The Turnaround At Ford Company

Better Essays
The Turnaround At Ford

The Ford company had always been a major player in the growth of the US economy, being one of the Big Three (along with GM and Chrysler) in the US automobile industry. Ford has been credited for having made the automobile attainable to the middle-class that emerged through the 20th to the 21st centuries, due in part to its refinement of the assembly line concept. It was the first manufacturing company to make use of the moving assembly line, which created so much efficiency that made owning a car highly affordable to the common American.
So for decades, Ford and the automotive industry had been one of the leading big employers in the US, contributing to its booming economy. For years, US carmakers like Ford
…show more content…
To compound matters, the accompanying financial crisis of the 2008 recession spurred the industry to slash costs and boost efficiency. The Big Three scrambled with their own restructuring efforts that included factory closures, divesting of nonperforming models and brands, and most of all – decreasing labor costs. (Davis, 2012) The Big Three, of course including Ford, now were faced with a huge labor machinery that it was not able to sustain – especially with a labor force that is ageing, has relatively higher wages vis a vis foreign carmakers’ workers, as well as very competitive retirement benefits packages.
Another important factor that contributed to the labor surplus in Ford, as in the US auto industry, is the fact that before, the unions kept a lot of auto workers happy and contented in their work environment for decades. Some Ford analysts blame those "legacy costs" (e.g. retiree health care and pensions) for adding to Ford’s troubles. When the economy was booming, the unions coddled the workers, while the Big Three reveled in their seemingly immovable positions.
Nobody read the signs of the times and so were caught unawares that economic conditions were changing, or when they did, believed that the automakers could handle it, as much as they handled the 1973 oil embargo. (Davis, 2012) Ford, like the big US carmakers, did not foresee that the increased globalization and the elimination of international trade protection laws brought in more
Get Access