The Ford Motor Company has been a powerful automotive company since its foundation in 1903. Founded by Henry Ford, the company quickly became a leader in innovation, notably inventing the assembly line process which allowed for cheaper production of cars for Americans to enjoy. Ford Motors survived the Great Depression and every recession since then, but the International Financial Crisis of 2008 affect it differently. US automakers heavily influenced by the crisis, as GM, Chrysler, and Ford were folding under due to many reasons, namely international competition, healthcare coverage, and the tightening of the American wallet due to the financial crisis (Isidore & CNNM, 2016). Ford, unlike its competitors, did not take any of the Troubled Asset Relief Program (TARP) money from President Obama’s stimulus package, a surprising move when the company’s profits were down $14.6 billion in 2008 (Vlasic, 2014). However, the leadership of then CEO Alan Mulally spared Ford the government debt that the other automakers saw.
Though Ford was losing considerable amounts of money before the financial crisis began in earnest, its executive management team made an important decision. In 2006, they decided to mortgage much of their assets in order to raise $18 billion to move the company in a new direction (Bunkley, 2006). The company received criticism for this decision, but is now praised for foreseeing the future financial crisis, and understanding that credit would be difficult to come by. Ford Motors did receive government loans in 2008, but for a different purpose. The US government allowed Nissan, Tesla, and Ford to receive money from the Term Asset-Backed Securities Loan Facility (TALF), in order to help accomplish government’s goal of increasing the number of electric cars on the highway (Kimbrough, 2015). Ford also received significant funding from the Department of Energy’s Advanced Technology Vehicle Manufacturing program, totaling $8.8 billion (Muller, 2012).These funds allowed the auto giant to revamp its factories, and steer the company into a new niche market. This became part of Ford’s shift to smaller, more efficient vehicles.
Ford entered the hybrid/electric vehicle (EV) market, and enjoyed moderate success until 2012, when sales decreased significantly (Savin, 2012). Currently, Ford’s BMW i3 Hatchback is the second best-selling electric car in the UK (Limited, 2016). The company remains committed to electric cars, though the company’s shares have fallen to their lowest point since 2012. Numerous factors have decreased Ford’s stance as an electric brand leader, notably competition from Tesla and General Motors. One challenge faced by Ford is the expense of lithium batteries, something current CEO Mark Fields must overcome. Ford has been trying to create a partnership with Google for a few years to create self-driving vehicles, among other advances. This goes to show how their management is focused on being tech-savy.
Ford’s exports to Europe took a shock in 2011, but recovered by 2014. In fact, Ford made its first profit in Europe for three years in 2014.This had more to do with the financial crisis deepening in Europe and recovering than any decision by Ford. Ford has long been among the most popular car brands in Europe, and they can be seen dotting highways and city streets from Madrid to Moscow. According to Ford’s Sustainability Report, the company finished a 2.3 billion euro investment in Valencia, Spain in 2015 (n.d), and also conducted numerous “mobility experiments” that helped ease traffic congestion while increasing public opinion. Ford achieved a profit in Europe of $259 million in 2015, but decided in February of this year to increase layoffs in Europe, as they are expecting a larger global financial crisis to begin (Zaman, 2016). Ford projects their European sells will remain on the rise, despite the impending economic issues.
Most importantly was former CEO William Ford’s decision to step down in 2006, and hiring Alan Mulally, someone relatively new to the industry itself (Hammond, n.d.). Bill Ford was CEO and a board member of several other companies, and could not directly manage the automotive giant anymore. Mullaly was heralded as an expert at turning failing companies around, and he had experience as the CEO of Boeing Commercial Airplane. Mulally helped the company generate $23.5 billion in loans, without taking bailout money, which significantly increased the company’s image in the eyes of US consumers (Leggett, 2014). Mulally said the largest challenge he faced was within the workplace, as his managers were not working as on coherent unit (Leggett, 2014). Managers were reluctant to share information of failures, meaning that a lot of problems could not be resolved. Therefore, changing the corporate culture was a necessity. Mullaly directly helped preserve Ford.
Ford’s stock gained in 2008 as investors noted they were not receiving federal bailout money, increasing confidence in the company’s financial strength.
Ford’s current success in the current international climate is due primarily to their foresight and planning. By focusing their US markets away from their traditional fame of big trucks and sport vehicles, they entered into a unique niche where their primary competitors could not compete. The reimagining of their production chain into hybrid and EV fields allowed them some flexibility as to where their profits came from. The corporate team also invested heavily into reengineering models that were already on the market, increasing their reliability, fuel efficiency, and aesthetic appearance. The company focused on restructuring and lean operations, demonstrating the effect that good management and strategic decision-making can do for companies that are currently unprofitable. As an example of their commitment to more efficient operations, Ford has announced their plan to run companies on a three-shift or crew model by 2017 (Quintaro, 1969). Ford’s management has increased Ford’s reputation to the sixth largest automaker in the world, and their unique streamlined system has increased productivity and efficiency at a time where most businesses and automakers were shrinking. Thus, Ford is a wonderful example of great leadership, saving one of the oldest automakers in the world from folding under.
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