FORD update......

[fdjake]

Since I got some people into this, I feel it's only fair to keep everyone up on the latest developments regarding Ford.

Obama met with Bush yesterday and from all reports "W" is on board with an American Car Company Aid Package.  Obama asked the President to consider ANOTHER $25 BILLION in ADDITION to the already approved $25 BILLION in the pipeline.  Also discussed was loosening the requirements for what that money could be used for.  The bottom line..........They get WHATEVER THEY NEED to ride this out.  The Goverment just watched what happened when they decided to let Lehman go bye bye...They are NOT about to have a repeat of that disaster.  GM ALONE has 2.5 MILLION jobs tied to it. NO WAY IN HELL is FORD going under in this political enviroment.....BANK ON IT!!

This is GREAT news for FORD.  The difference between Ford and GM at this point all comes down to PRODUCT IN THE PIPELINE!!!  Ford ALREADY has the right cars....The only problem is they are being sold in EUROPE.  In 2010 they start building those vehicles HERE.
The only thing Ford needs at this point is TIME....with TIME... Ford will move beyond the recession.

I don't worry for ONE SECOND about a FORD bankruptcy.  As I have said here repeatedly.....BANKRUPTCY IS NOT AN OPTION for a car company.  There's just TOO MUCH competition out there for any consumer to make their second largest purchase from a car company in bankrupty.  BANKRUPTCY IS NOT HAPPENING.

The other thing you will NEVER see is the DE-LISTING of FORD from any stock exchange.  This would BURY the stock market at this point.
It is now acknowledged that letting these car companies fail is NOT an option.  Obama has already committed to it, and with the Democrats controlling Washington there is NO WAY this doesn't fly.

The ongoing recession is slowly creating HUGE PENT UP DEMAND.
Once we work through this.....FORD will be in MUCH better shape PRODUCT WISE than GM.

These opportunites come along once in a decade.  It takes HUGE b*lls to throw your hard earned money at this type of investment.  It is NOT for everyone.  But for those who can stand the HEAT, the reward will be a DIAMOND a few years from now.

[Liquidity]

I think they will give them a bailout by this weekend.

but here's 1 reason they should file bk.

unions: those stupid unions along with airlines kill their companies. gm pays i think $130 per hour to its employees with all costs included.
$130 !!!

i have been chatting how they cant file bankruptcy with people.

here's another reason not mentioned. Pensions GM's pension fund would become the us governments burden if they file BK. so why not give them a package to fix their problems. it would cost the government money to just let them go bk and the fallout for that could be the final push the economy needs to go into a depression.

too much is at stake to let them go bk. GM has been a great day trade lately. 

I think the government needs to step in and have a hardball chat with the UAW. that union is killing the industry. over $100/hr you gotta be kidding me. no wonder our auto industry is suffering. If it were up to me I'd break all unions up. you want a job at fair pay then see you at 9 am bright eyed and bushy-tailed. People need to be more responsible for their futures. Save money, instead of borrowing to buy everything they own. It seems like everyone lives paycheck to paycheck now days.

I still can't believe that GM pays that much per hour. It explains why we are not on top of the auto industry anymore. I think GM pays 3 times what other foreign companies pay their employee's. 

[fdjake]

GM, FORD and CHRYSLER signed a LANDMARK contract with the UAW last summer.  They paid the UAW a LUMP SUM and NO LONGER WILL CONTRIBUTE A SINGLE CENT to retirees health care costs.  The payment was made directly to the UAW...now it's the UNIONS job to take care of their own.

The BULK of the concessions agreed to in that historic contract go into effect in 2010.  One of the biggest (besides healthcare) is the automakers can now hire PART TIME employees AS NEEDED.  HONDA, and TOYOTA have been doing this for years.  All new hires at Ford will start off as part timers, at a FRACTION of the cost of a full time employee. 

It is estimated that this new contract will save Ford BILLIONS!

The UNIONS agreed to ALL of this.

Read more here.....

http://www.autoblog.com/tag/UAW%20Ford%20contract/

It's all lining up........The BAIL OUT......The recession, which will create HUGE pent up demand......the NEW FUEL EFFICIENT Fords from Europe.....The new UNION contract.

[propertymanager]

Liquidity is absolutely right about the Unions.  I saw a report yesterday that said that total compensation for US Automakers (including benefits) is $78 per hour as opposed to $48 for foreign automakers in the US and as opposed to $31 for the average manufacturing job in the US. 

Just as happened in the airlines, the unions drove wages up far beyond a sustainable level, which resulted in the big 3 not being able to sell cheaper cars profitably.  They had to sell vehicles with a big price tag to offset those ridiculous labor costs.  The Big 3 are on the verge of insolvency and should be allowed to fail.  However, the US government doesn't have the will to allow the country to take the pain now and will obviously bail them out - which is what FDJake has been correctly saying all the long.

Moreover, Obama has proposed to do a lot to strengthen the unions and disadvantage business.  That will only make things MUCH WORSE in the long term.

Mike

[John_in_NC]

I wanted to stay out of this discussion, but you guys keep talking about the Airline Unions destroying the airlines. Where are you getting this from and give me some data (facts) to support this.

Deregulation and bad management is what really screwed the airlines. My pay has slowly went down AFTER you factor in inflation over the past 5 years. It wasn't long ago when getting hired at United (use to work there) was like hitting the jackpot for pilots.  Now those guys are nothing more than glorified bus drivers. Those guys took MAJOR concessions and totally lost their pensions. Even the most senior captain with hundreds of lives at stake in his 747 is making just a mere over 100K!

But look at Southwest, they are well managed company making money. They have made money in the worst of times. They just reported their first loss in 17 years, which is only because of the mark to market accounting practices for the fuel hedges. The pilots over there are ALPA (union) just like me and most other airline pilots, and they are making more than me.

