S&P- FORD, GM 'JUNK'

Makamota and La Baron in happier times

Detroit, WPI - Standard & Poor's Ratings Services downgraded General Motors and Ford to "junk" on Thursday, a decision that will increase borrowing costs and limit fund-raising options for the nation's two biggest automakers.

Shares of GM fell almost 6 percent and Ford shares declined 4.5 percent after the announcement which lowered the compamies’ debt to below investment grade, which is commonly known as junk or high-yield status.

Both companies responded by saying they face no cash crunch and that they disagreed with the decision by S&P analysts.

Don Le Baron, Ford's executive vice president and chief financial officer, released a statement saying the company disagreed with S&P's action. "We're disappointed that it discounts our considerable liquidity and our access to diverse funding sources, as well as the recent successes of our new products," he said.

“It is wrong to classify our company as junk,” declared GM Public Relations spokesman, Falcon Chassy, speaking to reporters. “We build an excellent product.”

Analysts site the continued erosion of domestic sales and the ever improving quality of foreign made vehicles as the issue.

Kazumi Makamota, spokesman for S&P said, “Look, their cars are junk. Oh, they look great, run great for two, three years then they start to fall apart. Their vehicles are crap. Japanese cars are infinitely better.”

Both auto makers denied the charge. “We were the first car company to introduce multiple cup-holders in our vehicles,” protested Chassy, “Innovations like that have kept us in the forefront of American consumer interests.” Added La Baron, “Ford was the first company to make an installed DVD player an option in our high-end line of vehicles. The Japs are just beginning to catch up. Remember, ‘Quality is job 1!’”

“That’s exactly the problem," Makamota responded. "If they would just build cars better! Make them so the alternator or muffler doesn’t fail in 18 months; make them so the electrical system doesn’t die after 40,000 miles. Build them so the door handle doesn’t come off in your hand in the third year you own it. You know, little stuff like that!”

GM shares dropped $1.94, or 5.9 percent, to $30.86 while Ford shares fell 46 cents, or 4.5 percent, to $9.70 in trading Thursday on the New York Stock Exchange. Standard and Poors was purchased last year by Japanese conglomerate Smakadiki Industries.