The General Is Finally Saying "Uncle?"

[dd74]

It looks like No Pontiac G8 (or Corvette, Camaro, Cobalt, Dualie, or Caddy) for me...

http://www.reuters.com/article/newsOne/idUSTRE5363ZM20090407

[m21sniper]

If GM goes under another panic sell off is going to happen in the market. Haha, it'll be a blood bath.

[jyl]

Shouldn't be a surprise. To GM-watchers or to the market.

Hopefully GM mgmt does a good job of planning the BK, and the govt steps in with the needed financial support, to make the BK as short as possible and for GM's business to suffer as little as possible.

[jyl]

So, let's suppose GM enters BK in a month but eventually emerges, and Chrysler enters BK and is liquidated. What do you think will be the impact on Ford? Near term and long term?

[kaisen]

Originally Posted by jyl

So, let's suppose GM enters BK in a month but eventually emerges, and Chrysler enters BK and is liquidated. What do you think will be the impact on Ford? Near term and long term?

It's kinda like the joke with the two friends and the charging bear..... the winner doesn't need to be able to outrun the bear, only outrun his friend.

[jyl]

Rather helpful for Ford, in the short run, then? They just did a partial debt exchange too. If the March SAAR improvement continues, abetted by a cash for clunkers law, it might be a pretty good time to be FoMoCo. In the short run.

Ford might be able to pick up some tasty bits on the cheap. I doubt they'd want anything that GM will be selling, but Jeep is a good brand. Maybe the Viper too (no, on reflection I don't think so). Especially if you don't have to take the contracts, dealers, debt, pensions, etc.

In the long run, Ford can't relish the idea of competing with a GM that's restructured it's union contracts, pension and medical, debt, and dealer network. Ford will need to find a way to match that.

[kaisen]

Originally Posted by jyl

Rather helpful for Ford, in the short run, then? They just did a partial debt exchange too. If the March SAAR improvement continues, abetted by a cash for clunkers law, it might be a pretty good time to be FoMoCo. In the short run.

In the long run, Ford can't relish the idea of competing with a GM that's restructured it's union contracts, pension and medical, debt, and dealer network. Ford will need to find a way to match that.

I think you're dead on

[onewhippedpuppy]

Originally Posted by jyl

In the long run, Ford can't relish the idea of competing with a GM that's restructured it's union contracts, pension and medical, debt, and dealer network. Ford will need to find a way to match that.

Ford has bigger worries than GM.

This is the first thing I've read that makes sense regarding this automaker bailout. It seems clear that GM is in a un-sustainable situation, reorganization is really the only answer that gives them a chance.

[kaisen]

Originally Posted by jyl

Ford might be able to pick up some tasty bits on the cheap. I doubt they'd want anything that GM will be selling, but Jeep is a good brand.

Ford is in no position to acquire even the lowest hanging fruit. The Chinese (and India) will pick the bones. Fiat and Nissan/Renault may benefit as well.

GM and Ford are global companies, so the vultures will be far and wide.

[dd74]

Ford will emerge as a superpower in automobile manufacturing - not that it isn't one already - if and when GM & Chrysler go BK.

I like Ford products - better than GM and far better than Chrysler.

Ford also never asked for bailout money.

Ford's a good company. It'd be even better if it could get rid of the UAW, but that's another story.

[Porsche-O-Phile]

Originally Posted by m21sniper

If GM goes under another panic sell off is going to happen in the market. Haha, it'll be a blood bath.

Probably to some extent but not as bad as you might think. I'm willing to bet a lot of that is already priced into the markets today. I figure a GM BK is seen as a virtual inevitability by most sophisticated market players and traders and while it would bomb the DOW for a few days, it probably wouldn't massacre it. There would be declines and there would be other declines in affiliated companies but a lot of it honestly has been seen as "coming" for a while. Only a very, very foolish business owner or investor would be so Polyannaish about GM as to think this was going to end "just fine" and take no action to prepare for a complete evaporation of that market segment.

[pwd72s]

Originally Posted by Porsche-O-Phile

Probably to some extent but not as bad as you might think. I'm willing to bet a lot of that is already priced into the markets today. I figure a GM BK is seen as a virtual inevitability by most sophisticated market players and traders and while it would bomb the DOW for a few days, it probably wouldn't massacre it. There would be declines and there would be other declines in affiliated companies but a lot of it honestly has been seen as "coming" for a while. Only a very, very foolish business owner or investor would be so Polyannaish about GM as to think this was going to end "just fine" and take no action to prepare for a complete evaporation of that market segment.

I agree, Jeff...the market is pretty skilled at anticipating.

[onewhippedpuppy]

Originally Posted by dd74

Ford will emerge as a superpower in automobile manufacturing - not that it isn't one already - if and when GM & Chrysler go BK.

I like Ford products - better than GM and far better than Chrysler.

Ford also never asked for bailout money.

Ford's a good company. It'd be even better if it could get rid of the UAW, but that's another story.

