NickF1011 Posted July 15, 2009 Share Posted July 15, 2009 The most important thing for both GM and Ford is what kind of post recession world they enter. Will cheap cars from China and elsewhere drip sales away from them (and the likes of Toyota) over the next decade, making their debts harder to manage. Or will we see a return to "business as usual" in the US and European car industry? That for me is the great unanswered question. I'll answer it for you then. It will be at least several more years before a decent Chinese car sees the U.S. market. It will be several years after that before said Chinese car is able to capture any appreciable market share in the U.S. So...at least for the next decade or so, the Chinese won't have any direct impact on the health of automakers currently doing business in the U.S. at all. Quote Link to comment Share on other sites More sharing options...
theoldwizard Posted July 15, 2009 Share Posted July 15, 2009 (edited) Ill go out on a limb here and say Ford will turn a profit for 3Q. 3Q2009CY ?!!!! I hate to take your money, but if I could find a free escrow service, I would put down $20 on that bet and give you 2 to 1 odds ! Edited July 15, 2009 by theoldwizard Quote Link to comment Share on other sites More sharing options...
theoldwizard Posted July 15, 2009 Share Posted July 15, 2009 ...Every manufacturer has a break-even point for volume in each market. With Ford's restructuring, their break even volume is lower than it once was... Very true, but that "break even point" is probably somewhere between 65-80% of max volume. That volume is typically based on a 2 - 10 hour shifts, 6 days a week. Ford still has many plants still on 1 shift or shutting down for a week or more every couple of months. Don't forget, money is going out the door quickly as they retool MAP and the Cuautitlán Assembly Plant. They have just paid off the tooling for both the Mustang and Taurus. 3 all new engines going into production soon; Coyote, BOSS and Scorpion. Even in a recession (and perhaps more so) "It takes money, to make money !" Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted July 15, 2009 Share Posted July 15, 2009 (edited) Very true, but that "break even point" is probably somewhere between 65-80% of max volume. That volume is typically based on a 2 - 10 hour shifts, 6 days a week. True--but those calculations also included job bank payments--a significant factor in the labor cost aspect of the break even equation. With one shift and one shift's worth of employees, it's true you're looking at lower amortization volume and lower volume for the plant's fixed costs. But you are no longer looking at paying two shifts of employees with one shift of output. Edited July 15, 2009 by RichardJensen Quote Link to comment Share on other sites More sharing options...
theoldwizard Posted July 15, 2009 Share Posted July 15, 2009 True--but those calculations also included job bank payments--a significant factor in the labor cost aspect of the break even equation. With one shift and one shift's worth of employees, it's true you're looking at lower amortization volume and lower volume for the plant's fixed costs. But you are no longer looking at paying two shifts of employees with one shift of output. Sigh. I don't know why I bother to "challenge" your statements, you never have any proof (My statements came Ford management, but I admit I don't have them in writing) So, do you have any data that indicates a major automotive assembly plant with UAW workers can "break even" on 1 shift, even with overtime. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted July 15, 2009 Share Posted July 15, 2009 (edited) Sigh. I don't know why I bother to "challenge" your statements, you never have any proof Was the GEN pool in place when you got those numbers? Yes it was. Is the GEN pool currently in place? No it is not. Does this materially impact the breakeven point for Ford? Yes it does. Did I say that Ford could break even on one shift? No I did not. I merely pointed out that YOUR numbers incorporate obsolete assumptions. It's called reasoning by inference, Mr. Wizard, you should try it some time. Edited July 15, 2009 by RichardJensen Quote Link to comment Share on other sites More sharing options...
TStag Posted July 15, 2009 Share Posted July 15, 2009 I'll answer it for you then. It will be at least several more years before a decent Chinese car sees the U.S. market. It will be several years after that before said Chinese car is able to capture any appreciable market share in the U.S. So...at least for the next decade or so, the Chinese won't have any direct impact on the health of automakers currently doing business in the U.S. at all. You may well be right but the Chinese are aiming to speed things up by buying companies like Opel and Volvo. If they gain access to the right engineering talent at companies like Opel then they can speed things up a lot. There are over 100 Chinese car companies. Many will just fade away but it won't be long before a number start exporting to the USA or setting up factories in the US. The Chinese are already gearing up a factory in Europe, if they get Opel then the timetable accelerates....... Quote Link to comment Share on other sites More sharing options...
ausrutherford Posted July 15, 2009 Share Posted July 15, 2009 ^^^ they wont get Opel, remember its not GM who is deciding who Opel is sold too, its the German government. Quote Link to comment Share on other sites More sharing options...
