Short term business news may not count for much in the midst of a deep recession, but stronger retail sales, corporate quarterly profits and declining unemployment claims are evidence that the economy is moving toward recovery.
This week, both Ford Motor Company and Toyota announced surprisingly strong results for the third quarter. Toyota reported a profit of about $242 million.
Ford’s results, bolstered by the “Cash for Clunkers” program, were even more eye-catching. The automaker reported a quarterly profit of nearly $1 billion, and announced that it “now expects to be solidly profitable” within a year.
By getting an early start on cost-cutting the firm entered the downturn with fewer factories, a leaner workforce, and money in the bank.
Despite the cutbacks, the company was able to improve its lineup. When the “Clunkers” program brought buyers back to showrooms, Ford was ready with interesting fuel-efficient models like its Focus, Fusion and Escape vehicles.
Good management and good luck is enabling Ford to finish 2009 far ahead of its Detroit rivals, and gain market share at their expense. The surprise of a profitable quarter deserves the widespread admiration it has received.
But Ford Management is willing to acknowledge that difficult days lie ahead. Chief executive Alan R. Mulally, said the outlook for 2010 remains uncertain because of the weakness of the economy.
The company has also been unable to persuade the United Automobile Workers union to agree to a deal further cutting labor costs. The UAW rejected concessions similar to those agreed to for Chrysler and General Motors. Union leaders said they were not willing to make further sacrifices while the company’s financial position is improving.
The UAW’s reluctance to compromise is discouraging to those who would like to unions play a stronger and more productive economic role. The productivity of American workers deserves to be rewarded, but it is hard to argue that labor-management collaboration is essential to the U.S. economy when large, well-established unions focus on short-term self-interest.
With the immediate future still looking bleak, the best strategy for labor, management and investors is patience and cooperation.
— Questions? Comments? Contact Managing Editor Nick Cowenhoven at nickc@journaltribune.com or City Editor Kristen Schulze Muszynski kristenm@journaltribune.com.
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