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Ford Motor Company

Ford Motor Company

One American Road
Dearborn, Michigan 48126-2798
U.S.A.
Telephone: (313) 322-3000
Toll Free: (800) 555-5259
Fax: (313) 845-6073
Web site: http://www.ford.com

Public Company
Incorporated: 1919
Employees: 327,531
Sales: $164.1 billion (2003)
Stock Exchanges: New York Pacific Euronext Paris Swiss London
Ticker Symbol: F
NAIC: 336111 Automobile Manufacturing; 336112 Light Truck and Utility Vehicle Manufacturing; 33612 Heavy Duty Truck Manufacturing; 33621 Motor Vehicle Body Manufacturing; 532112 Passenger Car Leasing; 524126 Direct Property and Casualty Insurance Carriers

As the second-largest automobile company in the world, Ford Motor Company represents a $164 billion multinational business empire. Known primarily as a manufacturer of automobiles, Ford also operates Ford Credit, which generates more than $3 billion in income, and owns The Hertz Corporation, the largest automobile rental company in the world. The company manufactures vehicles under the names Ford, Lincoln, Mercury, Jaguar, Volvo, Land Rover, and Aston Martin. Ford also maintains controlling interest in Mazda Motor Corporation. Ford's financial stability was shaken in early years of the new millennium as a result of slowing sales, quality issues, and a debacle involving Firestone tires.

Origins of an American Legend

Henry Ford, the founder of the Ford Motor Company, was born on a farm near Dearborn, Michigan, in 1863. He had a talent for engineering, which he pursued as a hobby from boyhood, but it was not until 1890 that he commenced his engineering career as an employee of the Detroit Edison Company. In his spare time, Ford constructed experimental gasoline engines and in 1892 completed his first gasoline buggy. Dissatisfied with the buggy's weight, he sold it in 1896 to help fund the construction of a new car. Ford's superiors at the electric company felt his hobby distracted him from his regular occupation and, despite his promotion to chief engineer, he was forced to quit in 1899.

Shortly afterwards, with financial backing from private investors, Ford established the Detroit Automobile Company. He later withdrew from the venture after a disagreement with business associates over the numbers and prices of cars to be produced. Ford advocated a business strategy which combined a lower profit margin on each car with greater production volumes. In this way, he hoped to gain a larger market share and maintain profitability.

Independently in a small shed in Detroit, Henry Ford developed two four-cylinder, 80-horsepower race cars, called the 999 and the Arrow. These cars won several races and helped to create a new market for Ford automobiles. With $28,000 of capital raised from friends and neighbors, Henry Ford established a new shop on June 16, 1903. In this facility, a converted wagon factory on Mack Avenue in Detroit, the Ford Motor Company began production of a two-cylinder, eight-horsepower design called the Model A. The company produced 1,708 of these models in the first year of operation.

The Ford Motor Company was sued by the Licensed Association of Automobile Manufacturers, an industrial syndicate which held patent rights for road locomotives with internal combustion engines. Ford responded by taking the matter to the courts, arguing that the patent, granted to George B. Selden in 1895, was invalid. During the long process of adjudication, Ford continued to manufacture cars and relocated to a larger plant on Piquette and Beaubien Streets. A Canadian plant was established in Walkerville, Ontario, on August 17, 1904.

Henry Ford and his engineers designed several automobiles, each one designated by a letter of the alphabet; these included the small, four-cylinder Model N (which sold for $500), and the more luxurious six-cylinder Model K (which sold poorly for $2,500). The failure of the Model K, coupled with Henry Ford's persistence in developing inexpensive cars for mass production, caused a dispute between Ford and his associate Alexander Malcolmson. The latter, who helped to establish the company in 1903, resigned and his share of the company was acquired by Henry Ford. Ford's holdings then amounted to 58.5 percent. In a further consolidation of his control, Ford replaced John S. Gray, a Detroit banker, as president of the company in 1906.

In October 1908, despite the continuing litigation with the Selden syndicate, Ford introduced the durable and practical Model T. Demand for this car was so great that Ford was forced to enlarge its production facilities. Over 10,000 Model Ts were produced in 1909. Able to vote down business associates who favored more conventional methods of production, Henry Ford applied his assembly line concept of manufacturing to the Model T.

