ford, built without your tax dollars
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From: Stroudsburg, PA
ford, built without your tax dollars
OK, I know more ford fanatics than I know GM fanatics (probably outnumbered 5:1). I was recently sent this article...
http://www.pennlive.com/editorials/i...is_the_re.html
and then I get another person saying GM is the #1 short sale with this:
followed by this:
and then this was posted:
so.... what the hell is going on? is this dude right that GM is pretty much lying to everyone about "profits"?
http://www.pennlive.com/editorials/i...is_the_re.html
http://www.pennlive.com/editorials/i...is_the_re.html
This month, General Motors Co. sold stock in a public offering. At the same time, the president announced that the tough decisions made during his administration were beginning to pay off. He also indicated that the “American taxpayers are now positioned to recover more than my administration invested in GM, and that’s a good thing.” I do not know whether to be amazed or appalled.
First, contrary to popular administration folklore, GM did not survive bankruptcy. The name did, but that’s all that happened. A new company acquired the name and assets of GM and is now the company being called GM. I wonder whether the GM commercials tracing its history back to the older GM without a disclaimer is being honest with those of us who own you — the American taxpayer.
The U.S. Treasury said it received $11.7 billion from last week's sale of GM stock, far shy of the $49.5 billion the government put into GM as part of its bailout of the giant automaker. The government still owns some shares, but whether taxpayers break even will depend upon share price performance in coming months.
Additionally, GM’s profit of $2 billion in this most recent quarter is a little puzzling as well. The difficulties involving the financials for a large company are well known, but the disclosure statement by the company about its internal controls concerns me.
I am more puzzled about the $2 billion in profit in light of the following disclosure from the GM third-quarter 2010 SEC filing: “We have determined that our disclosure controls and procedures and our internal control over financial reporting are currently not effective. The lack of effective internal controls could materially adversely affect our financial condition and ability to carry out our business plan.”
If control deficiencies were not enough, I am troubled as well by the presence of some items on GM’s balance sheet, the valuation of which is subject to significant interpretation. Specifically, the company lists more than $30 billion of goodwill. Goodwill? Really? I am certain that someone can justify this number but then again, someone justified the bailout to begin with.
GM’s profit and alleged success are a horrible payback to those who owned more than $100 billion in debt forgiven and shareholder value lost through the recent decade. To proclaim a success from such a travesty is difficult to understand.
Bankruptcy is intended to serve as a fresh start. It is intended to help people and organizations begin again and restore themselves to profitability or financial health. To boast of your success after so many millions have been hurt is devastating.
The real success story is Ford Motor Co. and the United Auto Workers at Ford who worked feverishly with one another to restore profitability in a difficult economy. Ford earned about $1.7 billion on much lower sales than GM’s. Ford’s shareholders and employees also benefited.
The U. S. Treasury benefited in that a tax provision of almost $200 million was recorded in the quarter. Paying taxes versus receiving bailouts is such a patriotic thing to do according to Vice President Biden. Thank you to the Ford team.
As a result of the Ford team efforts and its cooperation with one another, new Ford is the old Ford. Ford’s commercials will not need to be disclaimed.
Does that mean that Ford did everything right? Absolutely not, but it does mean that management, employees, the unions, dealers, suppliers, local government and lenders worked together to resolve an incredibly difficult problem and they did so successfully.
I realize that this is not much consolation to Ford or its team, but because the president has decided to laud the activities of those who took the easy way out, let me be one of the first to laud you and your entire team for a job well done.
That is the true recession success story. Let ‘s celebrate that.
This month, General Motors Co. sold stock in a public offering. At the same time, the president announced that the tough decisions made during his administration were beginning to pay off. He also indicated that the “American taxpayers are now positioned to recover more than my administration invested in GM, and that’s a good thing.” I do not know whether to be amazed or appalled.
First, contrary to popular administration folklore, GM did not survive bankruptcy. The name did, but that’s all that happened. A new company acquired the name and assets of GM and is now the company being called GM. I wonder whether the GM commercials tracing its history back to the older GM without a disclaimer is being honest with those of us who own you — the American taxpayer.
