strategic-management

18
Ford Motor Company — 2009
Alen Badal
The Union Institute
F
www.ford.com
Ford recently received $5.9 billion in Energy Department loans to help retool its plants
in Illinois, Kentucky, Michigan, Missouri, and Ohio to produce 13 fuel-efficient models,
including 5,000 to 10,000 electric cars per year starting in 2011. In mid-2009,
Nissan Motor was granted $1.6 billion in loans also from the U.S. Department of
Energy to build as many as 100,000 electric cars a year at its plant in Smyrna,
Tennessee, by 2013.
Ford’s newest competitor may be the U.S. government because GM and Chrysler
LLC are in line to get $62 billion in investments from the U.S. Treasury. GM and
Chrysler have cut their debt and closed hundreds of dealers with that money, while Ford
still has $33 billion in debt including its obligations to retirees. Since CEO Alan Mulally’s
arrival at Ford in 2006, the company has cut 40,000 jobs and closed 17 plants, reducing
costs by more than $5 billion. Ford has a $10 billion note that comes due in 2011.
Ford increased its production 16 percent in the third quarter of 2009 versus the third
quarter of 2008. This was good news for Ford shareholders and customers. In May 2009,
Toyota posted a $4.4 billion loss for its fiscal year, the first time Toyota posted an annual
loss since 1963. Virtually all automobile companies are suffering in the bad economy. Ford
is on track, however, to break even or perhaps make a profit in 2011.
Ford is also trying to sell its Volvo division but has decided to wait until GM completes
the sale of its Opel division in efforts to get a higher price for Volvo. Three firms as
of August 2009 were bidding on Volvo: Geely Holding Group, Beijing Automotive
Industry Holding, and a Europe-based group of investors. Sales of Volvo in the United
States fell 36 percent in the first six months of 2009 as compared to 2008.
An American icon for over a century, Ford’s revenue decreased from $172.5 billion
in 2007 to $146.3 billion in 2008. Born in 1863, Henry Ford founded Ford Motor
Company in 1903 and launched the Model T in 1908. Henry died in 1947. The greatgrandson
of Henry, William Ford, is today chairman of the board of Ford. Exhibit 1 features
the leadership of the Ford Motor Company. Ford’s icon vehicles, such as the Mustang
and the F-150 truck, can be spotted on the roadways worldwide.
Headquartered in Dearborn, Michigan, Ford has a 13.8 percent market share of the
auto industry as of February 2009, as compared to 17.5 percent in 2007. Ford Motor operates
two service businesses: Ford Motor Credit Company and Genuine Parts and
Motorcraft.
Ford manufactures and distributes automobiles across six continents with a team of
about 246,000 employees. The company operates about 108 plants globally and produces
such models as Ford, Lincoln, Mazda, Mercury, and Volvo. The company has sold its
Jaguar, Land Rover, and Aston Martin businesses.
The subsidiary, Ford Motor Credit Company, offers auto financing to both dealers
and customers globally. The company also assists dealerships with funding for such