Sorry *****, but this topic is entirely relevent and a clue to why the auto industry is in the scheizer...

How you can declare Ford's achievement of $100m profit for the quarter as a good result is beyond me. Ford should be making $40b/yr profit considering the amount of people they employ around the world and the freedom they provide to people that use their vehicles... in my humble opinion, of course.

 

then ford needs to look at how they do business.

 

Here we go again, back to the start.

Tell me how Exxon is doing so much better than Ford, GM, Toyota...

 

It's pretty simple. Exxon has wells that were designed to be profitable at $50/gal and the price is now over $100. Free money for them.

Keep in mind that most of the world's oil is controlled by various national governments, not private corporations like Exxon. I could bitch about the tax breaks, energy policy, iraq, various evil **** the oil companies pull, etc etc etc. But Exxon themselves have minimal ability to set the prices for oil.

 

Hmmm... so you say they have minimal (as in almost no) ability to set the price of oil. OK - I'll buy that.

Then could you please explain to me WHO is responsible for setting the sales price of gasoline and diesel at the pumps?
Because, it would seem to me that THAT is where the cash is being turned in that is feeding the RECORD PROFITS these big oil companies are making.

SURELY you won't try to convince me that they are not responsible for the prices they charge at their own pumps?

You see, it goes all the way back to my argument about just what is a fair profit, when does it become reckless, and how much is enough.
I can swallow the elevated cost of the raw material - IF that was simply passed along to me and all the other processing and distribution costs stayed relatively fixed. But they are not passing along the costs of crude alone... they are passing along a little extra too.
If they were making $.10/gallon profit yesterday, and the price of crude to make a gallon of gas went up $.05, then I should expect to see an increase at the pump of $.05 to offset their raw material cost and allow them to maintain their profit. What we are seeing is an actual increase of about $.07-.08 at the pump which is more than offsetting their added cost, and throwing some extra green to the bottom line. THAT is how they are selling LESS volume and making even MORE profit on the decreased volume.

I can even try to swallow that if they would be honest about it and not lie to me thinking I'm a vegetable... but when they stand before congress and say they are simply passing along the increases to the end-user... I call BS.

Oil/Fuel has GOT to be the only industry I know of that has turned rising raw material costs into a profitable situation for them. In the glass plants that I used to work, rising fuel costs cut our profits to nothing (even going negative) in 3 months and we could not go up on the prices we charged our customers because sales prices were contractually bound. At the plant where I work now, we are struggling to figure out how to absorb rising costs of gas for our furnaces and even fuel for our delivery trucks as these are killing our profit margins for the same reasons - we have contractual pricing with our customers ($x.xx/part for x-million parts/year).
I only WISH that we could simply "go up" a few cents a day to offset our costs like oil companies do at the pumps.

 

Fair profit, yes.

40 frigging Billion dollars is NOT a fair profit for a company that gets sizable tax breaks, while selling less product (which has nothing to do with shortages) but gets far more for it?

You're kidding, right???

If the stars and moon aling just right and Ford averages this each quarter, Ford will make $400 million this year.

In 1998, the Ford Motor Company earned $22.1 BILLION.

That would put this year's earning at roughly 1/45 or 0.02% of their earnings of 1998.

To top it all off, Ford has a few years of serious losses to make up for.

By every standard, Ford is doing FAR from "alright".



1. Ford's the one that's climbing back from the abyss. They have quality nailed, now they have to get some cars beyond Mustang and F-series trucks that people get emotional enough over to buy.

2. You haven't been keeping up with what's in the pipeline lately. If anything, Ford's now playing catch-up with GM as far as desirable product.

 

OK, Toyota has a profit margin about 9% while Ford's is 0.06% (barely breakeven).

If Ford was as profitable as Toyota, they should be making about $15B a year.

 

I don't know enough about the oil industry to have any idea what you're saying, I'm just pointing out where Exxon's revenues come from. It's pretty simple, they pump oil for (say) $30/gallon and then sell it themselves for $100/gallon. Huge margins. A few extra cents at the retail pump is a drop in the bucket compared to the well profits.

 

Their cost to extract it from the ground is d@mn-near fixed. All the infrastructure and utility is paid-for during installation of their pump and it amortized over some fixed lifespan. Maybe their cost to ship it over an ocean via ship goes up a tiny bit due to the cost of fuel for the ship, but pipeline flow is often by electric pump and the pipes are capitalized.
Again - bottom line is the cost to get it out of the ground is FAR more stable and predictable than their own pump prices, and is nearly fixed.
SO WHY THE WILD VARIATIONS IN PRICE?

Investors, speculators, sharks, policy-makers, collusion, cartels, and plain old GREED.
They are doing it because they can and nobody will stop them.

In a way, you are right... they are cashing in at the well because futures and commodities traders are running the price so high - the fixed costs to get it out of the ground make it all that more profitable for existing units as prices rise. But honestly... who's going to buy $500-million worth of oil this morning on the open market? You? Me? Jay Leno maybe? No... we have no use for it whatsoever and can do nothing with it exceopt sell it to someone who can store it, refine it, etc.... and that's oil companies. They are their own market until it reaches retail markets. Kinda what frosts my jewels about the whole trading thing... sort of "insider" trading anyways, isn't it?
The cash changing hands at the local gas stations is mind-boggling, and it is contributing a lion's share to their bottom line.