The U.S. Treasury said it received $11.7 billion from last week's sale of GM stock, far shy of the $49.5 billion the government put into GM as part of its bailout of the giant automaker. The government still owns some shares, but whether taxpayers break even will depend upon share price performance in coming months.
Additionally, GM’s profit of $2 billion in this most recent quarter is a little puzzling as well. The difficulties involving the financials for a large company are well known, but the disclosure statement by the company about its internal controls concerns me.
I am more puzzled about the $2 billion in profit in light of the following disclosure from the GM third-quarter 2010 SEC filing: “We have determined that our disclosure controls and procedures and our internal control over financial reporting are currently not effective. The lack of effective internal controls could materially adversely affect our financial condition and ability to carry out our business plan.”
If control deficiencies were not enough, I am troubled as well by the presence of some items on GM’s balance sheet, the valuation of which is subject to significant interpretation. Specifically, the company lists more than $30 billion of goodwill. Goodwill? Really? I am certain that someone can justify this number but then again, someone justified the bailout to begin with.
GM’s profit and alleged success are a horrible payback to those who owned more than $100 billion in debt forgiven and shareholder value lost through the recent decade. To proclaim a success from such a travesty is difficult to understand.
Bankruptcy is intended to serve as a fresh start. It is intended to help people and organizations begin again and restore themselves to profitability or financial health. To boast of your success after so many millions have been hurt is devastating.
The real success story is Ford Motor Co. and the United Auto Workers at Ford who worked feverishly with one another to restore profitability in a difficult economy. Ford earned about $1.7 billion on much lower sales than GM’s. Ford’s shareholders and employees also benefited.
The U. S. Treasury benefited in that a tax provision of almost $200 million was recorded in the quarter. Paying taxes versus receiving bailouts is such a patriotic thing to do according to Vice President Biden. Thank you to the Ford team.
As a result of the Ford team efforts and its cooperation with one another, new Ford is the old Ford. Ford’s commercials will not need to be disclaimed.
Does that mean that Ford did everything right? Absolutely not, but it does mean that management, employees, the unions, dealers, suppliers, local government and lenders worked together to resolve an incredibly difficult problem and they did so successfully.
I realize that this is not much consolation to Ford or its team, but because the president has decided to laud the activities of those who took the easy way out, let me be one of the first to laud you and your entire team for a job well done.
That is the true recession success story. Let ‘s celebrate that.
#1 short sale stock......already!! lol. and it's only been up since monday?!
lol, general public has some pretty high hopes....not so much.
it'll be a matter of time before they're in the ****ter again, esp. since people are hedging on the loss, not gain.
for those of you who aren't into stocks, short sale is a way of making money off the difference between purchase price and price drop. Its a way of making money when stocks fall, but you have to be certain they'll fall, otherwise you pay penalty on doing shortsale. they hit the #1 traded short sale stock on wed. or so since it was deemed as over priced from the release.
lol, general public has some pretty high hopes....not so much.
it'll be a matter of time before they're in the ****ter again, esp. since people are hedging on the loss, not gain.
for those of you who aren't into stocks, short sale is a way of making money off the difference between purchase price and price drop. Its a way of making money when stocks fall, but you have to be certain they'll fall, otherwise you pay penalty on doing shortsale. they hit the #1 traded short sale stock on wed. or so since it was deemed as over priced from the release.
EBIT- Earning Before Interest and Tax.........Gross 1.7 bil.
"GM’s first quarter adjusted earnings before interest and tax (EBIT) was $1.7 billion, after adjusting for the favorable impact of the sale of the Saab brand."
there ya go zig.....chunk off the taxes, loan payouts, interest and all the other **** and you're out of the black really ****ing fast...and thats straight from GM. What they do here is say "yes we made money" in the hopes of rasing consumer expectation about their company, and while they are essentially not lying, they aren't really telling the whole truth either. Plus to get that number, it was all adjusted to include the sale.
now lets look at quarter 2 of 2010 where they said "GM North America had EBIT in the second quarter 2010 of $1.6 billion, up from $1.2 billion in the first quarter." --but wait...I thought they made more than that the first quarter.....1.6-1.2 doesnt equal the1.7 of the first quarter?! oooh tricky..., it was up 1.2, compared to the net ammount (again not telling a lie, but not really telling the truth...just playing with words.)
