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Ford's 2Q profit a shot in the arm

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Ford's 2Q profit a shot in the arm

BY TOM WALSH

FREE PRESS COLUMNIST

It's nearly impossible to overstate how impressive Ford's second-quarter performance was, or how great an infusion of stability -- maybe even momentum -- it could provide to Michigan's long-suffering economy.

Ford's stock price gained 63 cents Friday, closing at $12.72 a share, after Ford far surpassed 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 debt during the three-month period, saving itself $470 million in annual interest costs.

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

• Ship 44% more cars and trucks in its home market during the second quarter.

• And boost North American employment by 2,000 people, after shedding more than 100,000 workers in the preceding decade.

A more stable automotive sector -- signified by Ford's strong profits and encouraging noises from General Motors, Chrysler and many auto suppliers -- is improving morale throughout the Detroit region, said Birmingham real estate broker Kelly Sweeney, CEO of Coldwell Banker Weir Manuel.

"The last 30 to 60 days, things feel better," Sweeney said. Even the long-depressed southeast Michigan housing market is showing signs of life.

"A couple years ago, we had 70,000 listings of houses and condos for sale in the six-county area," Sweeney said. "That's down to about 30,000 now, and a healthy market would be 18,000 to 20,000, but we've unloaded a lot. The worst is behind us."

At Ford, even more encouraging than boffo second-quarter numbers is the fact that CEO Alan Mulally and his management team are not getting big-headed or overconfident.

Indeed, Ford is planning lower vehicle production this quarter than last -- although still higher than last year's third quarter -- and 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 the only one making progress. GM, 61% owned by the U.S. Treasury, may start filing paperwork next month for a public stock offering after it reports second-quarter numbers. And Sergio Marchionne, CEO of Chrysler and Italian automaker Fiat, said Thursday that Chrysler will report an operating profit for the second quarter.

These are great signals for auto parts suppliers and the rest of the Michigan economy, from restaurants to clothing stores, that, after a disastrous decade, the worst may indeed be over.

link:

http://www.freep.com/article/20100724/COL06/7240368/1210/BUSINESS01/Fords-profit-a-shot-in-the-arm

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