories about the so called "German" quality.

Ok, Off my soap box.

Chip, are we having a to-do at B-J this year? :thumbsup:banana
 

Cobrar

GT Owner
Mark II Lifetime
Jun 24, 2006
4,027
Metro Detroit
So are the 'Big 3'. :bored

Economics 101 tells you that a thriving company (i.e. economy) is continuously developing 'new' products and expanding the client base. Investing 101 tells you to look at the composition of a company's revenue to determine long-range viability. A company (i.e, economy) that is only maintaining/servicing the current client base (no further gains in market share) has little value in the stock market (i.e. long-term viability indicates failure).


I SO appreciate that perspective.

I have no idea who trains these supposed M&A (or Operating) folks in the auto industry, but the vast majority never seem to grasp the value of a stream of new product as imperative to future success. You get lip service on future product, but the value accorded is about the current P/L.

Seems current company "leadership" these days is all about the 6 sigma (cost reduction) 'death spiral' and emphasis has completely shifted away from the concept of creating value. Expenses only contract so far and you become completely irrelvant from a product perspective ~ e.g. managing by the quarter. Only trouble is, foreign competition recognizes that weakness and uses it as an entre to your marketspace. :ack