I have long hoped for a resurgence of the American auto industry. All the way back in July 2007, I wrote an epic analysis of the state of the ‘big three’ American car companies and what I thought they needed to do to save themselves. I revisited the piece in June of this year to check-up on how they were doing—Chrysler and General Motors (GM) bankrupt, but Ford doing surprisingly well.
Of course, in the middle of all this Chrysler and GM were recipients of massive, pointless, unconstitutional public ‘investment.’ In the aftermath, there have been reports that both companies are now profitable—reports that are actually completely misleading and false. Supposedly, GM made a 865 million dollars in the first quarter of 2010 and $1.3 billion in the second. Chrysler, meanwhile, reported making 183 million dollars in the second quarter. These numbers are mostly fiction, since they include federal money and do not include the outstanding liabilities of the pre-bankruptcy versions of the two companies, now named Motors Liquidation Company (‘bad’ GM) and Old Carco LLC (‘bad’ Chrysler).
So after being handed billions of dollars of your and my money, GM and Chrysler have managed to each separate themselves into two companies and convince us that these quarterly profits of their newly-formed doppelgangers are something to be proud of. Congratulations to them; a lot of people fell for it.
But what about the other 1/3 of the old ‘big three’ U.S. automakers?
Ford Motor Company didn’t take a single cent of taxpayer bailout dollars. They never went bankrupt. They never split themselves into two companies to try and fake us out and hide their debts and liabilities. They shared the same competitive disadvantages—particularly the over-paid unionized workforce—of their two American cousins against the Japanese and Korean automakers. Despite all of this, Ford is turning record profits even in the midst of a serious economic downturn.
If we were going to spend tax money on car companies, maybe we should have let GM and Chrysler go under and invest in the one that seems to have leadership, great product, and a future . . . just a thought.