In short zig, what you hear the news announcers talking about or what you quickly scan off one article can't be what you hold as the solid numbers. Go to GM's website, all that stuff is posted in downloadable format since they are a publicly traded company and are required to post it.
http://media.gm.com/content/media/us.../0517_earnings
"GM’s first quarter adjusted earnings before interest and tax (EBIT) was $1.7 billion, after adjusting for the favorable impact of the sale of the Saab brand."
there ya go zig.....chunk off the taxes, loan payouts, interest and all the other **** and you're out of the black really ****ing fast...and thats straight from GM. What they do here is say "yes we made money" in the hopes of rasing consumer expectation about their company, and while they are essentially not lying, they aren't really telling the whole truth either. Plus to get that number, it was all adjusted to include the sale.
now lets look at quarter 2 of 2010 where they said "GM North America had EBIT in the second quarter 2010 of $1.6 billion, up from $1.2 billion in the first quarter." --but wait...I thought they made more than that the first quarter.....1.6-1.2 doesnt equal the1.7 of the first quarter?! oooh tricky..., it was up 1.2, compared to the net ammount (again not telling a lie, but not really telling the truth...just playing with words.)
In short zig, what you hear the news announcers talking about or what you quickly scan off one article can't be what you hold as the solid numbers. Go to GM's website, all that stuff is posted in downloadable format since they are a publicly traded company and are required to post it.
http://media.gm.com/content/media/us.../0517_earnings
so.... what the hell is going on? is this dude right that GM is pretty much lying to everyone about "profits"?
Registered User
Joined: Apr 2002
Posts: 2,154
From: All around
Re: ford, built without your tax dollars
Quite a bit of that feels more like a political rant than a Ford v. GM discussion. That said, every major company these days has been working hard to make the numbers look good. One time sales of property or capital equipment to make a bad quarter turn good, pushing off certain payments or losses to another time, etc. Ford and GM are both quite guilty of this practice - along with everyone else. Such practices are not new to any company, automotive industry or otherwise.
That said, GM did end up causing a lot of damage to stock and debt holders when they went Ch11, and Ford hasn't gone Ch11.
That said, GM did require an infusion of capital from the Govt where ford did not.
That said, they [GM] are showing some signs of improvement... but so is Ford, and without a government loan. So "Built without your tax dollars" is correct. The lies about profits? Unless the writer cites details and sources to the math used and why - it's an accusation and nothing more.
I just worry Ford is improving at a greater rate than GM is and may end up burying GM if the 'General slows down even for an instant.
That said, GM did end up causing a lot of damage to stock and debt holders when they went Ch11, and Ford hasn't gone Ch11.
That said, GM did require an infusion of capital from the Govt where ford did not.
That said, they [GM] are showing some signs of improvement... but so is Ford, and without a government loan. So "Built without your tax dollars" is correct. The lies about profits? Unless the writer cites details and sources to the math used and why - it's an accusation and nothing more.
I just worry Ford is improving at a greater rate than GM is and may end up burying GM if the 'General slows down even for an instant.
Registered User
Joined: Feb 2004
Posts: 943
Re: ford, built without your tax dollars
Didn't Ford just take a big government NAFTA loan to finance their vehicles that are getting sold in Japan an Mexico? Didn't they sign up for some of the money that was part of the $25 Billion from the feds to support alternative energy programs?
They didn't get a bailout, but they certainly aren't opposed to taking government money!
-Geoff
They didn't get a bailout, but they certainly aren't opposed to taking government money!
-Geoff
Registered User
Joined: Jan 2000
Posts: 10,285
From: Albany, NY
Re: ford, built without your tax dollars
Camaro is out selling the Mustang even with a fantastic 3.7L V6 and the return of the 5.0L and Ford fanboys don't like that.
And as was already posted, Ford has taken money from the Government. In 2009, Ford received a $5.9 billion loan subsidy under the Energy Independence and Security Act of 2007.
GM shares are still trading for over the $33 IPO price.
If I was going to short an auto company it would be Toyota with its 18.5 P/E ratio and $121B market cap. I just don't see much growth from them.
And as was already posted, Ford has taken money from the Government. In 2009, Ford received a $5.9 billion loan subsidy under the Energy Independence and Security Act of 2007.
