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Monday, 22 February, 2010 3:10 AM

Ford, GM and Chrysler are on the way to being profitable very soon, panelists say

PHOTO BY JASON RZUCIDLO / ©AMERICAJR.com

From left to right: SAE International CEO David Schutt, Center for Automotive Research Chairman Dr. David E. Cole, Autoline Detroit Host John McElroy, Automotive News Editor Jason Stein and OESA President and CEO Neil De Koker.

TROY, Mich. -- Detroit's Big Three automakers should all be profitable in the next two to three years. At least, that is what four panelists agreed at the SAE Detroit "State of the Industry" meeting last Tuesday at the San Marino Club in Troy.

Dr. David E. Cole, Chairman of the Center for Automotive Research (CAR); Neil De Koker, President and CEO of the Original Equipment Suppliers Association (OESA); John McElroy, Host of Autoline Detroit and Jason Stein, Editor of Automotive News were the panelists at the meeting. David Schutt, Chief Executive Officer of SAE International was the moderator.

Ford Motor Co. said it earned $2.7 billion in 2009 and expects to be profitable again this year. General Motors CEO Ed Whitacre hopes the automaker will make a profit this year also. Chrysler is expected to make money in two to three years. By 2014, all three Detroit automakers are predicted to be back in the black.

"Even though its been brutal and a lot of innocent people lost their jobs, these companies are now very, very competitive," said John McElroy, host of Autoline Detroit and Autoline Daily. "They can go out in the rest of the world and compete against the best. Very importantly, we can now build small cars in the United States with U.A.W. labor and make a profit on it. That's how big of a change we've had with this restructuring."

McElroy said he expects Chrysler to be at a break-even standpoint. He thinks Ford will report all-time record sales in two to three years. "This town is going to rock and roll and make money like it never has before," McElroy added.

"We represent about two-thirds to three-quarters of all the employment in the automotive industry," said Neil De Koker, President and CEO of the Original Equipment Suppliers Association (OESA). "The suppliers are doing amazingly well when you consider that we are operating at about 50 to 55 percent capacity utilization. It is absolutely amazing that very few have disappeared."

De Koker said the auto industry is still facing constrained bank lending. He said suppliers are facing overtime premiums that need to be addressed. Ford has made a 53 percent reduction in suppliers, Chrysler has made a 50 percent reduction in suppliers and General Motors has made a 30 percent reduction, the president and CEO of OESA said.

"The most serious problem is education," said Dr. David E. Cole, Chairman of the Center for Automotive Research (CAR). "Ninety percent of people buy cars on credit. This has to improve. I think lithium battery is real. I think it will be economic. The idea of the $2,500 Nano isn't going to happen. An opportunity is coming. The plethora of powertrains is incredible. The automotive industry may be one of the positive parts of the economy."

Cole said the minimum production age is a community college degree. He believes in the lithium battery for hybrid and electric vehicles. However, Cole doesn't think the Tata Nano $2,500 car will be a hot seller in the United States. He says that total vehicle sales of 12 million units can be successful. Cole believes the automotive industry creates a great future for college graduates as there will be many new jobs opening up.

"It's good be alive in 2010, what a world unimaginable, heartbreaking and totally changed," said Jason Stein, Editor of Automotive News. "By 2014, six United States automakers will be producing 180,000 clean running cars. BMW is filling the pipeline with more 6-cylinder engines. Sergio Marchionne hates days off. Where doe this merger end up? He needs Americans to make rapid shift to European cars. General Motor's once-damaged brands are cleared out. The key in Europe or America is revenue."

Stein said North Americans are more focused on improving fuel efficiency and cutting CO2. He said that Volkswagen wants to take the lead in electric vehicles. Stein said he is not sure if electric vehicles are worth the money at $2.75 per gallon of gas. He was very supportive of the cash for clunkers program because it caused sales to increase and it created new jobs.

"The economy is getting better so therefore we are selling more cars," said Susan Collett, Chairperson of the SAE Detroit Section. "It's good news for all of us."

The next SAE Detroit meeting will be held on Wednesday, April 14 at 5:00 p.m. during the SAE World Congress at Cobo Center.

"At Congress, we have student exhibits, competition as well as a dinner meeting," Collett added. "At that meeting, we're going to feature the Ford Fiesta. Otherwise, we're just related to it. We support it as best as we can."

For more information on the SAE Detroit Section, visit www.sae-detroit.org.

PHOTO BY JASON RZUCIDLO / ©AMERICAJR.com

Dr. David E. Cole, John McElroy, Jason Stein and Neil De Koker

PHOTO BY JASON RZUCIDLO / ©AMERICAJR.com

SAE International CEO David Schutt with the four panelists during the question-and-answer session.

PHOTO BY JASON RZUCIDLO / ©AMERICAJR.com

Four panelists at the SAE Detroit "State of the Industry" Section Meeting on Feb. 16, 2010.

PHOTO BY JASON RZUCIDLO / ©AMERICAJR.com

About 750 people attended the SAE Detroit Section Meeting.

PHOTO BY JASON RZUCIDLO / ©AMERICAJR.com

Supply Base Consolidation slide created by OESA President and CEO Neil De Koker.