Under gray clouds, flashes of normal

Jesse Snyder is senior writer at Automotive News.
Automaker pays debt early.

Don't know if that headline excites you, but it does me.

Because it applies to not one, but two, Detroit automakers.

General Motors will repay $1 billion to the feds this week, part of retiring its (public) rescue debt by summer. Ford will spend up to $3 billion this year to pay off early part of a loan due in 2013.

Hardly flashy. No touchdown pass.

Just basic, fundamental plays. Blocking and tackling.

Both acts are routine things that normal companies do. When a company generates some cash, it's sometimes more prudent to pay off higher-cost debt than take a profit.

Don't get me wrong. Neither GM nor Ford is anywhere close to normal.

Ford would cut its debt a smidge to $32 billion. That's still a lot of zeros.

GM is just months out of bankruptcy, alive only by government edict. Paying back the feds is more to convince skeptical car buyers GM has (and deserves) a chance than to demonstrate health.

We're not even talking about Chrysler's circumstances, although Sergio Marchionne and his board are wise to slash incentives and minimize cash burn until new product arrives. Until then, it's hunker down, dig in, stay alive.

No, I'm excited because Ford and GM can do things that healthy companies do. GM isn't scoring yet, but it's at least playing offense again. Ford is scoring but still must prove it can win.

But you can't pay down debt without some cash flow. That's the point: These payments are normal stuff.

Do some normal, add more normal, keep it up and eventually, things become normal.

And after the past two years, normal sounds pretty good.

Tags: Blog

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