Posted on 11/05/2009 9:06:23 AM PST by FromLori
As U.S. car manufacturer 'stuns' Wall Street with 3Q profits, some media forget to report Ford didn't take government cash.
Ford Motor Company took everyone by “surprise” Nov. 2, when it announced nearly a billion dollars in profit for the third quarter of 2009. The company also said it would be “solidly profitable” by 2011.
CNN repeated the announcement on Nov. 3 “American Morning,” saying, “Turning now to the Big Three in Detroit, Chrysler extends its buyout offer to more than 20,000 employees while General Motors is still trying to restructure spending billions of bailout dollars, but Ford – which didn’t take any cash from Uncle Sam – is back in the green again, posting a profit of nearly $1 billion for the third quarter.”
The announcement was big news, but what should have caught more journalists’ attention was the fact that Ford managed to turn things around without the help of a federal bailout – the very bailout reporters promoted in 2008 and 2009.
Yet, several shows including all three networks’ morning programs, CBS “Evening News,” CNN’s “Anderson Cooper 360,” and MSNBC News Live all left out that crucial piece of information Nov. 2.
But that Nov. 2 report, the “Evening News” found room to include union complaints against Ford, quoting UAW’s Gary Walkowicz: “I think people are angry and fed up with concessions. We’ve dealt with concessions year after year for the last five years. I people – think people got to the point of saying, ‘Enough is enough that’s it.’”
One year ago, the network news media avidly supported a federal bailout for the Big Three U.S. auto companies and ignored union responsibility for lack of competitiveness.
“GM may not make it without help, and others may have to merge,” declared “Nightly News” anchor Brian Williams in November 2008. “If just one of the Big Three were to fail, an estimated two and a half million jobs might be lost.”
ABC correspondent Chris Bury suggested on Nov. 11, 2008 that it was a matter of fairness, after all, the banks had already been bailed out: “After riding to Wall Street’s rescue can the government just say no to American automakers that are bleeding cash by the billions.”
Between Nov. 1 and Nov. 18, 2008 the morning and evening shows of ABC, CBS and NBC aired 31 stories with a pro-bailout tone, which was almost three times as many positive stories as balanced stories – only 12. Only one story, on ABC’s “Good Morning America,” presented an overall anti-bailout tone.
According to Reuters, GM and Chrysler received “roughly $64 billion in direct aid” from the government. Since then both companies have struggled. Chrysler saw sales fall 30 percent in October 2009, while GM saw a slight “bump” in sales of 4.7 percent the same month.
The media promotion of an auto bailout did not reflect public opinion. Back then 49 percent of Americans were opposed to an auto industry bailout and 47 percent were in favor, according to Gallup.
But according to Rick Newman, chief business correspondent for U.S. News and World Report, anti-bailout sentiment might have been exactly what helped Ford rise to profitability.
“[T]hey’ve taken market share from GM and Chrysler. Clearly a lot of people who wanna buy a domestic car, but were disgusted by the auto bailouts went over to Ford,” Newman told CNN’s “American Morning” Nov. 3.
NBC “Nightly News” and “World News” also indicated Nov. 3 that Ford’s decision not to take the bailout improved the public’s perception of the company and “richly rewarded” them.
Cash for Clunkers gets credit, Mullaly rarely gets rebuttal
Nine network and cable mentions of Ford’s successful quarter all credited the government’s Cash for Clunkers (CARS) program, but 77 percent of those reports (seven of nine) didn’t include Ford’s rebuttal that the company would have seen third quarter profits even without the trade-in program.
CEO Alan Mullaly said that the company would “absolutely” have profited even without cash for clunkers. “It was a good stimulus,” Mulally told Automotive News after Ford announced a $997 million quarterly net profit. “But the real strength of the third quarter is based on the strength of our product line improving.”
Automotive News reported, “CFO Lewis Booth said the federal government’s clunkers rebate program didn’t lead to an increase in Ford’s third-quarter wholesale sales. Instead, Ford ran dealer stocks down.”
But broadcast and cable news gave credit to the CARS program anyway, keeping its theme of promoting the government giveaway.
In August 2009, all three broadcast networks lauded the program calling it “wildly popular,” “too successful” and a “victim of its own success.” The networks also cited proponents of CARS nearly three times as often as critics in stories citing experts.
The $1 billion trade-in scheme burned through its entire 14-week budget in one week’s time, prompting the Senate to allocate another $2 billion in taxpayer dollars. Still, networks heaped praise on the clunker program. CBS “Evening News” anchor Katie Couric teased on Aug. 3, “[S]ales reports out today show the Cash for Clunkers program gave U.S. automakers a much-needed jumpstart.”
Union Dues
One major problem facing all three domestic car companies is the auto unions and their legacy costs.
When the networks were busy promoting a bailout of the auto industry in 2008, reporters were also conveniently ignoring unions as one of the reasons the industry was in trouble. Union contracts have put U.S. manufacturers at a distinct disadvantage compared to foreign auto companies that build cars in the U.S. But out of 44 stories in November 2008, only 4 pointed out the union problem.
