Years 2008 and 2009 must be
reckoned as the most painful
years in the history of the much adored American auto industry, as
the global recession has almost taken it to the verge of a collapse. Detroit,
often called the home of the Big Three—Ford, General Motors (GM) and
Chrysler— has undergone an unprecedented trauma. After enduring a long and
painful period of downfall, amidst speculations, GM filed for bankruptcy on June
1 and Chrysler was taken over by the Italian auto giant, Fiat. Both these
companies, backed by government aid, are expected to re-enter the market
shortly, with new vigor. Analysts are not interested in the renewed performance
of these two auto giants but are keen on catching how another Detroit
darling `Ford' would battle it out alone, as it
has declined the government's aid.
As plans were being laid out to restructure GM and Chrysler, many
analysts opined that the ordeals of the two competitors of Ford might leave it in
an enviable position. Moreover, Ford had begun an unusual restructuring
program under the leadership of its new CEO, Alan Mulally, much before
the economic crisis cast its venom on the auto industry. As part of the program,
it raised $23.6 bn towards the end of 2006 by pledging all its major assets,
including its headquarters, as collateral. Given its farsightedness in
securing cash pile, it obviously declined the bailout packages announced by the
government. This decision by Ford not only kept the Dearborn-based
company away from federal intervention in its affairs, but also convinced the US
public that it was somehow different. Some analysts also said that Ford has
differentiated itself as a good Detroit versus a bad Detroit. However, now
things seem to have changed for Ford. Analysts expect that the two other
Detroit companies backed by government aid are likely to emerge as tough
competitors to Ford, posing difficult challenges to its independent existence.
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