Interesting article on what may happen to Ford and GM... I hope not.
link: http://www.azcentral.com/business/ar...mford0315.html

Analysts: GM, Ford may 'potentially disappear'

Bill Koenig
Bloomberg News
Mar. 15, 2006 12:00 AM


SOUTHFIELD, Mich. - General Motors Corp. and Ford Motor Co., the two biggest U.S. automakers, need to improve their North American operations or they may collapse, analysts said Tuesday.

If the companies, plus DaimlerChrysler AG's Chrysler unit, can't stabilize their share of the U.S. market, "one or more could potentially disappear," said Robert Schnorbus, an economist with J.D. Power & Associates, on a conference call.

GM's U.S. market share fell 1.3 percentage points, to 26.2 percent last year, as the company posted $5.6 billion in losses at its North American operations. Ford had a pretax loss of $1.6 billion in the region, while its share of the U.S. market declined 1 point, to 18.6 percent. advertisement




"Time is short to remedy these issues," Standard & Poor's analyst Robert Schulz said on the call. "The next 18 months is very important. It's vital both companies demonstrate progress in turning around their North American operations."

GM and Ford combined plan to cut as many as 60,000 jobs in North America by 2012 as they shut factories to reflect their declining U.S. sales. Asia-based companies including Toyota Motor Corp. and Kia Motors Corp. have announced plans to expand factories in the United States as they take a greater share of the market, the world's largest.

Efraim Levy, another S&P analyst, said auto sales in the United States will decline to 16.7 million vehicles this year from 16.99 million in 2005. GM, Ford and Chrysler held 56.9 percent of the U.S. market in 2005, excluding European-based brands of GM and Ford.

GM, Ford and Chrysler may be able to stabilize "their share of the market at 55 to 60 percent, not far (from) where they are today," Schnorbus said. J.D. Power, like S&P, is part of New York-based McGraw-Hill Cos.

"We believe GM and Ford will be unable to stem their market-share losses," Pete Hastings, a fixed-income analyst at Morgan Keegan in Memphis, Tenn., said. "It's rare indeed when we can characterize an S&P analyst's view as overly optimistic."

S&P cut the debt ratings of Detroit-based GM and Dearborn, Michigan-based Ford below investment grade last year. GM's U.S. auto sales fell 4.3 percent last year, while Ford's declined 5 percent. Industrywide, sales rose 0.5 percent.

S&P analyst Jean-Michel Six said new-vehicle registrations in Europe will rise to 14.7 million this year from 14.5 million in 2005.

 

Don't forget Ford and GM have large overseas operations that are actually doing quite well.

 

Poorly written article , is all I got to say.

 

The opinion of an analyst means nothing to me.
Anyone who thinks that Ford and GM are going to "disappear" needs a reality check.

 

Does anyone have an idea of what Fords/GMs overhead is in their overseas operations, ie salaries, benefits, retirement plans. I would think it's a bit lower than over here. I don't think either would disappear, slim down more yes.

 

Like the other posters have said and alot of people seem to forget Ford and GM are not just US auto manufactures. They are global auto manufacturers the US is just one of their markets. Ford alone has a larger share of the Mexican and South American market than they do of the American market. Granted that market is much smaller, but it's still growing and so is their market share. They are also doing well in many of the other markets around the world. I don't know for sure why they seem to be having such a hard time here. We could speculate for days on that one.

 

If this article is in any way true, it will be a long time coming. The government would most likely bail them out for some time like they are doing with the airlines. Then I could see them actually joining forces if it came down to life or death.

But I can definitely see them losing a lot of ground in the near future. Nissan has announced that they are finally getting into the bread and butter of the big 3, full sized trucks. Diesel 3/4 tons to be exact. I'm sure that Toyota will follow suit and that 1 tons are next. They will sell like hotcakes (however they sell) on name alone.

They are already getting picked at in the 1/2 ton and 1/4 market. Plus Asian cars dominate the car market. That's a market that will be near impossible for the big 3 to get back. I don't see it happening in my lifetime.