I agree that from a business standpoint Ford is a MUCH better company. I would think that GM and possibly Chrysler going into BK will give them a lot of leverage to renegotiate contracts, further improving their business. It's funny, but I just don't find any of their products appealing. All of their products seem so middle of the road, jack of all trades master of none. Even though GM is in a tailspin, I actually like some of their products. The G8 is a bargain, as is dd's favorite Cobalt SS. The CTS is very good, the Impala is competitive in it's segment, the Corvette is a performance car steal, and the new Camaro is supposed to be very good (for a muscle car). But I suppose the average commuter doesn't really care about skidpad grip or 0-60 times.

[Jim Richards]

My 2 pesos: I think the disparity between Ford's European products and their domestic products is the biggest impediment to the company becoming a "superpower in automotive manufacturing."

[NICKG]

Originally Posted by jyl

So, let's suppose GM enters BK in a month but eventually emerges, and Chrysler enters BK and is liquidated. What do you think will be the impact on Ford? Near term and long term?

let me answer that ...and LenDaddy will hopefully chime in....if gm goes under(bk) and no plan is in place to pay the suppliers....Chrysler is done...and ford will likely fail in a short period afterwards. Toyota, Honda and all the other makers who have plants here will be really hurt....really hurt. the industry as a whole may collapse. the reason is that if there is no plan to pay the suppliers, they all fail...now. The car companies have cut them to the bone, and they just don't pay on their recievables in a timely manner, most are 90-180 days out and now that the banks are not lending against these receiveables, there is not enough cashflow to operate. once the snowball starts to roll, it's gonna wipe the industry out in this country...

[onewhippedpuppy]

Originally Posted by Jim Richards

My 2 pesos: I think the disparity between Ford's European products and their domestic products is the biggest impediment to the company becoming a "superpower in automotive manufacturing."

Fortunately I think they have realized that as well. For 2010 we get the vastly superior European Focus and for 2011 a new Fiesta that will also be a global effort. Bring over the Mondeo and a few of the hot ST/RS variants and I'll actually consider buying a Ford.

[onewhippedpuppy]

Originally Posted by NICKG

let me answer that ...and LenDaddy will hopefully chime in....if gm goes under(bk) and no plan is in place to pay the suppliers....Chrysler is done...and ford will likely fail in a short period afterwards. Toyota, Honda and all the other makers who have plants here will be really hurt....really hurt. the industry as a whole may collapse. the reason is that if there is no plan to pay the suppliers, they all fail...now. The car companies have cut them to the bone, and they just don't pay on their recievables in a timely manner, most are 90-180 days out and now that the banks are not lending against these receiveables, there is not enough cashflow to operate. once the snowball starts to roll, it's gonna wipe the industry out in this country...

I think the popular theory is that GM reorganizes using govt money, not shuts it's doors. Normal operations and production would continue. That would avoid the "doomsday scenario" that you describe.

[kaisen]

Originally Posted by NICKG

....if gm goes under(bk) and no plan is in place to pay the suppliers....

There are already government plans in place

[jyl]

I agree, if the suppliers go down, so do the OEMs.

The govt is well aware of this, so has guaranteed receivables owed by OEMs to suppliers.

http://www.treas.gov/press/releases/docs/supplier_support_program_3_18.pdf

The program will provide suppliers with access to government-backed protection that money owed to them for the products they ship will be paid no matter what happens to the recipient car company.

Participating suppliers will also be able to sell their receivables into the program at a modest discount. This will provide suppliers with desperately needed funding to operate their businesses and help unlock credit more broadly in the supplier industry.

The program will be run through American auto companies that agree to participate in the program. Suppliers to those companies that agree to maintain qualifying commercial terms will have the opportunity to request this government backed protection. If granted, the supplier will pay a small fee for the right to participate in the program.

The Treasury Department has made available up to $5 billion in financing under this program.

I assume that even with this support, and GM's emergence from BK (hopefully), some suppliers will still go under, due to excessive debt loads and not enough revenue. Stocks of companies like Lear and American Axle are trading at prices that imply imminent BK. Presumably healthier suppliers like JCI and Magna can step in and take over some of the business.

[NICKG]

Originally Posted by kaisen

There are already government plans in place

well whoever told you that has no clue..I work for a tier1/2...they owe us millions(in the 50 range) and it is NOT being paid...OR gauranteed..they close? we are done..and my company is one of the more viable ones in the grand scheme of things. what I said is EXACTLY what will happen and IS happening right now. no doomsday, no thoughts...it is what is actually happening.
the pdf you posted is what they say..but to date, NOTHING has happened...not 1 penny has been paid...if they continue to hold off like this...most suppliers will be done irreparable damage to them...and they will have to close even if they get some $ becuase their supplier will have collapsed as well
it is already happening..we make exhaust, many of the small flanges and such are already are already getting hard to get because the subs are dying daily and then they keep the tooling and it is a battle to get it back...