Sands of time, twists of the wheel, etc. etc. …
From the link:
China’s Zhejiang Geely Holding Group Co. bought Volvo cars from Ford Motor Co. on Sunday for $1.8 billion, a landmark agreement designed to elevate the Chinese company’s profile onto the global automotive stage.
Geely’s acquisition of Volvo offers the latest illustration of how China’s economic rise is reshaping large swaths of global business, as its huge market and increasingly powerful companies play a growing role in industries from cars to natural resources to telecommunications equipment. The Volvo deal, which comes after China surpassed the U.S. last year as the biggest auto market, puts a Chinese company for the first time in charge of a major global car brand.
To anyone who’s been paying attention General Motors’ bankruptcy comes as no no surprise, but the repercussions are still a mystery. Cato’s Daniel Ikenson brings up a very salient point — now that the government is the de facto owner of GM what’s going to happen to Ford.
Of the big three Ford has remained in a fairly strong position in a very weak industry. Most importantly it hasn’t been forced to take federal bailout money. Ikenson wonders if the fed may not put a thumb on the scales a little to help its latest property, namely GM, out a bit.
From Cato Today:
BANKRUPTCY FOR GM – FORD NEXT?
General Motors on Monday filed for bankruptcy protection, even after $19.4 billion in federal bailout money. Cato scholar Daniel Ikenson has long suggested bankruptcy as the best course for GM, and now worriesabout Ford’s future: “The government has a 60 percent stake in GM. Who’s going to want to own Ford stock—and therefore, will Ford be able to raise capital—when the U.S. government has an incentive to tip the balance in GM’s favor wherever it can?”
– Full statement from Ikenson
– “An Overdue Reckoning in the Auto Sector,” by Daniel Ikenson
– “Don’t Bail Out the Big Three,” by Daniel Ikenson
– “GM’s Last Capitalist Act: Filing for Bankruptcy Protection,” by Daniel Ikenson
The Ru, st Belt just keeps taking body blows and crushing shots to the jaw. It’s hard to see how these companies can remain afloat without the government simply stepping in and taking over for the time being. Is GM too big to fail? Ford? Is the auto part supply chain so weak that if any of the onetime “big three” collapse, the whole system breaks down?
We may find out before long. Talking to a group of businessmen last night, the general consensus on the unemployment aspect of this financial crisis is the rate will slow, but rising unemployment will likely continue unabated through the end of 2010 if not longer.
From the link:
The three largest automakers, including Toyota, each said their sales declined at least 40 percent from February 2008.
Sales were down 53 percent at General Motors, 48 percent at the Ford Motor Company and 40 percent at Toyota. Chrysler sales fell 44 percent.
Honda reported a 38 percent drop, while Nissan said its sales fell 37 percent.
“The February numbers are clearly a step down from where we’d been running the last four months,” said Michael C. DiGiovanni, G.M.’s chief sales analyst. “It’s unsettling to our business. These are obviously unsustainable levels which are causing almost every auto manufacturer across the world to look for government aid.”
G.M., of course, has gotten $13.4 billion from the federal government to help it avoid seeking bankruptcy protection, while Chrysler, which will report its sales later Tuesday, has received $4 billion.
Maybe sensing the hand tugging the rope around its neck was its own, the United Auto Workers has made concessions to help keep Ford Motor afloat.
From the link:
Signaling that it is willing to do whatever it can to save Detroit automakers, the United Automobile Workers union has agreed to concessions with the Ford Motor Company on its retiree health care fund.
The agreement, announced Monday, would allow Ford to substitute its stock for as much as half of the $13.6 billion it owes the fund.
It could also form the basis for similar deals with General Motors and Chrysler, which need to cut costs and demonstrate that they can survive under the terms of their loans from the federal government.
”What they negotiated today at Ford is really something that unions aren’t made to talk about,” said Gary N. Chaison, a professor of industrial relations at Clark University in Worcester, Mass. ”This is the union trying to hold onto a benefit that few retired workers enjoy and doing it at a cost that may be prohibitively high.”
But U.A.W. leaders clearly see the alternative to making such concessions as far worse for their membership.
”The modifications will protect jobs for U.A.W. members by ensuring the long-term viability of the company,” the union’s president, Ron Gettelfinger, said Monday in a statement.
Couldn’t have anything to do with the fact banks aren’t giving out auto loans for the most part could it?
From the link:
Auto sales tumbled 38% in January, plunging even more than expected to their worst levels since 1982 as a pullback in purchases by rental car companies became the latest problem for the troubled industry.General Motors (GM, Fortune 500) reported that its sales plunged 49% from a year ago. Ford Motor (F, Fortune 500) said sales fell 39% at its Ford, Lincoln and Mercury brands, and 40% overall when including sales at Volvo, which Ford is trying to sell. Chrysler LLC reported a 55% drop in sales.
But it wasn’t just the U.S. automakers reporting sharply lower sales. Toyota Motor (TM) reported a 32% decrease in its U.S. sales, while sales at Honda Motor (HMC) tumbled 28%. Nissan (NSANY) sales fell 30%.