I'm not a hardcore union guy, in fact, I think ALPA is a joke! But one thing I can tell you from the airline side, it has VERY little to do with the current airline problems.

[rookieNYC]

Liquidity is absolutely right about the Unions.  I saw a report yesterday that said that total compensation for US Automakers (including benefits) is $78 per hour as opposed to $48 for foreign automakers in the US and as opposed to $31 for the average manufacturing job in the US. 


I posted a looooong time ago how damaging unions were to this country and I was *jumped* by the forum..I will leave it up Mike and Liquidity from now on..My opinion has already been expressed..

[fdjake]

Your all about to see EXACTLY how UNIONS will effect this country.

This is a pendulum......for YEARS Unions have been on the decline in this country.  Bush let the BILLIONAIRES have their way for so long that now that pendulum is starting to swing the OTHER way.  WORKING CLASS PEOPLE HAVE HAD IT!!!!!!

I fully expect to see MASSIVE UNIONIZATION under Obama/Biden.
My guess is..... Putting some MONEY in the hands of people who will actually SPEND IT won't hurt MIKE or ROOKIE.....(but they'll still complain)

[Liquidity]

Liquidity is absolutely right about the Unions.  I saw a report yesterday that said that total compensation for US Automakers (including benefits) is $78 per hour as opposed to $48 for foreign automakers in the US and as opposed to $31 for the average manufacturing job in the US. 

Just as happened in the airlines, the unions drove wages up far beyond a sustainable level, which resulted in the big 3 not being able to sell cheaper cars profitably.  They had to sell vehicles with a big price tag to offset those ridiculous labor costs.  The Big 3 are on the verge of insolvency and should be allowed to fail.  However, the US government doesn't have the will to allow the country to take the pain now and will obviously bail them out - which is what FDJake has been correctly saying all the long.

Moreover, Obama has proposed to do a lot to strengthen the unions and disadvantage business.  That will only make things MUCH WORSE in the long term.

Mike

MIKE

 it was bloomberg or cnbc wasnt it alot higher than 78 ?? im sure it was over a 100 it was either 103 or 130 i thought. either way the UAW better give some consessions to get a bailout done.

[Liquidity]

This dawned on me today about an auto bailout


the Treasury is focusing money on Consumer lending now which has everyone like what Heck are they doing.

what happens when you have 3-5 million people fearing for thier jobs before christmas ?? do they go out and shop ?? heck no. If you bailout these autos it guarantees these employee's their jobs.

why would the treasury be switching the gameplan to consumer lending right now ........CHRISTMAS !!

they will bailout the auto's.  3-5 million jobs are connected to the auto industry.

the economy is ravaged by bad news especially when it comes to spending. if the government can prop up christmas sales it's a HUGE win for them. it gives the public a sense of calm.

this will give the stock market a huge boost. I'm long this rally, options expire next week also. i think we go high 9k's maybe even 10k on this rally.

as for a trade. Im in DRYS right now. short squeeze play.

[propertymanager]

Liquidity,

I think I saw it on CNBC.  Here is another article that I found:

http://nospeedbumps.com/?p=606

I'll be shorting the market if the DOW gets back to 9,500.

Mike

[Liquidity]

mike

ok i thought i was way off on the over a 100/ hour.  that report you're looking at is from 2005.

over a $100 is ridiculous. that report from 2005 says it took over 35 hours to produce a car thats $4000 or more per car in labor costs, ouch

[kj9876]

Read article today on GM seems Gm is worse off than Ford so would it help or hurt Ford if Gm declaes bankruptcy?

http://money.cnn.com/2008/11/14/autos/auto_failure_ripple_effect/index.htm?postversion=2008111412&eref=rss_topstories

[propertymanager]

kj9876,

I think a GM bankruptcy will initially affect Ford negatively.   When the government signals that they will not bail out GM, that will also be negative for Ford and Chrysler.  However, if a GM bankruptcy ends up being a disaster for the economy, then the nation may exert pressure on the government to bail out Ford.  It will be an interesting ride.

Mike 

[fdjake]

All this talk about NOT bailing out GM will end this way........

It's a HEAD FAKE.......That's all this is....The Democrats annouced Friday that the REPUBLICANS would not support a bailout for the Auto Makers.
That was BRILLANT STRATEGY...by doing that they have put BIG TIME pressure on those Republicans.  This was EXACTLY what happened when the TARP was passed.  Initially the Republicans said NO, then the HEAT got turned up, and they CAVED!!!

There's 2.5 MILLION jobs tied to GM ALONE......Ask yourself how much the MARKET liked the Lehman bankruptcy????  A GM version will BURY our economy. 

Personally, I DO NOT like the idea of bailing out a business that for DECADES amde absolutley STUPID decisions.  BUT..............as an INVESTOR, at this point in the economic cycle, with a DEMOCRATIC President and majority in Congress........YOU can't pass up this investment.  Right now.....as in EVERY MAJOR RECESSION.....things look BAD....this time they look REALLY bad.  Eventually this will pass...people will buy cars, and houses, and they'll run up their credit cards AGAIN.....Because on average....most people HAVE NO CLUE...

THAT...you can INVEST in!!!

You guy's know my position.....I'm simply trying to get a few folks here to OPEN THEIR MINDS.....Maybe this guy can say it better than me....

http://www.autoblog.com/2008/11/14/autoline-on-autoblog-with-john-mcelroy/

[stevie-o]

The only problem with the Republicans caving in and voting for TARP, is they suddenly voted for it when all kinds of earmarks and spending for special interest groups were included. Our politicians and our government has been bought, and they've been sold out for all long time now.