Ford Posts Unexpected Profit Ford Motor Co. posted Monday better-than-expected financial results for the third quarter. The company also revised its projection for 2011, from "breakeven" to "solidly profitable."
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Ford Posts Unexpected Profit

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Ford Posts Unexpected Profit

Ford Posts Unexpected Profit

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.


And I'm Robert Siegel.

Today, Ford Motor Company posted stronger-than-expected earnings for the third quarter. It also revised its 2011 forecast from breakeven to solidly profitable. And Ford announced that it will try to raise about $3 billion by issuing new stock and securities that can be converted to stock. The automaker says momentum is on its side, even as it shoulders a lot of debt.

Michigan Radio's Tracy Samilton reports.

TRACY SAMILTON: Ford has been increasing its market share in Europe and the U.S. bit by bit, month by month, in one of the worst economies in auto history. In the U.S., its third quarter increase was 2.2 percentage points.

Kate Knight(ph) is part of that happy statistic. For eight years, she drove her family around Northville, Michigan, in a Honda Odyssey.

Ms. KATE KNIGHT: It was the perfect car for us at the time. We needed a minivan. We have three children.

SAMILTON: But the Odyssey wasn't what you'd call glamorous or trendy, especially by the time it was ready to be put out to pasture. By then, the Ford Flex was turning Knight's head. The styling was fresh, even American. Knight said she always felt she should buy from a domestic automaker. After all, as Chrysler, GM and Ford go, so goes the economy in Southeast Michigan.

Ms. KNIGHT: But we're not in a position to make a pity purchase when we're buying a new car for our family, so it has to be the right vehicle for us. And it definitely was. It's surpassed our expectations.

SAMILTON: Other Ford vehicles are selling well, too, including the Focus and the Fusion. But Ford didn't just improve products and revenue, it paid close attention to the other side of the balance sheet: closing plants and thinning the ranks of employees with early retirement offers. Ford went from burning through $1 billion or more a month in cash reserves last year to adding nearly $3 billion to reserves in the third quarter this year.

Laurie Harbour is president of Harbour Results.

Ms. LAURIE HARBOUR (President, Harbour Results, Inc.): They've done a significant amount of cost cutting within the company, some of it driven through purchasing and suppliers, but a great deal of it done at the product engineering level and at the manufacturing level. That cost savings is now beginning to show to their bottom line.

SAMILTON: Of course, Ford had to cut its costs sharply to compete with GM and Chrysler. They got rid of huge amounts of debt by declaring bankruptcy. Ford didn't, so it still has $21 billion of long-term debt to repay.

Mr. ALAN MULALLY (CEO, Ford Motor Company): We will pay back our debt.

SAMILTON: That's Ford CEO Alan Mulally. He's convinced that Ford will gain more market share and make enough money to both invest in new cars and trucks and pay off loans.

Mr. MULALLY: We're positioning ourselves to be able to accelerate the improvement of that balance sheet, which will negate any competitive disadvantage we have on interest today.

SAMILTON: But it's not the debt that worries analyst John Wolkonowicz so much, as looming labor issues. He's with IHS Global Insight. UAW members soundly rejected a deal not to strike Ford in 2011 when the current contract is up. That no-strike provision is something else GM and Chrysler got in bankruptcy court. Wolkonwicz says this could be a huge problem for Ford.

Mr. JOHN WOLKONOWICZ (Senior Automotive Analyst, IHS Global Insight): Ford could be hit with a lengthy strike, the most unfortunate situation for all concerned.

SAMILTON: But Ford officials say they'll continue to work with the UAW, not against it, to keep the company on track. They plan to keep the new products coming, too, starting with the introduction next year of a car that's been popular in Europe: the Ford Fiesta.

For NPR News, I'm Tracy Samilton in Ann Arbor.

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