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Ford Motors Survival Attempt

Essay by   •  December 22, 2010  •  1,430 Words (6 Pages)  •  1,478 Views

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Ford Motor Company has had a decrease in progress in the past decade. "Change or die" is the latest mantra at Ford theses days, overlooked by President of the Americas, Mark Fields, the latest leader of CEO William Clay Ford Jr's bid to turn around his great-grandfather's company. On January 23, Ford reported a profit of around $2 billion but said its key North American auto operation leaked $1.55 billion last year, and project the losses to keep coming in the next two years. In an attempt to regain balance, Ford will be cutting 14 factories and up to 35,000 jobs by the year 2012. Three U.S. assembly plants identified for closing in the next three years are in St. Louis, Wixom, Mich., and Atlanta. Two other assembly plants yet to be determined will also be closed by 2008, while Ford's St. Thomas, Ontario assembly plant, with nearly 2,600 employees, will lose one of its two shifts. The seven other plants to be closed are power train and stamping plants, such as the Batavia, Ohio, transmission plant, with more than 1,700 employees. The cuts represent about 18 to 21 percent of the employees in its North American auto operations. The closings will cut even deeper into U.S. hourly employment of 82,000. Ford is also talking about changing from a culture left overstocked with gas-guzzling SUVs, and replacing it with one focused on making vehicles that customers actually want. Wall Street pushed Ford's share up but still wishes they would make larger cuts, by cutting off their struggling Mercury brand or perennial money-loser Jaguar. Daimler-Chrysler has also joined GM and Ford in slimming down by announcing cutting 6,000 white-collar jobs in the next three years.

The Automotive industry has been under tight grip the last few years. Rising gas prices and changing consumer demand has caused many companies to lost millions of dollars. In Ford's case they are cutting down on 14 plants and up to 35,000 jobs in the next 8 years. The cuts come from the North American factories which have been slowly losing more money for Ford. With these cuts, Ford faces a few problems. The company is destroying an astronomical number of jobs during an era of higher unemployment rates; they're also losing key plants such as transmission and power train plants; resulting in a loss of production. It is a bold step for Ford, but if it is ineffective it could prove fatal for the future of the 102 year-old company.

After comparing this problem with the 5 functions of management, I found that this can be classified as two different functions of management. The first and most obvious function is that of "Staffing", the act of determining human resource needs or issues and attending to them. William Ford Jr. reviewed the company's global human resources and found that the personnel at 14 different plants were not performing at the level they needed to. In turn for the lack of performance, Ford took the stand to start over from scratch and discharge the respective workers from their plants. Along with staffing I also believe this situation falls under the function of "Planning", the act of setting a goal for the business, and taking the appropriate actions to meet this goal. Ford set a goal of rebuilding the company and regaining control of the roads, while also climbing up from debt into sufficient profit. In order to make lead-way on this goal, it required that Ford Company start from its weakness. The North American auto operation cost Ford $1.55 billion last year, and expected losses in the next few years. Ford made the decision to cut down on the North American factories, and 35,000 jobs, and start from scratch. "These cuts are a painful last resort, and I'm deeply mindful of their impact," Chief Executive William Ford Jr. said in announcing the cuts. "This is the vision and strategic focus to rebuild the business. In the long run, we will create far more stable and secure jobs. We all have to change and we all have to sacrifice, but I believe this is the path to winning". With that statement and his actions, I found that this parallels not only the staffing aspect of the 5 functions, but also planning.

With Ford's decision come questions, along with benefits and consequences of their actions. Some of the current questions involve; are future jobs really going to be more secure and stable? Will all 35,000 jobs become available again in the company's future? Where will Ford Company go if this rebuilding plan fails? And the most common question is: Will this rebuilding process really guarantee profit or success in the future?

To back up Ford's decision to make these cuts are the future benefits these actions possess. Ford has been sliding economically and on the market share in the past few years, and has been in need of a change. Ford Company's biggest liability is in their North American operations, accounting for over a billion dollars in losses. Cutting down on North American factories opens up potential to produce profit in already successful areas and use it to rebound the auto maker. Another benefit is

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