Funny how we depend much more on electricity, yet it remains stable, efficient, cheap, and readily available. Makes you wonder why the big difference in economics, huh?

 

While I agree that "0.9%", or whatever, is a piddling Return on Inverstment, it is a positive number, not the hemorraging of dollars that most auto makers have been doing lately- how much has GM lost in the last couple quarters, or last year? Not a rhetorical question, I don't have those numbers at my finger-tips, but my point is that Ford has turned around, and going in the right direction.

I am fully aware of the myriad problems faced by auto manufacturers- problems with credit and loans for the buyers, sky-rocketing fuel prices, and whole marketplace beset with fear and uncertainty. Which makes Ford's accomplishments even more note-worthy.

I am by not means a GM-basher, quite the opposite, but I am also getting very frustrated by all of GM's marketing 'experts' who refuse to listen to the customers. It is their arrogance and condescenssion that I blame much of GM's very significant problems on- instead of telling us what we want, what is 'best' for us, or by trying to manipulate us into buying 'brands' and product placements, why not produce interesting, good-quality cars at a reasonable price? Seems almost too simple, doesn't it, yet look how Toyota and Honda have moved to the head of the class. Their quality is real, not just some marketing hype- Look at how Hyundai has come in at the bottom end, cheap and value conscious segement of the market, established a reputation for decent cars at a good price, and is now selling RWD V-8 powered sedans, something that you couldn't even get for a decade or more from GM- despite the never-ending demand of municipal and fleet vehicles, a market that GM gave away- perhaps on the advice of their so-called 'experts'

Again, still, I find myself rooting for GM to turn it around, to wake up and start building world-class cars, like they used to. Anyone else here old enough to remember when Rolls Royce was buying TH400 transmissions from GM because they truly were the best in the world? I see disturbing parallels between GM, and where I work, for DOT- a govenemnt agency- in both cases we have wonderful engineering firms, capable of designing and building almost anything, run by a layer of beauracracy that seems to be clueless.

I suspect that GM will get back on top of the marketplace if and when they ever figure out that, to do well in this business takes more than slick ad campaigns or dealer rebates- they need exciting, interesting products that appeal to a large swath of various buyers- I know that they haven't had much in years that I would care to own- I love my F-body, but it was only the low price that convinced me to buy it- I have owned several Caprices, Impalas, Olds 98's, and Buicks, all with power, luxury, and space- the real luxury of being able to carry friends, associates, golf clubs and luggage on trips in speed and comfort- but I haven't been able to buy what I want for more than a decade at the GM dealer, while Ford/Mercury talks louder and louder to me every day- My last 3 rental cars have been a Buick Lucerne, very luxurious, FWD, okay but not exciting, and two Mercury Marquis- again, not enthusiast's cars, but predictable fun handling and mileage in the mid 20's on the highway at 70MPH- If I choose not to drive an SUV, and I want room for dogs, camping gear of passengers, and I like RWD and V-8's, what are my options?

edit: I appologize for my whining, but recognize that my frustration of watching GM screw up, time after time, is very real. I want a fun, good, solid car from them again, not blame for government policies or oil prices. Ever try to buy a cheap car, like, no power windows, no radio (because you might want to add your own aftermarket), no power seats? Oops, we can't afford to build them that way, everybody 'has' to buy the more expensive, optioned out one- well, not this everybody-

 

What's their revenue though?

Thank you!

 

Percentages may be a useful marker, but I think it is significant whether the cash flow is positive or negative. Ford is banking profits, GM continues to shoot themselves in the foot:

(Post #1 of 5)
GM is in tough shape for Q1 2008....
DETROIT — General Motors Corp. says it lost $3.3 billion in the first quarter as strong overseas growth was dragged down by a strike at supplier American Axle and Manufacturing Holdings Inc. and weak U.S. sales.

The loss reported Wednesday for the January-March period also reflected one-time charges. It was much larger than its loss of $42 million, or 7 cents per share, in the same quarter a year ago.

GM says the two-month strike at American Axle has cost it $800 million and 100,000 vehicles. The strike has affected 30 GM plants.

GM's loss included a $1.45 billion charge to reflect a change in the value of GM's interest in GMAC Financial Services and $731 million to increase GM's liability in Delphi Corp.'s ongoing bankruptcy.

Makes anybody that cares about GM products feel pretty bad-

 

But stocks go up, lol
http://www.marketwatch.com/news/stor...DD386623DEB%7D

 

I think you're right. Apparently the guys who brought you the dotcom boom and the housing boom are now at work bringing us the oil boom. When the price shoots up a ton of marginal fields become profitable and we get into the next classic boom-bust cycle.

Just that you have the Chinese, the Russians, the Iranians, the ultrawealthy arab states, Chavez, etc etc. What can you really do about it other than parking an army in the middle east?

Well, Enron. But good point, effective regulation has proven to work on the production/distribution level at least.