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Ford Pulls its Weight Without Bailout Funds: Surpasses Toyota in May sales

“The people saying they don’t want to buy anything at General Motors are not mad at General Motors. They don’t want to patronize Obama. They don’t want to do anything to make Obama’s policies work! This is an untold story, by the way. Of course, the government-controlled media is not gonna report anything like this but there are a lot of people who are not going to buy from Chrysler or General Motors as long as it is perceived Barack Obama is running it, because people do not want his policy to work here because this is antithetical to the American economic way of life. The government does not own car companies; the government does not design cars, not in a country that works. So people aren’t going to buy products from companies that Obama runs.” ~ Rush Limbaugh

Amid bankruptcies and forecasts of Detroit doom, one of the Big Three is hanging tough. Ford tough.

Once defined by the revolutionary Model T, Ford is motoring on without federal bailouts, Treasury-led restructurings or bankruptcy judges.

Ford Motor Co.’s U.S. market share grew last month, and sales surpassed even mighty Toyota’s. Ford’s shares have outperformed those of Honda and Toyota over the past year. Shares of archrival General Motors Corp., now in bankruptcy, are nearly worthless.

Shareholders and analysts see pluses and minuses in Ford’s decision to steer clear of government interference.

“Ford [may] be able to prevail taking the high ground and not taking government money,” said John Chevedden of Redondo Beach, Calif., who owns 600 shares of Ford stock. Mr. Chevedden said he purchased the stock “at a dip,” so he hasn’t lost any money on his investment.

He called himself “cautiously hopeful” based on production increases and Ford’s upbeat annual report released last month. He thinks Ford will benefit from the downsizing of GM and Chrysler LLC – as its production increases are designed to do.

Mr. Chevedden said he was more concerned with the overall economy than with Ford.

“The concern is just about the market in general, whether it’s going to rebound or if people will just buy less cars,” he said.

Tom Whited, a financial adviser for Edward Jones Investments in Plymouth, Mich., said such uncertainties keep him from recommending Ford stock even though the shares have performed better than expected.

“There are so many question marks around the Detroit auto industry in general that I think there are better options,” he said.

Mr. Whited also worries that Ford will have difficulty competing with Chrysler and GM after they come out of their bankruptcies “debt free.”

The company’s decision to go it alone prompted shareholder Jason Kozlowski of Toledo, Ohio, to buy Ford stock three months ago.

“I’m thinking because they didn’t take the bailout money, because they decided to do their own thing, that they will eventually pull out of it,” he said. “It looks like they’re going to hold their own.”

Auto analyst Colin Langan of UBS, which does investment banking for Ford, agreed.

Mr. Langan said Ford will benefit in the long run by avoiding the involvement of the government and the United Auto Workers union in its restructuring, giving it more flexibility and the ability to focus on profits.

“I think [GM’s bankruptcy] is an opportunity for Ford to stand out from U.S. competitors,” Mr. Langan said.

Ford’s increasing global presence, as well as the scheduled U.S. arrival of new models like the Fiesta next year, bode well for the company’s future.

“I really looked at [Ford’s] prior turnarounds and elements in past successful turnarounds, and every turnaround has had a new product,” Mr. Langan said.

“I think there are definite, clear opportunities for Ford to gain market share.”

Indeed, Ford’s U.S. market share in May reached its highest level since 2006, rising to 17.4 percent from 15.2 percent a year ago. But Ford spokesman Bill Collins said GM’s bankruptcy has not affected Ford’s plans.

“Things have not changed in the way we’re running the business,” Mr. Collins said.

Ford’s domestic sales totaled 155,994 vehicles last month as its Fusion hybrid and Flex crossover models set sales records. Ford even outsold Japanese rival Toyota, which notched 135,661 U.S. sales. Ford’s May results were the best since July, when it sold 161,530 vehicles.

With investors still wary of stocks and especially shares of automakers, Ford’s common stock has surged from a low of $1.26 last year to close at a 52-week high of $6.41 on Tuesday. Ford shares, while virtually unchanged over the past year, have handily outperformed those of Japanese rivals Toyota and Honda, whose shares have fallen 24 percent and 18 percent, respectively.