Instead of blaming the unions, reporters blamed the overall U.S. economy for slumping auto sales.
“With sales plunging 35 percent in October alone, the auto industry is reeling from the nation’s biggest financial crisis since the 1930s,” CNBC’s Trish Regan said on the Nov. 8 NBC “Nightly News.”
But Daniel Ikenson pointed out on the Cato Institute’s Web site that unions are probably more responsible for Detroit’s problems than the media’s scapegoat of a generally bad economy. Those foreign nameplate manufacturers that sell in the United States “face the same contracting demand for automobiles as does the Big Three,” Ikenson wrote. “The difference is that these [foreign] companies have a better track record of making products Americans want to consume and are not seeking federal assistance.”
Fancy that, not taking the government’s money turned out better in the end.
I think all unions are legal thuggery.
That is an excellent example of how the unions see the companies in much the same way as children see their parents...as bottomless pits of cash.
Though I know many union employees understand full-well that companies have problems and that translates into problems for the employees, the union leadership is not in a position to demonstrate such maturity.
They justify their very being much the way Jeremiah Wright does his...they are selling an infantile grievance system pointed at The Man.
Die GM!
Die Chrysler!
As for Ford, I'm not thrilled with them, but I'm not emotionally invested in a quick death for them.
The bottom line is that Ford has a structural problem; it’s relationship with the UAW. Since the UAW controls its two domestic competitors and can mainline government cash to keep those two dead companies on life support, it’s only a matter of time before the UAW does the same to Ford.
Ford must either close the UAW plants and move production south, or this will be their Indian Summer.
I’ve never owned a Ford. I did read a review, however, that rated their hybrid above the ubiquitous Priuth.
I really like their “Big Scion xb” style SUV, seeing as I own the original xB.
I am waiting for Pelosi, Reid or Obama to step up to the microphone and decry the “windfall profits” Ford has made on the backs of its workers and demand a special tax!
I am very happy with my Prius!
I’m with you. You noticed I drive a Scion. If my wifes 2001 Chrysler 300m ever wears out, I’ll be getting “non UAW” product. The sucker just runs and runs though. :)
I have loved my Ford automobiles and will consider them for a future car purchase.
Ford better watch out - Barny Frank may just declare them “too big to fail” and assume control of them anyways. This is the reward they will get for being successful.
I was always a GM fan until the seventies when you couldn’t tell a Buick from an Olds from a Chevy. All of the cars I loved became clones of each other except for trim differences. It never made sense to me why they still had diferent names.
What once was a great company has become a huge stinking cesspool of greed and waste.
I’ve always been a Chevy truck and Corvette guy. Nothing else GM makes interests me, although the HHR is a good vehicle.
I have two Ford Escapes and love them. My kids fight over who gets to drive “red” or “gray” but don’t want to drive “green” (the GMC Yukon). I would buy another Escape, and might also buy an F150. Why not.
As far as “after the other two are dead,” I think they already are. The corpses are on life support, but now that they are de facto run by the UAW and the government, there is no way they are ever profitable again. The decision to pull the plug is no longer economic, but political.
Ford had massive restructuring in 2006-7, when Alan Mulally moved from Boeing to become CEO at Ford.
Back then, everybody thought Ford was going down due to their huge losses. Mulally sold off Jaguar, Land Rover, Mazda, and other assests, so they had more cash in the bank when the crisis hit.
Ford was “lucky” that they downsized before the crisis, so they didn’t have as great a need for government cheese. They’ll end up the largest US automaker not by growing, but by both Chrysler and GM shrinking.
I agree we liked them too when we were young. We had a 63 split rear window vette and he had a 57 2 door hardtop at one time. But after the early 70’s they were ugly and crappy though my husband is still grieving and was offended when I told him of the poll a few years back that most people said they were ugly and crappy.
The UAW will do all they can to bankrupt Ford.
That's an "it depends" number. If their DOE/DOD money is for products delivered, then I have no problem with them being paid for supporting the legitimate government function of providing for the common defense. If it was TARP/Bailout by another name, then they need to die.
“Mulally sold off Jaguar, Land Rover, Mazda, and other assests”
IIRC, Ford only sold part of their interest in Mazda. And there are quite a few shared platforms and drivetrains between the two entities (Mazda3/Focus, Mazda6/Fusion/Milano/the Lincoln thing).
I do love those vettes, still do, and I like the 2010 Camaro too. They still put out some really decent products, but the upper managment sucks. The Olds Aurora was a great car, and they killed it.
I had a 68 427, wish I had it today.
I also had a couple of Olds 442’s a 68 & 70.
I still have my 68 Camaro I bought in 1978, but it’s not what you would call factory stock. The engine is a 383 stroker motor around 600 horses on premium gas, no nitros. The suspension is all redone with after market parts, handles pretty good.
Ah, the good ole days.
I have to side with your husband.
There was never an ugly, crappy corvette.
Not ever.
Compared to the foreign imports, they were always a bargain.
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