At Least Ford Got the Message from Consumers
Historic Automaker Is Determined to Become Relevant Again
Apr 16, 2009
Henry Ford would have winced as his ‘baby’ strayed, but would recognize now that his company finally has more going for it than its two home based counterparts. Ford Motor Company is returning to the production of market relevant automobiles- built-in quality, fuel efficiency, environmental friendliness.
Broke the Mantra
What this means is Ford has finally broken away from the mantra of building obsolescence into vehicles- a practice the “Big Three” North American auto makers have been accused of engaging in for much of their histories.
Decades ago, Toyota and the rest of the off shore industry in Japan, Europe and South Korea saw the growing disillusionment of North American consumers over domestic vehicles that were built to disintegrate within a few years. They also saw the consumers’ thirst for quality. So, right under the noses of the North American auto industry, offshore automotive manufacturers built and sold the kind of high quality, long-lasting and fuel-efficient vehicles that consumers wanted. Their sales soared.
Ford Got It
The Big Three watched but didn’t catch on. Ford eventually did get it. The other two still haven’t. Instead, the top dogs at GM and Chrysler recently hustled off to Washington in their corporate jets to prostrate themselves before a U.S. congressional committee, groveling for billions of taxpayer bailout dollars.
Meanwhile, Ford startled the stock market and the newly minted government of President Barack Obama by declining financial assistance.
Brilliant Financing
The question is how did Ford do it. Just a few months ago, the company’s bondholders agreed to take 38 cents on the dollar in return for future cash and equity. This flash of brilliance cut $10 billion from Ford’s debt load, thereby reducing annual interest costs by $500 million.
There is other evidence that Ford Motor Company has rediscovered some of their founder’s inventive flair. Not the least of these is Ford’s handing of the eco-technological revolution in the automotive industry amidst the worst global recession since the Great Depression.
Ford’s new generation of vehicles are finding a fast-growing acceptance among discriminating consumers, alongside market leaders like Toyota. By this time next year, Ford expects to replace almost half the vehicles now in its showrooms with environmentally-friendly, fuel-efficient hybrids.
Better Ideas
Ford did have a better idea than its two home-base counterparts – putting substance behind its promise of quality.
Perhaps it is no accident that the helm at Ford is occupied by Henry’s great grandson, William (Bill) Clay Ford Jr., the company board’s executive chair. He has built a solid reputation for environmental responsibility and, like his great grandfather, has a deep respect for the people who will make the difference between the company’s success and failure.
At last count, Ford worldwide had more than 200,000 employees working in 90 plants producing its well-known product lines: Ford, Lincoln, Mercury and Volvo. The company derived its 2008 revenues of $146 billion from manufacturing and distributing these vehicles in 200 markets on six continents, and from financial services provided by Ford Motor Credit Company.
Ford is not out of the woods yet by a long shot. Its 2008 revenues of $146 billion represented a sharp drop from the $172 billion in 2007 and the $160 billion of 2006. But its renewed emphasis on quality, economy and environmental responsibility has put it back in contention as a key player in the world automotive industry, while GM and Chrysler carry on with their struggles for survival.
