Ford Posts $1 Billion Profit

U.S. Automaker Says It will be Profitable in 2011

(CBS/AP)  Ford Motor Co. earned $1 billion in the third quarter, fueled by U.S. market share gains, cost cuts and the government's Cash for Clunkers rebates.

The Dearborn, Michigan-based automaker on Monday reported net income of $997 million, or 29 cents per share. Ford says it now expects to be "solidly profitable" in 2011. Previously the automaker said it would be break-even or better.

Shares of Ford, the only Detroit automaker to dodge government aid and bankruptcy protection, rose 50 cents, or 7.1 percent, to $7.50 in pre-market trading.

The latest results signal that Ford's turnaround is on more solid ground. The company lost more than $14.6 billion in 2008 and hasn't posted a full-year profit since 2005. While it made a profit in the second quarter, that was mainly due to debt reductions that cut its interest payments.

Its North American car and truck division - a key business - posted a pretax profit of $357 million, its first quarter in the black since early 2005. Ford cited higher pricing, lower material costs and increased market share for the improvement.

The earnings came despite an $800 million revenue drop. But Ford said it cut costs by $1 billion during the quarter.

But Ford still has big problems - labor problems, reports CBS News correspondent Dean Reynolds. It reached its relative prosperity through, among other things, a rigorous restructuring - corporate-speak for slashing 53,000 jobs and closing 13 plants since 2006.

Now a new contract with Ford approved by the UAW leadership - but including a six-year no-strike clause - is getting rejected by more than 70 percent of the rank and file, reports Reynolds.

Gary Walkowicz led the effort to reject it and his local sure did - by 93 percent.

"I think people were angry and fed up with concessions," Walkowicz told Reynolds. "We've given up concessions year after year for the last five years and I think people just got to be saying enough is enough. That's it."

Ford also has $26.9 billion in debt, up $800 million from the second quarter.

Ford didn't quantify the impact of Cash for Clunkers, which offered buyers payments to trade in their vehicles. The program helped Ford cut costly incentives and raise production. It also won buyers; the Ford Focus and Ford Escape were among the top five sellers in the program. Ford sales were up 17 percent in August thanks to the program.

Ford also has benefited from consumer goodwill after it declined government bailout money and didn't go into bankruptcy over the summer as GM and Chrysler did. Ford grabbed sales from its rivals, posting the largest increase in market share of any automaker in September. Ford expects an overall gain in U.S. market share in 2009, a feat it hasn't accomplished since 1995.

[conradleslie]

My Ford Expedition is 6 years old and the roof has rusted through!!! It started with bubbling rust spots under the paint. I heard that Ford knew that there was a problem with the paint in models 2000 to 2005. If you go on line and google Ford paint problems you will get lots of hits plus download Ford Technical Bulletin acknowledging that they have a problem. Yet they wont take care of it under warranty. Beware of Ford products. I am interested in class action law suit

[payasyougo]

"Ford Posts $1 Billion Profit"
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This makes no sense. How could a company be so profitable without a government rescue?

[Virgil-1]

Ford will be forced into bankruptcy just like the others.This is our government's plan of action.It's called government control.Mark my words!

[gerryrigger]

-Ford cited higher pricing, lower material costs and increased market share for the improvement.
-Last week, workers overwhelmingly rejected an agreement with the United Auto Workers that would have brought Ford's labor costs in line with rivals General Motors Corp. and Chrysler LLC. (They)felt the company was healthy enough and didn't need further concessions.


Okay so in a recession you raise prices even as the cost of materials come down because of it. Meanwhile labor costs are higher than at the other unionized car companies because UAW fat cats think you're fat enough to keep them fat. Good luck maintaining profitability with this business model, Ford! Now you've lost my "good will" and there'll be no "fording" into the future for me with your business Model T.

[jsd330]

You don't even know what concessions were asked for. The workers gave concessions even before the bailouts. Do you know any Ford workers? I do, if you do ask them what they were asked to give up. And it wasn't the UAW fat cats, it was the rank and file, that went against the union backed consessions. GM and Chrysler workers had no choice, since the bankruptcy court ruled on what they had to give up.

[dwilson59]

Ford is coming out with some good cars, I like the new SHO. But what happens now? The union will not go in line with GM and Chrysler for wages. And I quote ", and felt the company was healthy enough and didn't need further concessions".

OK lets see what happens when you look at the Forth Quarter with out the Clunkers Program. Growing up in Michigan I can tell you driving an American mad auto was a norm. In south Florida it is all about the imports.

[corps_own_america_II]

Check the books. Remember Enron. I find it amazing how many people are so supportive of Corporations. These guys pay millions to craft laws that screw the public. People of this country don't get anything near the representation from Congress that Corporations do. There's nothing "free" about the Free Market.

[jade84116]

Ford didn't take bailout money, so this is just free enterprise in action. The fact that the others can't say that argues against socialism.

[liberalme]

by missme4 November 2, 2009 1:19 PM EST
YEAH FORD! WOOHOOO! This is one more reason why my driveway is full of Fords
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Thank God--oops sorry---thanks to our Government and Mexico for cheap labor and massive profits!!!!!!!

[jsd330]

At least the profits stay in the U.S. Not so with the Japanese carmakers, and they have plants in Mexico to.

[kenhamlett]

This is an example of why company management and investor interest merge to form a good business model.

[lightningF]

Free market Economy,without government intervention,and business thrives. Capitolism is alive and well,as long as government stays the hell out of it and lets the market police their own. Had AIG failed there would be no Bonuses paid by the Tax Payers bailout funds. Stop all Bailouts,just say Hell NO.

[anti-global3]

better yet, take everycent of the bailout money back now, today, with interest and let all of the companies who took bailout money or tarp money fail.

[lami987]

Its time to bonus Ford executives and cut labor cost to be inline with GM's or Chrysler's labor cost. GM's CEO is making less than $1 million but Ford is $39.5 million. Why can't Ford executive pay be also inline with GM's or Chrysler's. Or any other automaker's. Fiat's CEO is making $4 million, Toyota's is less than $1 million. With that kind of pay disparity and company's attitude towards labor one can easily see labor and management would not get along. Ford is more like a slave driver than a well run company.