[OAC_Sparky]

reldridge,Jul 25 2008, 10:52 AM Wrote:The huge loss is good and bad... If you look at the fine print, $5.3 billion of it is labeled as "North America Long-Lived Assets", which is being speculated as dumping all of the hardware that was used to make trucks and sport utes and retool for the new compact cars.[right][snapback]269383[/snapback][/right]

Actually, no.

This is how this announcement works.

1) Remember the Ford/UAW contract that everyone gushed over last year? The one that shed all of that "legacy cost" that people like to quote where Toyota pays $50 an hour per employee and Ford pays $70 per, yet we make about the same an hour (whether you realize it or not)? Part of that "legacy cost" reduction was the creation of VEBA (Voluntary Employee Beneficiary Association) where the Union handles the retiree benefits? It was this quarter that Ford had to make the $4.5 Billion contribution to set up the fund.

2) It you buy a house valued at $300,000 , and the city you live in goes through economic decline, your house value might diminish to $250,000 . So, on paper, you lost $50,000 . When Ford closes plants, the area around the plants diminish in value. The plant diminishes in value. All of these are "asset write downs". Asset write downs aren't always a bad thing, believe it or not. Less value means less taxes. But either way, Ford didn't lose that $3B in cash, it's on paper. Just like stock, a paper loss doesn't become a real loss untill you sell the stock.

Did anyone actually look at what Ford actually lost? Only $1.3B (North American operations). Not great, I'd be the first to admit. But considering the hit that gas is making on the truck and SUV market it wasn't unexpected.

Of course, all this doesn't make great headlines. Alarmist mentality and speculative trading is why we're paying $1.25+ /L for gas. Just like the whole 3rd shift hiring thing. And I know many of you are affected from it -- and I'm not making light of it -- but did you see the headlines about it?

"More layoffs at Ford"
"Ford cancels 3rd shift"

The reality is that Ford will still have a third shift in body and paint for the time being. The trim/final line, scheduled for 8 hours but can be forced to work 10s . Oakville is still taking the 150 or so that are transferred in from Windsor. Nobody got "laid off", the 300 or so hires got put on hold. And I know it sucks for those of you that are waiting, I have a friend that I gave my application to waiting too. But the media loves this s***, telling half the story.

If you want to actually look at the real story that Ford has the legal obligation to report to its shareholders, look here:

http://www.ford.com/doc/ir_20080724_2q08_earnings.pdf