What a difference a year makes. Twelve months ago the U.S. auto market was in the tank, along with the U.S. economy. General Motors and Chrysler were being radically restructured at the behest of a White House-appointed auto task force headed by Steven Rattner, a Wall Streeter with no automotive experience.
Despite what seemed like chaos at the time, the quick trips through Chapter 11 for GM and Chrysler worked. They used bankruptcy to whack plants, executives, employees and dealerships, plus a mountain of debt. At GM, four brands were eliminated.
Ford Motor Co. has accomplished its own refocusing without government-imposed bankruptcy to eliminate debt from its balance sheet, unloading several brands in the process. It earlier had hocked everything in sight, including its logo.
The Detroit 3 also have gotten a big hand from their workers. In 2007, the UAW allowed the companies to unload enormous retiree health care costs into trusts administered by UAW appointees. The union also accepted an eventual two-tier pay plan for new hires and agreed to reduce the time that laid-off workers in the Jobs Bank can collect nearly 95 percent of their pay.
As a result of the restructuring, the Detroit 3 today seem ready to take advantage of the improved auto market.
Things aren't back to where they were or even any place that might have been considered normal before the bottom fell out. But market conditions are markedly better than a year ago. In the first quarter of this year, Ford posted pretax income of $2.1 billion, and GM reported $1.3 billion. Chrysler said it had an operating profit of $143 million and generated $2 billion in cash.
But it is way too early for any of the Detroit 3 to consider spiking the ball in the end zone. Now is the time to stress manufacturing, design and marketing fundamentals — the automotive equivalent of blocking and tackling.