theoldwizard Posted July 15, 2009 Share Posted July 15, 2009 ...I merely pointed out that YOUR numbers incorporate obsolete assumptions. It's called reasoning by inference, Mr. Wizard, you should try it some time. Sorry 30+ years of engineering does not allow me that luxury ! Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted July 15, 2009 Share Posted July 15, 2009 You may well be right but the Chinese are aiming to speed things up by buying companies like Opel and Volvo. If they gain access to the right engineering talent at companies like Opel then they can speed things up a lot. There are over 100 Chinese car companies. Many will just fade away but it won't be long before a number start exporting to the USA or setting up factories in the US. The Chinese are already gearing up a factory in Europe, if they get Opel then the timetable accelerates....... Wasn't it supposed to be 2008 that MG was going to open that assembly plant in Oklahoma? Fact is, none of the plans of Chinese automakers have panned out anywhere close to what could be considered "on time". These accelerated schedules sound nice to investors, but Chinese automakers have shown little in the way of executing on their grand plans. Quote Link to comment Share on other sites More sharing options...
7Mary3 Posted July 15, 2009 Share Posted July 15, 2009 No one can make any money at the current rate that cars are being sold in the US. Some anaylists are predicting GM will be profitable in the 4th. quarter at the current sales rate. We'll see. But I will warn you all of one thing- should the Feds. make a killing in the 'New GM' IPO, we will never hear the end of it. Quote Link to comment Share on other sites More sharing options...
jpd80 Posted July 15, 2009 Share Posted July 15, 2009 (edited) Some anaylists are predicting GM will be profitable in the 4th. quarter at the current sales rate. We'll see. But I will warn you all of one thing- should the Feds. make a killing in the 'New GM' IPO, we will never hear the end of it. That's a scary thought (GOP's worst nightmare) Treasury and Obama would look like economic saviours. A sanitized GM with approx $10 billion debt makes a reasonable profit for a couple of quarters attracting private investors back into GM. That would all be true if the only thing wrong with the old GM was its debt burden, they still need to spend money downsizing plants/employees and develop new products that people want to buy. Edited July 15, 2009 by jpd80 Quote Link to comment Share on other sites More sharing options...
silvrsvt Posted July 16, 2009 Share Posted July 16, 2009 Some anaylists are predicting GM will be profitable in the 4th. quarter at the current sales rate. We'll see. But I will warn you all of one thing- should the Feds. make a killing in the 'New GM' IPO, we will never hear the end of it. I think pigs will fly before that happens....those same anaylists said that bankruptcy would kill both GM and Chrysler.. Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted July 16, 2009 Share Posted July 16, 2009 those same anaylists said that bankruptcy would kill both GM and Chrysler.. In the long run, it very well still could. Quote Link to comment Share on other sites More sharing options...
jpd80 Posted July 16, 2009 Share Posted July 16, 2009 I think we should take comfort that Ford has restructured and is getting by in tough times, increased sales are coming and Ford is ready for them. Once F Truck kicks away, the whole market will pile on board and the rise could happen fairly quickly, that tends to happen when people like your products and Ford is certainly on a roll... Quote Link to comment Share on other sites More sharing options...
ausrutherford Posted July 16, 2009 Share Posted July 16, 2009 3Q2009CY ?!!!! I hate to take your money, but if I could find a free escrow service, I would put down $20 on that bet and give you 2 to 1 odds ! With the way Ford has been reducing their loss each quarter, it very well could. Quote Link to comment Share on other sites More sharing options...
focus05 Posted July 17, 2009 Share Posted July 17, 2009 3Q2009CY ?!!!! I hate to take your money, but if I could find a free escrow service, I would put down $20 on that bet and give you 2 to 1 odds ! I'm actually wondering with the positive adjustments that Ford will be able to book for their debt retirement and other special items if they'll have an accounting profit for Q2 (not operational of course). I can't see how Q3 and Q4 will be anything other than loss quarters operationally - but Ford has surprised before. I expect the first operationally positive quarter to be Q2 or Q3 next year - but that depends on a lot of factors like industry size, currency, commodity pricing, etc. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted July 17, 2009 Share Posted July 17, 2009 that depends on a lot of factors like industry size, currency don't forget currency size: Quote Link to comment Share on other sites More sharing options...
Noah Harbinger Posted July 17, 2009 Share Posted July 17, 2009 don't forget currency size: That's some serious inflation.... Quote Link to comment Share on other sites More sharing options...
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