GM shares are still trading for over the $33 IPO price.
If I was going to short an auto company it would be Toyota with its 18.5 P/E ratio and $121B market cap. I just don't see much growth from them.
Last edited by Z28x; Nov 30, 2010 at 10:15 AM.
Registered User
Joined: Nov 2000
Posts: 2,712
From: Ontario
Re: ford, built without your tax dollars
And Ford also caused a fair bit of pain to its stakeholders too ... when GM and Chrysler were undergoing bankruptcy proceedings, Ford took the opportunity to force its bondholders to take about a 90% loss on their investment. Could they have pulled that off if they hadn't threatened bankrupcy, backed up by the precedence of GM and Chrysler already going down that path? I'm not so sure ...
So while Ford's shareholders didn't necessarily suffer any pain, their bondholders sure as heck did.
So while Ford's shareholders didn't necessarily suffer any pain, their bondholders sure as heck did.
Registered User
Joined: Sep 2004
Posts: 1,448
From: Irving, TX
Re: ford, built without your tax dollars
There is a lot of hate for GM out there. Many people think that GM will tumble again, so hearing it is the most shorted stock on the market isn't surprising. But, I think a lot of people are going to lose money there. The timelines for a short aren't that long. I am guessing GM is going to be staying stable for awhile, as far as stock price.
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Joined: Nov 2001
Posts: 1,178
From: Payson, AZ USA
Re: ford, built without your tax dollars
GM will be getting their portion of the DOE loans soon. They didn't qualify before, as they were not a viable entity. They have reapplied, so expect to see an announcement soon.
Ford has only used a small portion of their DOE loan, thus far. It is to be used to retool factories for more energy efficient vehicles. As Ford is actively seeking investment grade again, they will use this credit line very sparingly. One certainly cannot argue with their paying down of debt, to the tune of $12.9 Billion so far this year.
Ford did not "force" their bondholders to do anything. They offered them a buyout. Whether or not the bondholders bit, was completely up to them.
Frankly, they have done everything smart, moneywise, to improve their business model. This endears them to the public. People are mad at GM, not because they hate GM, but because they hate the idea of rewarding failure, and picking which businesses are to be saved, simply because they are "too big to fail." One would have to be pretty callous to not understand where they are coming from. After all, thousands of business's closed up in this recession/depression, and there was no help for them.
I completely understand, and agree with, the reason for saving GM. It doesn't mean I have to like it, or the precedent it sets. However, I feel that the UAW contracts should have been nullified, as they would have been under any normal BK situation. That is another nit to pick, however.
Ford has only used a small portion of their DOE loan, thus far. It is to be used to retool factories for more energy efficient vehicles. As Ford is actively seeking investment grade again, they will use this credit line very sparingly. One certainly cannot argue with their paying down of debt, to the tune of $12.9 Billion so far this year.
Ford did not "force" their bondholders to do anything. They offered them a buyout. Whether or not the bondholders bit, was completely up to them.
Frankly, they have done everything smart, moneywise, to improve their business model. This endears them to the public. People are mad at GM, not because they hate GM, but because they hate the idea of rewarding failure, and picking which businesses are to be saved, simply because they are "too big to fail." One would have to be pretty callous to not understand where they are coming from. After all, thousands of business's closed up in this recession/depression, and there was no help for them.
I completely understand, and agree with, the reason for saving GM. It doesn't mean I have to like it, or the precedent it sets. However, I feel that the UAW contracts should have been nullified, as they would have been under any normal BK situation. That is another nit to pick, however.
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Joined: Jun 2004
Posts: 2,977
From: SeVa
Re: ford, built without your tax dollars
like the bailout, I think its the lesser evil in that case to allow the contracts to stand.
Not in the last month I beleive and to be honest, even if Mustang had squarely outsold the F5 from the get go, people would still be on the Government Motors bandwagon for reasons Lightning cited.
Last edited by bossco; Nov 30, 2010 at 01:57 PM.
Registered User
Joined: Aug 2000
Posts: 6,165
From: Sterling Heights, MI
Re: ford, built without your tax dollars
Then it would still be inaccurate to say that all Fords are built "without your tax money." I do realize there is a big difference in the scale of what we're talking about of course.