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Amusing

The National Debt Road Trip

How do the Obama deficits compare with past presidents? And how did the national debt get so big anyway. This video tries to answer those questions by looking at the debt as a road trip and seeing how fast different administrations have been traveling.

Amusing

It’s the Economy, Stupid

Karl Rove is right… it is the economy and its too bad that Obama and the Democrats are willing to put Liberal Ideology before our once great country. Soon the realization that the price to be paid for having Obama as our President will be too high and Congress will have to be the “fall guys”. Hopefully enough of them will fall so we can correct the path we’ve been put on.

Tomorrow will likely bring more bad news for President Barack Obama on the number one issue for voters — the economy. The Labor Department’s monthly job report will almost certainly show unemployment topping 9%, with a couple hundred thousand more jobs lost in May.

It will get worse before jobs get better. Congressional Budget Director Douglas W. Elmendorf recently predicted that unemployment will continue rising into the second half of next year and peak above 10%.

Mr. Obama has an ingenious approach to job losses: He describes them as job gains. For example, last week the president claimed that 150,000 jobs had been created or saved because of his stimulus package. He boasted, “And that’s just the beginning.”

However, at the beginning of January, 134.3 million people were employed. At the start of May, 132.4 million Americans were working. How was Mr. Obama magically able to conjure this loss of 1.9 million jobs into an increase of 150,000 jobs?

As my former White House deputy press secretary Tony Fratto points out on his blog, the Labor Department does not and cannot collect data on “jobs saved.” So the Obama administration is asking that we accept its “clairvoyant ability to estimate,” and the White House press corps has let Mr. Obama’s ludicrous claim go virtually unchallenged.

Still, there are limits to Mr. Obama’s rhetorical tricks. Even he cannot turn job losses into real job gains. And he won’t be rescued by stimulus spending.

Former National Economic Council Director Keith Hennessey made a persuasive case on his blog that the stimulus will be ineffective because the additional economic growth it spurs will come six to nine months later than it could have.

This is partly because, as the Congressional Budget Office estimates, only $185 billion (23% of a $787 billion stimulus package) will be spent this fiscal year. The government will spend an additional $399 billion next fiscal year. The balance — $203 billion — will be spent between fiscal years 2011 and 2019, long after the economy has turned on its own power and for its own reasons. In addition, much of the stimulus that went this year for tax cuts and transfer payments has been saved, not spent. (The national savings rate went from less than 0% to about 5%.)

If the Obama administration were more serious about growing the economy than just growing government, the stimulus would have been front-loaded into this fiscal year.

In addition, the claim made by Team Obama that every dollar in stimulus translates into a dollar-and-a-half in growth is economic fiction. The costs of stimulus reduce future growth. No country has ever spent itself to prosperity. The price of stimulus has to be paid sometime.

Any real improvement in the economy so far is more likely the result of the Federal Reserve expanding the money supply and the Fed and Treasury shoring up the financial sector.

But the Fed’s actions are risky. Easy money and expansionary policies are not sustainable. We may soon be in for a bout of inflation unless the Fed soaks up much of the money it flooded into the system. The government is also likely to hamper private investment as it uses a vast amount of capital to finance its debt. And when the Fed stomps on its monetary brakes, as eventually it must, we’ll get sluggish growth.

The irony for Democrats is that the Fed may hit the brakes in the run-up to the 2010 congressional elections or the 2012 presidential election.

It is becoming clear that the economy is now the top issue. Mr. Obama’s presidency may well rise or fall on it. The economy will be his responsibility long before next year’s elections. Americans may give him a chance to turn things around, but voters can turn unforgiving very quickly if promised jobs don’t materialize.

That’s what happened in Louisiana, where voters accepted Democrat Gov. Kathleen Blanco’s missteps before Hurricane Katrina but brutally rejected her afterward because she failed to turn the state around.

Until now, the new president has benefited from public willingness to give him a honeymoon. He decided to use that grace period to push for the largest expansion of government in U.S. history and to reward political allies (see the sweetheart deals Big Labor received in the GM and Chrysler bankruptcies).

The difficulty for Mr. Obama will be when the public sees where his decisions lead — higher inflation, higher interest rates, higher taxes, sluggish growth, and a jobless recovery.

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