In 2009, the Obama administration put $64 bn and its prestige on
the line to engineer the rescue of General Motors and Chrysler,
stunning naysayers with its rapidity and the sweeping ownership changes.
The Obama administration acted decisively, helping the companies to
shed billions of dollars in debt, reduce labor costs, and prune their
burdensome dealer networks. The government took 61% and 9.85% stakes in GM
and Chrysler respectively, while the UAW (United Auto Workers) now
owns 17.5% of GM and 67% of Chrysler. Will this support guarantee survival
or prosperity? Sales fell to 10.4 million in 2009 from 16.15 million in 2007.
Ironically, 2009 was considered a bad year for US automakers because after
76 years, Ford lost its No. 2 spot to Toyota.
Although it has been only eight months since the rescue, the future
of the former `Big Three' looks bleak at best. The only bright spot in the
gloomy American automotive market was Ford's performance. Under the
crisp leadership of ex-Boeing Chief Alan Mulalley, Ford delivered a $1 bn
profit in 3Q'09 that beat Wall Street expectations. Its stock has increased
1,000% since its March 2009 market bottom. The halo effect from refusing a
government bailout gassed up its marketing/sales engine. The award-winning
Fusion had sales growth of 49% in 2009, with the hybrid version increasing
its sales by 147%. But even a green Ford still has two big `weeds' to
contend with: in November, the UAW rejected a contract that would have given
Ford labor cost parity with GM and Chrysler; and it still has $27 bn
in debt.
|
