Ford doing better than GM and Chrysler, but still not very well

“At the end of the day, all the machinations [over restructuring] won’t matter if we can’t get the consumer back into the showroom,” says Ms. Lindland.

In recent weeks, the prospect of bankruptcy at GM and Chrysler has grown more likely, after an Obama administration task force decided neither company had gone far enough in presenting a restructuring plan designed to win more government aid.

Together, the two firms have received $17.4 billion in loans since December, as the Bush and Obama administrations have sought to avoid the huge job losses that would result from the industry’s sudden collapse.

A bankruptcy filing by Chrysler could come by the end of April. And if Chrysler doesn’t succeed in a deal to line up Fiat as part owner, the result could be a difficult liquidation for the firm. GM has about a month longer to work out its plans. The question there is not so much survival – the government has signaled its commitment to keeping the largest US automaker afloat – as it is the terms of the restructuring.

A bankruptcy is not inevitable, but many analysts see it as likely.

“The degree GM needs to change … almost necessitates a court process,” says Aaron Bragman, a Detroit-based analyst, also with IHS Global Insight. “There’s no guarantee that it’s going to be quick.”

To reassure consumers, the government has said it will stand behind the warranties of new cars bought from GM or Chrysler.

Analysts still worry that carmakers going through bankruptcy will see a significant hit to their sales as a result.

Relatively good news for Ford

Against that backdrop, Ford is shining brighter. Its quarterly loss was not as steep as many analysts had forecast. And it has made some impressive headway lately in cutting costs – negotiating deals with both the United Auto Workers and with creditors who own Ford bonds.

“We’ve made strong progress on our plan to transform Ford into a lean, globally integrated company poised for long-term profitable growth,” chief executive Alan Mulally said in conference call Friday. He’s implementing a “one Ford” strategy to create more synergy across the firm’s global operations.

Among the positive signs for Ford:
• The new union deal will save $500 million in annual labor costs.
• In exchange for incentives, creditors agreed to eliminate $10 billion in debt owed by the company – another big cost saving.
• Its F-series truck remains the top-selling pickup in the US, and the company’s market share rose in Latin America and Europe.

Ford still needs to hope the current recession doesn’t become deeper and longer. Its cash reserves aren’t unlimited. But so far, so good.

“We are positioning Ford to survive the current downturn” and capitalize on a recovery, Mr. Mulally said.

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