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NINETY EIGHT REGENCY

Detroit 3 grind their way back to success

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Detroit 3 grind their way back to success

You gotta love what's coming from Detroit these days.

As fretting intensifies over prospects for the global economy, consumer confidence, clumsy policy-making and a potential double-dip recession -- see the gyrations of equity markets just this week -- the Motor City's given-up-for-dead automakers are showing encouraging signs of sustainable life.

General Motors Co., desperate to shed its federal owners through an initial public offering late this year or next, is pressing the case to would-be investors that there really is a "new GM." The best part of the company's spiel, delivered this week to the financial community, is that facts, accumulating management moves and the early performance back up the rhetoric.

For a change. These guys, most of them GM veterans, think differently because their CEO and board of directors expect them to. They make decisions faster. They spend more time developing cars and trucks instead of gaming financial instruments to obscure failure.

They've formed what amounts to a venture capital group to exploit promising technologies that could be leveraged into industry-leading innovation, incremental profit or both. They've targeted OnStar, the satellite-based infotainment unit, as an underutilized asset primed to deliver big. And they're obsessed with results.

When CEO Ed Whitacre says the GM that exited bankruptcy last July 10 was "shell-shocked" and "constrained" and "overly complicated," that's because it was. When he says today's company is faster, simpler and more intensely focused on delivering products to customers, you can see it -- if you're willing to suspend chronic cynicism about GM's past.

In Dearborn, Ford Motor Co.'s cash-generation machine is humming well enough to enable it to reduce its debt load with a $3.8-billion payment into the United Auto Workers' health care trust fund. The move a) smooths a path for next year's national contract talks because it b) fulfills early a key obligation that c) reduces Ford's debt which d) signals the Blue Oval is on increasingly firm financial footing.

A lighter Ford debt load likely will raise credit ratings for both the automaker and its credit company, J.P. Morgan said in a report Wednesday, adding: "We feel that Ford has the ability to reach investment grade status within the next two years."

That's huge. This from a company that is consistently gaining U.S. market share and booking profits; whose new vehicles win high marks from critics and independent surveys for quality, fit and finish; whose winnowed product line is focused intensely on the Blue Oval, not ancillary brands that sap resources and divert management attention.

In Auburn Hills, Chrysler Group LLC is launching the first new vehicle of its Italian period, even if the new Detroit-built Jeep Grand Cherokee is the final manifestation of its aborted nine-year Sturm und Drangmarriage to Germany's Daimler AG. Early reviews make the iconic SUV sound like something its predecessors generally have not been -- hot.

Yes, I know, two of these companies wouldn't be here but for the intervention of Team Obama and billions in taxpayer dollars. Nor would the UAW be what it is today, because the bailouts of its employers were bailouts for the union, too.

But this isn't the calamity foretold. Nor is it the allegedly inevitable collapse of American industrial icons that would herald a new automotive order run from Germany and Japan, South Korea and China. As controversial as the Detroit bailouts have been, are and will be, the mounting evidence suggests these companies possessed economic value worth saving.

Their products are solid and technologically competitive. Their balance sheets are stronger, their business models more robust. Their management is realistic, focused on performance and freed from the burdens of Detroit's Golden Age past.

The jittery global economy could swoon once again, delivering yet another setback to consumer confidence. Auto sales in the United States and Europe, especially, could run below historical trends for the next several years.

But Detroit car companies that can't rise to the challenge? Not so much, which is why ya gotta respect what these people are doing -- they won't die.

From The Detroit News: http://detnews.com/article/20100701/OPINION03/7010348/1148/auto01/Detroit-3-grind-their-way-back-to-success#ixzz0sREEpqjH

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