GM Paves Way for Ford

Tuesday, 2 Oct 2007 | 10:54 AM ET
Car Wars
Discussing what's next for Detroit, and how to make some $$$, with Mad Money host Jim Cramer.

Last week, General Motors struck a landmark deal with the United Auto Workers, freeing itself from part of the multibillion-dollar burden of providing healthcare for retirees. Now GM can sink much-needed funds into getting competitive in a Japan-dominated market. Expect Ford to be next in line for a business-boosting agreement with the UAW, Cramer said tonight on Mad Money.

“These two companies will become automakers again and not health-insurance cooperatives…that just so happen to sell cars,” he said.

Ford’s a better company too, according to Cramer. It beat expectations by 49 cents in Q2, and though it was still a reported loss, it was a much smaller one. All of Ford’s regional businesses surprised as well, North America the most. The company also is in a better cash position than GM, with better-than-expected cash flows and a lower cash-burn forecast.

“There’s every reason to believe that Ford will be able to extract the same heinous and exploitative, but very profitable, terms from the UAW,” Cramer said. He recommended buying some F stock before that happens.

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