by Keith Laing
Contributing Writer, Atlanta Tribune: The Magazine
In late 2008 and early 2009, when the federal government was grabbing the wheel for much of the U.S automotive industry, Detroit-based Ford Motor Company’s financial gas tank was on ‘E,’ much like the rest of its brethren.
But now, with Japanese car giant Toyota losing control of its image, American car companies now have perhaps their biggest opening in a generation to get back the 1980s standing; a time when foreign cars came to be seen as being not only more sporty, but better made. Just a scant year from teetering on the financial brink, Ford is thought to be better poised to rule the U.S. roads than either Chrysler and General Motors.
However, as recently as the beginning of the current severe economic downturn, generally regarded now to be last 2007, the pecking order of American cars was not so clear. As President Barack Obama was preparing to take his historic oath of office, Chrysler and General Motors were partially turning the keys to their companies over to the federal government in exchange for a financial jumpstart. GM borrowed $6.7 billion from the government in the “bailout” that helped fuel much of the current rage at big business and the federal government. Chrysler refueled its finances to the tune of $7 billion.
Both companies also filed for bankruptcy.
But Ford turned down the federal help and did not take its finances to the courtroom, choosing instead to restructure to reduce debt; getting a $23 billion line of credit from private firms like Goldman Sachs, J.P. Morgan Securities, and Citigroup; closing a number of plants; and shifting its focus from gas guzzling sport utility vehicles that became increasingly harder to sell as gas topped $4 gallon in 2008. Now, the company, which lost almost $15 million in 2008, is basking in its first full-year of profit since 2005….
….However, the lights for Ford are not all green yet – its revenues were still down about $20 million in 2009, though the company spent less to post a profit. Additionally its debt level remains high, about $30 million. But Clark Atlanta University Management Professor Charles Moses said there are still lessons Atlanta’s businesses can learn from Ford’s apparent U-turn.
Read the full story in the April 2010 issue of Atlanta Tribune: The Magazine