A third-quarter report shows that Ford Motor Company is back in the black after narrowly avoiding bankruptcy.
According to The Washington Post, the automaker posted $1 billion in profits for the third quarter. The company’s North American branch hadn’t turned a profit since 2005, meaning was in the red for about four years.
The government’s now-defunct Cash for Clunkers initiative was a major help for Ford sales, but the increase wasn’t solely based on increased business. The profit is also the result of lay offs and cost cutting. The company also said that it slashed its structural costs by $1 billion in this quarter. For example, Ford has closed about 10 plants since 2006.
The rebound is still in a precarious position as contracts with the United Auto Workers expires in 2011, and the union has said that had chosen to retain its right to strike if the terms of the new contract don’t meet with its members approval.
"We haven’t had a raise in five years," said local union president, Nick Kottalis of Dearborn, Michigan. "It’s peculiar that Ford was asking for all these concessions while they were making all this money. A lot of the people on the line were asking, ‘Was this all a big lie?’ "
However, the profits still don’t reflect the decreased demand for more Ford cars. Reportedly, production was down to 10 million new vehicles this year, that’s down from the 16 million automobiles that were rolling off the line at the company’s peak a few years ago.
"As long as demand is this low, it’s hard for anybody to make money in the automobile business," Louis E. Lataif, a former Ford executive, told The Post.
– Sonya Eskridge
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