Ford Contract to June 2014 Aspertheoldman - just to clarify that your last post was written before the new contract. AM's contract with Ford is not up at the end of June. That would make me very nervous. A new contract with Ford was signed last year which goes until June 2014. Furthermore, AM has been asked by Ford to quote on a new vehicle program for Oakville, scheduled to launch in the second half of 2014. Plus AM has a contract signed with its labour force to June 2014.
Ford Canada sales are reported to be up in the first quarter, with 15% growth expected for the year. At the end of January, David Baskin, with a BUY on Ford, said the age of the automobile fleet in North America "is older today than it has been any time in 40 years. A lot of people and companies deferred replacing their vehicles. Personal incomes are rising in the US, which leads him to believe those cars will be replaced." End of February, Prakash Hariharan chose Ford as a TOP PICK saying "This is a company that has been having great operating success and great leverage to its franchises compared to the other Big 3. Great turnaround from 2008. Has been gaining market share in China." In March, John O'Connell said don't buy Ford but also said "the financing market for car loans is opening up. It (Ford) has been very well run compared to the two largest NA competitors" and said he prefers auto suppliers like MG. Ford was a Top Pick of Colin Stewart February 7th: "Likes US auto business. Shares were really depressed. Still well below traditional average of sales in US. The US Fleet is old and a replacement cycle is going on".
This is a cyclical industry and the market will wax and wane. We just happen to be in the positive part of the cycle and this should be very good for AM. I am taking a 12 - 24 month investment view, during which time, Ford is unlikely to 'sneeze'. The fact that AM was successful in extending the Ford contract attests to the fact that their product/manufacturing are is very high quality and competitively priced.