What Ford's $595 million loss tells us
Henry Ford himself was still on the scene when the book "Brave New World" came out with its jaunty slogan: "ford's in his flivver, all's right with the world." Now that the Ford Motor company is said to be on the way to its first annual loss since its founder's day, there is still something for Henry and his flivver to tell us beyond a satirist's pages. It is that the "Yankee ingenuity" he symbolizes is needed once again -- not only by his company and the rest of the American auto industry but by a whole nation that is emerging from a different kind of horse-and-buggy age.
Indeed, it many be that some other industry -- information technology, for example -- will take its turn as the touchstone for what is happening in the American economy as another sort of brave new world develops. But even in beleaguered autoland the legacy of American resourcefulness promises better times ahead -- and, in fact, has kept the situation from being as bad as predicted by some.
For example, Ford's record third-quarter net loss of $595 million was less than some on Wall street were expecting. Cost-cutting efforts were cited as starting to offset losses.
For further perspective on the Ford loss, as well as the previously announced General Motors third-quarter deficit of $567 million, it should be noted that the third quarter is ordinarily the weakest segment of the year for the auto industry. It is when slow sales and closing of assembly plants for retooling tend to cause particular drains on cash. Ford's problems included high interest expenses as well as drops in car and truck sales and a reduced share of the market at home and abroad.
Improvements are expected in the current fourth quarter. And, as investments in better- mileage small cars begin to pay off, the longer-term prospects brighten. General Motors says its recovery has already begun. Further progress should come as the effects of recession wear off.
To broaden the perspective still further, the auto industry was the only one of the some thirty major American industries to show an actual loss in the third quarter. In many of them profits were less than last year -- while oil, rubber, office equipment, and others still registered gains -- for an overall drop of 13 percent. But the stalling of Ford's flivver has not alone the world.
The national engine does need cranking, though. That's why we say Yankee vigor and inventiveness have to be exercised more widely in the way many Americans are already demonstrating so well.