Mike

 

I blame most of GM and Ford's problems on the UAW. If the UAW get into the North American Auto Plants at Kia, Toyota, and Hyundai; they will have the same problems as Ford and GM and that is high overhead=higher priced automobiles.

 

The UAW does have to take some of the blame. But you have to place a large portion of the blame on Ford and GM themselves. For example, they build vehicles that no one wants. IE-The Aztec. There are many more that only got made for like 1-2 years and then dropped. I used to know where to find the list, but I've forgot. Think of all that money wasted in tooling.

Then you have them trying to force cars onto the market. IE-Camero, GTO, etc.

Make some cars like the Camry or Corolla. Affordable, reliable, and efficient. Unfortunately, I think that ship has sailed for US automakers. Even if they did build economy cars better than the Asian builders, people wouldn't buy them.

Mike

 

Well I'm thinking there are the Automakers of the future. What people don't realize that the only thing that is keeping the american auto biz from making a profit is legacy cost and perception.

First legacy cost. Both GM and Ford have been in biz undisrupted biz much longer than any of the compitition. In the US I think Toyota is less than 1 to 1 retirees to workers while GM is 5 to 1. This is not the fault of anyone. Technolgy means we can make more products with less people and charge less for the product. GM at one time had 50% of the world market and had this for a very long time. The employed lots of people in what we would think of today as an arcaic fatory operation.

On the other side Toyota is expanding. This means that they are adding people to the payroll. This means younger workers that are years from retirement. 30 years from now Toyota will be in the same place as GM. Will they be in the same trouble. I think so.

Second perception. Look at the latest JD Power and Associates Long Term Dependability Survey. The top 10 breaks down like this:

5 - Japanesse
4 - American manufactures
1 - European

Only Lexus and Porsche cracked the top 5 the rest are by American companies. For some reason people think that unless it is foreign is a pieve of crap.

The other problem with perception is the media. Everytime there is a recall for a American car company it is plastered in every news outlet there is. But you almost never hear about foreign recalls. Toyota last year recalled I think about 1 million. Not a small number but you didn't hear about it unless you read the detroit Free Press.


I personally think that if Gm and Ford declare BK the foreign auto makers better watch out. They will come out leaner and meaner than than they can possibably imagine. Even without declaring BK if they can continue with there current plans and play hardball during next years contracts they are still going to be very stong.

 

haha ford wont be goign anywhere they got some big plans for the next few years...as for GM got nothig to say about there 10 different minivans

 

What really scares me about this is that G.M. is going through the crisis first. If they do reorganize by filing Chapter 11, it will give G.M. a significant cost advantage over Ford, probably pushing Ford into backruptcy as well. G.M. would probably recover first, and could cause a lot of damage to Ford and DCX.

 

Seems to me that if Ford has learned anything over the past 50 years (the approximate time that has elapsed since Deming first approached the big three with his TQL ideas- and was turned away), they would have learned to see the writing on the wall. What I am saying is that if they see that GM is about to file bankruptcy, they will position themselves to benefit from it, not the other way around. They have already begun using lean manufacturing to reduce costs, but the UAW won't budge on the jobs bank issue, meaning that their costs aren't reduced significantly.

 

Bankruptcy wont help, if the experience of the airlines is any indication. Today you have to be either a super efficient low-cost provider (Southwest, Jet Blue) or provide a luxury product that the public will willingly pay a premium for (Singapore, Virgin Atlantic).

The old idea of making huge numbers of similar cars with different nameplates to try and saturate the market wont fly anymore. Toyota and Honda dont have an equvalent to Mercury, Chrysler, Pontiac, Buick, GMC, etc. Kill off the medicore brands and shed those dealer networks. That last one will be more difficult than shedding excess workers.

Jim

 

Thats exactly why Honda wont let a Union in their plant. Living 5 miles from both Ohio Honda plants, I know that the Union is knockin on their door, but Honda won't let em in.