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Ford's profit sends reassuring signal: Worst over for Michigan?

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Ford's profit sends reassuring signal: Worst over for Michigan?



It’s nearly impossible to overstate how impressive Ford’s second-quarter performance was, or what an important signal it sends about the state of Michigan’s battered economy.

At midmorning Ford stock was trading around $12.50 a share, up 40 cents in early trading, after Ford blew the doors off of Wall Street’s profit expectations — despite the fact that overall U.S. and European automotive markets this year are weaker than anticipated.

In what’s still a crummy sales environment by historical standards, Ford managed to:

• Repay $7 billion in automotive debt during the three-month period, saving itself $470 million in annual interest costs.

• Post a first-half profit of $5 billion, after a $2.5-billion loss in the same 2009 period.

• Ship 44% more cars and trucks in its home market during the second quarter, even boosting North American employment by 2,000 people, after shedding more than 100,000 workers in the preceding decade.

Even more encouraging than those boffo numbers is that CEO Alan Mulally and his management team are not getting big-headed or overconfident. Indeed, Ford is planning lower production this quarter than last — although still higher than last year’s third quarter — and it has slightly lowered its forecast for total industry sales in the U.S.

Ford is keeping inventories in check, maintaining discipline on rebates and other sales incentives, and still managing to grow its business. And it’s not alone: both General Motors and Chrysler are both showing signs of stability despite the soft economy.

That’s a great signal for its suppliers and the rest of the Michigan economy, from real estate agents to clothing stores, that the worst may indeed be over after a disastrous decade.



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