Ford Motor Co. Cruises Past Toyota in China and Boeing's Leverage Wins Out

Ford and Boeing recently put the finishing touches on an outstanding year and are out of the gate in 2014 with positive news.

Jan 6, 2014 at 3:00PM

The Dow Jones Industrial Average (DJINDICES:^DJI) is flat in midafternoon trading as U.S. factory orders rose above expectations. The Commerce Department reported today that orders for goods produced in U.S. factories rose 1.8% to $498 billion for November, compared to the expected 1.6% mark. One reason for the jump was a 21.8% increase in aircraft orders. One company benefiting from the rise in aircraft orders is making headlines today for other reasons. Here are the details.

Big leverage
Contract negotiations between Boeing (NYSE:BA) and the International Association of Machinists and Aerospace Workers finally ended in a narrow agreement. Friday's vote closed with 51% in favor of Boeing's eight-year contract extension that would guarantee production of the company's next-generation 777X aircraft in Washington state. Sixty-seven percent of union voters rejected a similar offer in November.

The vote guarantees production of the 777X to Washington, including the fuselage, wings, and final assembly; politicians in the area had said that Boeing would take wing fabrication elsewhere, at the very least, if the latest offer was rejected.

There's three sides of implications from this recent development. On one side, this agreement secures thousands of jobs, as well as ensuring that Washington state remains "the aerospace capital of the world," The New York Times quoted Gov. Jay Inslee as saying after the vote.  

The vote is also a major win for the company, which can now replace its pension-style retirement plan with a 401(k)-style contribution plan. In an era in which large corporations have tens of billions in underfunded pension obligations, this will be a huge move to cut costs.

For investors, this is a win for two reasons. One, it removes a huge amount of uncertainty regarding where the 777X will be produced while also assuring Boeing won't be hit by any machinist strikes through 2024. Also, had Boeing actually taken more than just its wing production out of its Everett, Wash., plant, the company would have likely faced manufacturing problems as the new workforce gained experience in actually building the 777X -- a potentially costly setback for Boeing, its customers, and its investors.

In another manufacturing industry, Ford (NYSE:F) today reported significant sales progress in China, the world's largest automotive market.

Graph by author. Information from Ford's monthly sales releases. 

Ford was late to join the sales race in China and is a significant distance behind U.S. rival General Motors (NYSE:GM) in the nation. Ford announced today it sold more than 935,000 vehicles in China last year, a 49-percent increase from 2012, as its Focus continues to sell extremely well and new models gain traction.

While Ford will likely sell more than 1 million vehicles in China this year, it will still be far behind General Motors and Volkswagen, which are each expected to announce 2013 sales that top 3 million units. The folks at the Blue Oval obviously have a long ways to go to reach that level, but Ford's nearly 50% growth in 2013 was enough to pass Japanese rivals Toyota (NYSE:TM) and Honda, which respectively sold 917,500 and 756,882 vehicles last year in China.

Ford had trailed the two Japanese automakers in China for much of the last decade. It now has a chance to keep its lead while completing the goal of doubling Ford's Chinese market share from 3% to 6%, fueled by 15 vehicle launches by the end of 2015.

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Fool contributor Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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