Bottom line, time heals all wounds - were there a lot of people harping on Chrysler's bailout in the 70's a couple years ago? As long as GM remains healthy and profitible, this too shall pass.
Bottom line, time heals all wounds - were there a lot of people harping on Chrysler's bailout in the 70's a couple years ago? As long as GM remains healthy and profitible, this too shall pass.
Registered User
Joined: Nov 2000
Posts: 2,712
From: Ontario
Re: ford, built without your tax dollars
(I know there's tons of other benefits the UAW employees continue to receive, but most people focus on the hourly wages. And of course the UAW is starting to get back to its old 'suck the host dry' tricks again.)
Admin Emeritus
Joined: Dec 1997
Posts: 11,157
From: Nashville, TN area
Re: ford, built without your tax dollars
Please, please, please...let's not turn this into a political argument or debate.
Having said that, I thought this video was interesting...
http://www.whitehouse.gov/blog/2010/...-auto-industry
Having said that, I thought this video was interesting...
http://www.whitehouse.gov/blog/2010/...-auto-industry
Registered User
Joined: Mar 2001
Posts: 13,713
From: The Golden State
Re: ford, built without your tax dollars
I agree with Jason that this shouldn't turn into a political thread, not out of a plea to members, but because the issue simply isn't political to anyone save those in hopeless, out-on-the-fringe, not-worried-about-their-credibility, denial.
The fact here is pretty plain. GM would have died very, very early in 2008 without the feds stepping in, with Chrysler about 6 to 12 months behind them.
After that, then you have the Domino Effect.
Suppliers and other businesses that depend on multiple US car makers for their income failing. That means that no matter how well Ford does, they simply can't get supplies for their vehicles, and they start tumbling.
Even if Ford survived GM's and Chrysler's implosion, Ford would (after spending time setting up...a lot of time setting up) would have to utilize almost exclusively foreign suppliers since most every North American supplier would have been wiped out.
Many people call Ford lucky. Ford was only lucky that the Feds steped in and saved GM and Chrysler.
The rest of Ford's turnaround is routed almost exclusively in the fact that they took an honest look at themselves, realized that their business model was not sustainable, and changed it by leveraging everything they had for cash and then changing the company.
Keep in mind that back in the "Exploder" days at the end of Nasser's run as CEO, Ford's quality was in the tank with recalls and horrible customer relations on warranty issues. GM was the shining prince next to Ford at the start of the decade, and was on par with Toyota in both sales and profit.
Going back to the original post, the pennlive editorials are just that: opinion.
Opinions are like poop chutes.... everyone's got one. And some stink. Some horribly so.
His is one of them.
2 issues that I equate with what they smell like:
1. His view that it's a travesty that these poor innocent shareholders took a bloodbath.
a) These shareholders missed the fact that no lending institution would lend to GM since early this decade. If that wasn't enough of a hint, there was the fact that in early 2008 GM lost more money in a quarter than any corperation in history.
b) Where does this jackass think these shereholders would get their money if they were paided in full? You can bet the farm it wouldn't come from the Feds. GM's shareholder value was measured in negative numbers (no exxageration). So if the shareholders were to be paid, GM would be liquadated (and mostly sold to the Chinese), and there would still be some left out in the cold!
2. The fellow makes issue that the current GM isn't the old one, and raises the whine that GM is being dishonest with the taxpayer simply because it traces it's heritage.
Oh Pleese give me a frigging break!
If when Studebaker went bankrupt, and you bought the entire company including the name except the the liabilities, and you called it Studebaker and carried on the heritage, if someone got on a soapbox and said that you were commiting fraud by linking yourself with the historic Studebaker, you'd almost certainly call them a kook.
That's the down side of the internet. Some nut with an axe to grind can post an opinion and it's picked up and posted giving the whackjob a sent of credibility.
General Motors Company is STILL General Motors, and has every legal, moral, and common sense right to use the heritage of the various divisions of GM that they bought and continue.
Chrysler was bought by both Daimler and later Cerberus.
Does that mean that today Chrysler can not use Chrysler's history and heritage? Rolls Royce is owned by BMW and Bently is owned by Volkswagen. Does that mean that RR and Bentley's history can't be accessed by the current company? Jaguar and Volvo was owned by Ford, and GM owned Saab. I don't recall reading anything from this guy challenging these companies using the history of their new subsidararies.
