Partly, but that’s not the macro-economic issue here.
There is an abundance of auto production in the world, period. There is far too much auto production capacity in the US, and the world (esp. Japan, Korea and the EU combined) to allow all companies to survive in their current form.
This is why GM got to the point of rolling up Saab. Is there a need for Saab cars out there? Nope. They fulfill no unique product requirement in the market, unlike (eg) Subaru, which has a pretty unique product in a niche market. Saab is just another Euro-weenie car, not unlike a dozen others.
Ford’s management (which is increasingly from outside Detroit) now sees this situation for what it is: a deflationary environment, where the consumer’s buying power will be crushed by declining wages and declining credit availability. Therefore, auto consumption will be constricted for years and years going forward, exacerbating the over-capacity in the US auto market.
The #1 obstacle to the Big Three shedding capacity has been the UAW - who have demanded featherbedding writ large in the form of keeping entire unprofitable product lines/plants in place, bleeding money off the balance sheet. This is what Ford wants to end-run by buying out the UAW, not the usual salary/benefit issues that the UAW imposes on Ford. There’s something else that Ford is probably looking to end-run here too, which is the UAW’s habit of “pattern bargaining” - which means that when the UAW shakes down Uncle Sugar over at Government Motors, the UAW’s precedent is to apply that deal to the other two automakers by previous contract requirement.
Ford is smart to get out from under the UAW. If they can get enough of the UAW to take the buy-out, I might just buy a buttload of F.
“There’s something else that Ford is probably looking to end-run here too, which is the UAW’s habit of “pattern bargaining”...”
Since the UAW owns part of Chrysler & GM, while Ford is doing alright without government welfare, I think the UAW will select Ford as their target company for negotiating. If they choose Chrysler or GM they will be negotiating against thenselves.
Ford’s going where GM and Chrysler can’t, and by the way, Boeing is paving the way. Mulally isn’t an idiot.
Since the union won’t give Ford the same deal they gave GM and Chrysler, then they are voting them off the island.
Buy them out, take the hit, and move out of Detroit for Georgia and South Carolina. Now you have non-union Fords competing against union GM and Chrysler. No contest. Feds will have to unfairly extend GM and Chrysler all kinds of help to compete. It won’t take long, maybe two years, and the public will vote with their feet against Government Motors and Subsidysler.
I have owned Ford's for nearly 20 years. If I do have to buy a new car it will be for now a Ford.
Last week I had a 2010 Ford Fusion 4dr rental car and not only did it handle well that car had some giddy up under the hood.
I wouldn’t buy an automaker, at least not a US one. I’m afraid if Ford is too successful, Obama will crush them, or at least try.
Look folks, all this gloomy forecast can change in a heartbeat if we get a probusiness, tax cutting government in there.
The UAW put Toyota where they are.