One of the sillier commercials I've heard in a while was one on a local country station where morning host 'Moby' was 'interviewing' a local Ford dealer and proceeded to use the company's aversion to accepting federal bailout money as a selling point. While I really can't argue with that angle seeing how the majority of the targeted demographic probably opposed all forms of the bailout, the commercial itself was absolutely preposterous.
Primarily because it enabled 'Moby' to use it as yet another rant against the supposed creeping of socialism in our society as it was intermingled with phrases like 'God-fearing' and 'commerce-loving' (honestly). Now, if you want to make a pitch to folks that Ford opted out of federal bailout money out of principle, I suppose you could take that route but - speaking as someone who actually has family employed by Ford - that would be awfully wrong-headed.
Ford didn't willfully avoid bailout money to make a point, but rather because through a combination of difficult internal business decisions and, in the F-150, a popular product that remained in demand, they were able to reach a relatively stable situation. This isn't to say that Ford doesn't have challenges, but it does mean that they saw this coming a while back, made some tough choices when necessary and relied on their strong sales of trucks to get them through this storm.
Coupled with the fact that they didn't go out and make foolish decisions in years past as GM did, they were able to stay above water. Ford simply had more options and that, in turn, gave them more leverage and flexibility in tackling the ongoing economic crisis (and explains why Ford CEO Alan Mulally was a key point person in the recent deal regarding auto mileage standards).
Speaking of that, I think it's a very good thing. Arguably it will have an impact on the affordability of some vehicles, largely trucks, but I think only for the short-term. For starters, the constant fluctuation in the price of fuel has hindered the incentive for automakers to effectively invest resources in not only creating more efficient vehicles, but also larger ones that can hold on to their towing and hauling power. But now adding another variable to the mix - higher prices for some consumers, thus meaning more incentive by automakers to create efficient, effective and affordable vehicles - I suspect you'll see the technology needed to deliver that mix arrive much sooner than later.
Also, I would imagine you'll see a variety of consumer-focused tax credits doled out by the federal government, as well as various state governments. In addition, I would imagine that you'll see additional incentives and temporary subsidies passed on to the automakers to assist them with the development of said technology, thus keeping the cost passed on to the consumer lower.
Folks are still going to be able to buy trucks for personal use, but we're going to adapt to the temporarily higher price and ease into it through a variety of credits and incentives.
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Keeping in mind that I don't live in North Georgia anymore, and so I'm not up on recent talk-show banter, and I don't know anything about "Moby" anyway...
ReplyDeleteYou explain the economics of Ford's superiority right now as though you are giving us the "real" reason that Ford refused bailout money, the reason that all the anti-bailout people are missing. But they aren't missing it. It's all connected. Most people who I hear praising Ford for not taking bailout money do it for the reasons you have described here. They are in a stable financial position, and so they don't need to be bailed out. For people who think bailouts are a bad idea, obviously a company that doesn't need a bailout is going to be a symbol of strength and virtue. It's not like anti-bailout people are not thinking about economics. Economics is the "big issue" in all of this. Some GOPers who have already betrayed public trust that they are "fiscal conservatives" are trying to get in on the anti-bailout thing, b/c it is politically the only move that helps them.
A super-popular president and a dominant majority in both houses of Congress for the Democrats means the GOP simply HAS to oppose whatever the Dems do and hope it goes bad so that they can gain politically in the aftermath. This is the only play they have, politically. (And if you hate this kind of politics-first-principles-second behavior, then just remember that this is standard fare for both parties. This is democracy; people have to "win" every few years or so, and so short-term strategy to figure out how to be popular is more valuable to your career than long-term planning in accordance with principle.) And so that's why free marketers are "high" on Ford right now. They are a company that is (more or less) operating with economic efficiency, and so as a result they ought to be in a superior position to companies that are failing.
But now back to the bailouts. The company that doesn't need "free" money is nonetheless offered it, and all the while it's two major domestic competitors are taking this "free" money through a pipeline. So, Ford is voluntarily putting themselves at a competitive disadvantage by not taking the money (this is the same reason that economic "bubbles" are so damaging to an economy; even companies that don't need to make risky investments to stay afloat are nonetheless extremely tempted to do so, b/c everyone else is.) And yet they decided to do just this. It should be obvious why they are a positive symbol for anti-bailout people.