Ford's instructive success drive

Five months ago, Ford Motor Co. declined a federal bailout. Six days ago, Ford reported a third-quarter profit of nearly $1 billion. The happy lesson of this story: One of the "Big Three" U.S. automakers isn't dependent on massive infusions of taxpayer dollars.

Yes, Washington's "Cash for Clunkers" program last summer did indirectly help fuel Ford's comeback. But the seeds of the company's ongoing rally started in 2006, when it hired a new CEO in Alan Mulally, former head of Boeing Commercial Airplanes. Mr. Mulally initiated a series of efficiency enhancements that evidently have improved Ford's product quality and price competitiveness.

Ford gained much more from "Cash for Clunkers" than General Motors and Chrysler did because consumers made its Focus, a fuel-efficient compact, and its Escape, a relatively fuel-efficient SUV, two of the top five sellers in that program. Ford also benefited from its difficult decision in June to put its fiscal house in order, not by taking bailout billions but by selling more common stock -- trading some of its debt for badly needed equity.

Though Ford, along with the entire auto industry, has been hit hard by the recession, it has made impressive marketplace advances over the last two years thanks to this tried-and-true business formula: Give the customer a good product at a good price.

That doesn't mean Ford has gained a permanent edge over its competition.

GM, Chrysler and foreign-owned automakers have implemented positive comeback strategies of their own. And Ford, apparently paying a price for its recent success, has hit a new labor snag: The United Auto Workers rejected another series of contract concessions Monday, citing Ford's profit as "evidence of the contributions" its workers have made to the company's rebound.

However, Ford's first quarterly profit in four years remains a welcome sign of better times -- and not just for the auto industry.

It's also an instructive example that huge private companies in financial trouble don't necessarily require huge bailouts of public money.