Problems in Ford Motor Company

Any talk about complacent people is not complete without the mention of the big American automobile companies - General Motors and Ford. In a country where the love for cars is only second to love for beer, declining auto sales is a very bad sign. Ford and GM are no longer the legendary names that they used to be but huge dinosaurs awaiting their doom. Let me restrain myself to discussing about Ford today.

Ford is a company which changed the way the world travels. It was the first company to mass-produce cars, which were until then a luxury reserved only to the rich. It revolutionized manufacturing and empowered the common man. But now the company is dire straits and is making company wide layoff's in an effort to cut costs. There are departments in Ford where more than 30% of the staff were fired. Things do not look any better for the future since Ford plans on further "trimming" its white-collar staff. Such company wide cuts, if lasts for a long period, would bring down the employee morale and scare away top brains to competitors.

We should analyze the reasons for such a crisis. Firstly, I think Ford Motor Company lost its foot by not making the right calls at the right time. A company which made the legendary Mustang - the most popular muscle car of all times, didnt forsee the need to make fuel efficient cars. Also Ford lost out to the Japanese car manufacturers on reliability and durability issues. The number of recalls are much greater for Ford ( and other American manufacturers) when compared with Japanese manufacturers.

The most outrageous recall I have heard is the recall of 2000 Ford trucks for the replacement of its cruise control switch. Ford has been using the switch on many of its models from 1992 to 2003. It has been found that these switches can catch fire without any warning posing danger to life and property. The CNN website recommends you to "park your vehicle away from your house". You should probably park your vehicle away from all human and animal habitation (or in a junk yard) to prevent causing any damage.

The automobile industry is in a crucial phase now while it is preparing itself for a change in technology. The good old internal combustion engine would soon be replaced by cleaner technologies like fuel cells. To prepare for such a transition a company needs to invest a lot into research and development. The amount of profit you make today will determine the amount you are going to invest in R&D and eventually the amount of profit you are going to make tomorrow. It is possible that a small slip could fast turn into a downward spiral. Ford already lags behind Toyota and Honda in Hybrid Technology. Ford Escape-Hybrid, the so called "world's first hybrid SUV" has technology heavily borrowed from Toyota.

All said, it is possible that Ford sees the bottom of the slope and starts climbing again. After all it is still one of the largest manufacturers of SUVs and pickup trucks. Perhaps the solution for Ford's cost crisis lies outside United States - in countries like India and Mexico, which provide the same cutting edge technological support at a fractional cost. But the true solution out of its current position could come not by cost cutting but by innovation. Ford can regain market share only if it come up with exciting, fresh ideas ahead of its competitors. Only the future will say whether this would happen.