Lesson #1: A recession is a natural occurence, more or less, that cannot be fixed easily. Therefore, do not get in a panic and start throwing around money to try and make it better. It most likely will not work.
Lesson #2: If a company is headed in the direction of bankruptcy, let it go. Billions of bailout dollars will not save it. (Exhibit A: German retailer; Exhibit B: GM and Chrysler)
Lesson #3: If you are a company that is not headed in the direction of bankruptcy (i.e. Ford), you will be put at a disadvantage. This is the point I will go further in depth with.
General Motors and Chrysler, though bailed out and bankrupt, have two significant competitive advantages over companies such as Ford – the only one of the big 3 to not receive bailout funds, nor go bankrupt. What are these two advantages?
1. Wiping out their debt – Ford accrued a lot of debt because of the recession as well, but had been planning for a recession and therefore was not in a position of need necessarily. Ford still has this debt to deal with. GM and Chrysler do not. Because of their bankruptcy, they get to start with a clean slate, but under the same name, brand, etc. So after taking billions of government dollars, they get to start over anyway.
2. Union concessions – under the threat of losing their jobs, the CAW union members agreed to concessions in their agreements – namely a decrease in benefits. However, because Ford was not under this same pressure, the union has not agreed to any concessions. Good thing Ford wasn’t dumb enough to offer them as much as GM in the beginning.
The good thing for Ford, is that they still have the public’s trust and their dignity intact. According to the Economist, 70% of taxpayers disagreed with the bailouts. I couldn’t be more proud of Ford…I have been a Ford girl for as long as I can remember and this just makes me love them even more. And also gives me so much more material to smack-talk GM fans with.