Ford third quarter profits down a bit but still strong
Ford Motor Company reports strong profits for the third quarter. The company made $1.6 billion, despite a stagnant U.S. economy.
The company's profit was down a bit from last year, because of a charge related to commodities, not because sales have slowed.
Ford also reduced its debt by another $1.3 billion.
CEO Alan Mulally says the improved balance sheet -- and the new contract with the United Auto Workers -- will result in job growth over the next three to four years.
"We’re gonna be able to offer 12,000 new fantastic jobs associated with all the disciplines, engineering, manufacturing, operations, and so it's a very positive development based on improving our competitiveness," Mulally told Michigan Radio.
For the fourth quarter, Mulally expects continued strong performance from the company, although expectations for overall U.S. vehicle sales for the entire year have been recently lowered.
Mulally notes economic growth this year was only 1.5%, a reflection of a slow recovery from an unusually deep recession.
But U.S. vehicle sales have been, if not brisk, then healthy.
"The pent up demand is greater than it’s ever been," said Mulally. "The average age of vehicles is over ten years, almost eleven, so we’re here with the products that people really do want when they need ‘em."
Ford's profit announcement follows a good news and bad news week for the company.
Two rating agencies, Standard and Poor's and Fitch, both boosted Ford's credit rating two notches. The company is now just under an investment grade credit rating. Getting to investment grade will lower Ford's cost of borrowing.
The bad news was somewhat troubling. Ford dropped from tenth place to 20th in a closely watched survey of reliability by Consumer Reports. That's a worry because Ford's increased market share has been due in large part to customers believing that Ford cars are as high-quality as Japanese competitors.
The company has also benefited from gaining customers who liked the fact Ford did not take federal bailout money during the recession.
But Mulally says Ford has been working on fixing the quality issues for a year now, and results are starting to be seen. He says most of the problems are related to software, and so are easily fixed.
Chrysler will discuss its third quarter earnings on Friday.
GM announces its results on November 9.