Amazing what some mentally disfunctional assclowns can come up with.
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Joined: Feb 2000
Posts: 2,026
From: Japan
Re: ford, built without your tax dollars
Ford certainly had good timing back in 2006. http://www.usatoday.com/money/autos/...inancing_x.htm
For the first time in its history, Ford Motor (F) has used substantially all of its North American plants, trademarks, patents and even some intracompany debt as collateral to secure $18 billion in loans to help fund the company's attempt at restructuring over the next two years.
The loans highlight just how bad things are at Ford, which expects to burn through $8 billion in cash this year. Analysts say the automaker could use up an additional $5 billion to $8 billion next year. Without a cash infusion, the heavy costs of Ford's restructuring plan could have sent it searching for bankruptcy-court protection in a few years.
"At that cash burn rate, the $20 billion they had wouldn't have lasted long," said Shelly Lombard, an analyst at Gimme Credit. "This buys them several more years to get their act together."
Earlier this month, General Motors said it, too, would use machinery, equipment and special tools at its U.S. manufacturing sites to secure a $1.5 billion loan. That's in addition to a $4.6 billion secured loan it negotiated in July.
"Clearly, it would not be a first option for either company if they were in a better financial situation," said Mark Oline, an analyst at Fitch Ratings. "This gives them time and resources to address their structural issues and to face those problems. Restructuring is going to be a very expensive process."
Declining market share, rising raw material costs and massive pension and health care obligations have pressured both automakers' bottom lines. GM lost $3 billion this year through the end of September, and Ford lost $7 billion.
While many think GM may be on the brink of turning things around, the market may not get better for either automaker next year. Experts predict auto sales could fall to a 10-year low in 2007, and raw material costs will continue escalating.
Negotiations on new contracts with the United Auto Workers union begin in July, and industry watchers expect the No. 1 issue up for debate will be how to make the companies smaller.
The loans are good news and bad news for shareholders and debt investors. While it may give the company more time to turn things around, in the event it would file for bankruptcy protection anyway, unsecured investors would likely never recoup any of the money they've devoted to Ford. Fitch downgraded Ford's unsecured debt Monday, saying the chance that investors would get their money back dropped in half, from 68% to 34%.
Don Leclair, Ford's chief financial officer, said recently that the company was taking this step because, "It's the right thing to do."
The loans highlight just how bad things are at Ford, which expects to burn through $8 billion in cash this year. Analysts say the automaker could use up an additional $5 billion to $8 billion next year. Without a cash infusion, the heavy costs of Ford's restructuring plan could have sent it searching for bankruptcy-court protection in a few years.
"At that cash burn rate, the $20 billion they had wouldn't have lasted long," said Shelly Lombard, an analyst at Gimme Credit. "This buys them several more years to get their act together."
Earlier this month, General Motors said it, too, would use machinery, equipment and special tools at its U.S. manufacturing sites to secure a $1.5 billion loan. That's in addition to a $4.6 billion secured loan it negotiated in July.
"Clearly, it would not be a first option for either company if they were in a better financial situation," said Mark Oline, an analyst at Fitch Ratings. "This gives them time and resources to address their structural issues and to face those problems. Restructuring is going to be a very expensive process."
Declining market share, rising raw material costs and massive pension and health care obligations have pressured both automakers' bottom lines. GM lost $3 billion this year through the end of September, and Ford lost $7 billion.
While many think GM may be on the brink of turning things around, the market may not get better for either automaker next year. Experts predict auto sales could fall to a 10-year low in 2007, and raw material costs will continue escalating.
Negotiations on new contracts with the United Auto Workers union begin in July, and industry watchers expect the No. 1 issue up for debate will be how to make the companies smaller.
The loans are good news and bad news for shareholders and debt investors. While it may give the company more time to turn things around, in the event it would file for bankruptcy protection anyway, unsecured investors would likely never recoup any of the money they've devoted to Ford. Fitch downgraded Ford's unsecured debt Monday, saying the chance that investors would get their money back dropped in half, from 68% to 34%.
Don Leclair, Ford's chief financial officer, said recently that the company was taking this step because, "It's the right thing to do."