Detroit Free Press - In the days ahead, the Detroit Three will report their second-quarter financial results and kick off national labor talks with the UAW.
The post-recession financial picture painted by those results should play a big role in shaping the background of the talks, which open today with Chrysler, Wednesday at General Motors and Friday at Ford.
The Detroit Three are likely to report combined profits of more than $4 billion, before one-time charges, despite the challenging economic backdrop of the last three months.
"We had the gas price spike and natural disasters ... and then, of course, we had the slow economy that is not doing anybody any favors," said Rebecca Lindland, automotive analyst for IHS Automotive.
Individually, the performance of GM, Ford and Chrysler is expected to be mixed.
On Tuesday, Chrysler is expected to report a profitable second quarter. That would be the second in a row, following a profit of $116 million in the first quarter. Although that's an important building block, it's far from a full recovery.
For the first time, Chrysler also will report its earnings in conjunction with its Italian owner, Fiat. It's also widely expected that Chrysler and Fiat CEO Sergio Marchionne will this week reveal his vision for a combined global auto company.
Ford, which also reports earnings Tuesday, is likely to fall short of its strong year-ago earnings of $2.6 billion.
GM, which is to report its performance in early August, will likely exceed last year's second-quarter earnings of $1.3 billion, but its results could be clouded by a buildup of pickup inventory that has Wall Street nervous.
Challenging 2Q could throw a wrench in recovery
As General Motors, Ford and Chrysler prepare to begin reporting second-quarter earnings, Wall Street will be watching the results just as carefully as it will be watching contract talks that begin this week with the UAW.
"Investors have been conditioned to fear the worst" about union talks, Morgan Stanley analyst Adam Jonas said in a report Thursday.
Chrysler is first at the plate, and it is hoping to deliver its first full-year profit since 2005, when it reported an operating profit of $1.5 billion as a unit of DaimlerChrysler AG.
In the first quarter, Chrysler reported a profit of $116 million, putting the Auburn Hills automaker on track to exceed Fiat and Chrysler CEO Sergio Marchionne's forecast for a profit of $200 million to $500 million for the year.
But the second quarter was challenging, and industry watchers will keep an eye on how Marchionne restructures Fiat and Chrysler as he seeks to further consolidate the two companies into a larger, single, global automaker.
They'll also be looking for more information about the timing of Chrysler's expected 2012 IPO.
