Detroit Automakers Turn Back the Clock on the Arsenal of Democracy -- Investors Should Cheer
The move to go after more incremental revenue through the defense business is encouraging, but there's more for investors to cheer about.
Overview
Detroit automakers Ford Motor Company (NYSE: F) and General Motors (NYSE: GM) are fighting a new kind of war: one against the narrative that automakers are low-margin and capital-intensive. The automakers are doing this by entering new businesses, such as Ford with its battery energy storage systems and General Motors with its high-margin subscription services for OnStar and Super Cruise.
Both are also turning back the clock and getting back into the defense business to support the U.S. military. GM's first delivery of Patriot missile parts to Lockheed Martin is the most recent example of its growing value to investors.
Details
It's a little buried in Ford's and General Motors' histories, but many forget that during World War II, both Detroit icons halted civilian car production to manufacture a long list of weaponry, vehicles, and aircraft. General Motors converted more than 100 plants and factories to build everything from airplane engines to machine guns and tank components. Ford similarly used its massive production capacity to deliver thousands of jeeps, heavy-duty military trucks, and even complete B-24 Liberator bombers to the military.
Source
Originally published at www.fool.com.