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25.1.06

Ford slashes 30,000 jobs to keep shareholders happy 

I take no joy in being proved right as slashes 30,000 jobs and closes 14 plants, or a quarter of its US . It is always dangerous to sit back when the going is good, and for a long time, with the selling so well, Ford didn’t look at its lines.
   Once the top sellers in , with nameplates such as and Taurus, Ford has slipped so far down the top 10 that it’s lucky it’s still there, selling antiquated technology. closed down with cars with newer roots than the pensionable 2006 .
   It is fair to remember that Ford has managed to do well in markets such as , where the Sedan (with different bodywork to the Brazilian model) has had a great introduction. But slashing potential capacity by 1·2 million in the US could lead to poorer economies. The solution still seems very -bound, though despite that qualm, I could not say what else Bill Ford could do to keep his happy.
   Ford is a great example of share prices and the old model driving everything. Bill Ford’s new , ‘Way Forward’ is his second since he became chairman. These are all designed to placate American shareholders in the short term. But why even have slogans if they are directed at a single group of people in the ? do not work that way: the message goes to everyone.
   Mr Ford is at least right about speeding up processes, and I have always felt that its German, I mean, European, operations were growing from strength to strength as a result. Köln’s more expressive designs for 2007 and 2008 will at least prevent Fords from looking like , something that it had been guilty of (look at the CD132 Mondeo and compare it to a Mk IV Passat; or the Fiesta and Polo; or the Five Hundred and an old Audi 100). Some work at the company suggests Ford can focus (no pun intended) on its (see here)—and to me, that makes sense.
   But I worry if the capacity can be regained. The last time I heard such dire cutting of capacity for the reason of meeting demand was with . It never recovered from the loss of , although it was also true that that company was starved of investment, something that won’t do in Dearborn.

Del.icio.us tags: Ford | branding
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Comments:
Maybe Ford needs to start worrying about making better cars before it can even consider making... well, more cars?  
Well said, oblanchard, and I have taken similar stances in many of my earlier blog postings (see this post from 2003, this one from last year, and, most closely to your point, this post from October 2005. Ford has let its passenger car slide while the trucks were selling: a clumsy move. The Explorer gaffe cost it billions. I’m sure the closures would have happened regardless, though I still feel that the decision was swayed most by Wall Street.
   I personally like Bill Ford’s decision-making, generally (or, more precisely, I have come to respect him); and I am sure the guy would not have taken this decision lightly. Yet it is still a shame that management, in past years, did not try hard enough. Let’s hope that the recovery plan, with hybrids and bifuel cars on the horizon, will allow Ford to open new factories when the buyers return—and I feel the share rating will improve in six months’ time from its sub-junk-bond rating. But it needs to put the customer first, not Wall Street.
   A very logical next step would be to challenge the Camry, Accord and Altima hybrids directly by adapting the Mazda system from the Escape and Tribute into the Fusion, Mazda 6 and its variants. I think Camry has the mid-size hybrid stakes won, thanks to the Prius, but Ford needs to put up a fight. Maybe in compacts like the Ford Focus, or in a sports car. It just needs to be first in one sector, for a change.
   It also needs to look at non-steel construction and other innovations. Cars have not advanced as much between 1985 and 2005; compare that to the same period of 1945 and 1965, for instance, or 1965 and 1985. Ford should be the company to make the leap, and a recent Time interview suggests that W. C. Ford does have this in mind—again, something that I pushed for earlier in blogs (predicting much of what he said correctly).  
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Entries from 2006 to the end of 2009 were done on the Blogger service. As of January 1, 2010, this blog has shifted to a Wordpress installation, with the latest posts here.
   With Blogger ceasing to support FTP publishing on May 1, I have decided to turn these older pages in to an archive, so you will no longer be able to enter comments. However, you can comment on entries posted after January 1, 2010.


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