In developing the assembly line, Ford noted that the average worker performed several tasks in the production of each component, and used a variety of tools in the process. He improved efficiency by having each worker specialize in one task with one tool. The component on which the employee worked was conveyed to him on a moving belt, and after allowing a set time for the task to be performed, the component was moved on to the next operation. Slower workers thus needed to increase their work rate in order to maintain production at the rate determined by the speed of the belts.

Ford's battle with the Selden group led to a decision by the Supreme Court in 1911, eight years after the initial suit. The Court ruled that the Selden patent was invalid. The decision freed many automobile manufacturers from costly licensing obligations; it also enabled others to enter the business.

When the United States became involved in World War I (April 1917), the Ford Motor Company placed its resources at the disposal of the government. For the duration of the war, Ford Motor produced large quantities of automobiles, trucks, and ambulances, as well as Liberty airplane motors, Whippet tanks, Eagle submarine chasers, and munitions. In 1918, Henry Ford officially retired from the company, naming his son Edsel president and ceding to him a controlling interest. But, in fact, Henry continued to direct company strategy and spent much of his time developing a farm tractor called the Fordson. He also published a conservative weekly journal, the Dearborn Independent. Edsel, who was more reserved and pragmatic than his father, concerned himself with routine operations.

At the end of the war Henry and Edsel Ford disagreed with fellow stockholders over the planned expenditure of several million dollars for a large new manufacturing complex at River Rouge, near Detroit. The Fords eventually resolved the conflict by buying out all the other shareholders. Their company was re-registered as a Delaware corporation in July 1919. The River Rouge facility, built shortly afterward, was a large integrated manufacturing and assembly complex which included a steel mill of substantial capacity.

Cash-Strapped in the 1920s

Between January 1 and April 19, 1921, the Ford Motor Company had $58 million in financial obligations due, and only $20 million available to meet them. Convinced that Ford Motor would be forced into bankruptcy, representatives of several large financial houses offered to extend loans to the company, on the condition that the Fords yield financial control. When the offer was refused, the bankers retreated, certain that they would soon be called upon to repossess the company.

With little time available, Henry Ford transferred as many automobiles as possible to his dealerships, who were instructed to pay in cash. Almost immediately, this generated $25 million. Next, Ford purchased the Detroit, Toledo & Ironton railroad, the primary medium of transportation for his company's supplies. By rearranging the railroad's schedules, Ford was able to reduce by one-third the time that automotive components spent in transit. This allowed him to reduce inventories by one-third, thereby releasing $28 million. With additional income from other sources, and reduction in production costs, Ford had $87 million in cash by April 1, $27 million more than he needed to pay off the company debts.

The Ford Motor Company's only relationship with banks after this crisis was as a depositor. Moreover, despite poor financial management, Ford maintained such strong profitability that it offered to lend money on the New York markets, in competition with banks. With large quantities of cash still available, Ford acquired the financially troubled Lincoln Motor Company in 1922.

Edsel Ford was more enthusiastic about the development of the aircraft industry than his father, and in 1925 persuaded his fellow shareholders (all family members) to purchase the Stout Metal Airplane Company. His close friend William Stout, who was retained as vice-president and general manager of the company, developed a popular three-engine passenger aircraft known as the Ford Trimotor. Nearly 200 of these aircraft were built during its production run.

After 18 years producing the Model T, the Ford Motor Company faced its first serious threat from a competitor. In 1926, General Motors Corporation introduced its Chevrolet automobile, a more stylish and powerful car. Sales of the Model T dropped sharply. After months of experimenting with a six-cylinder model, Ford decided to discontinue the Model T in favor of the new Model A. On May 31, 1926, Ford plants across the country were closed for six months while assembly lines were retooled.

Company Perspectives:

Our vision is to become the world's leading consumer company for automotive products and services. We are a global family with a proud heritage passionately committed to providing personal mobility for people around the world.

That year Ford voluntarily reduced its work week to five days, declaring that workers should also benefit from the success of the company. Ford was also one of the first companies to limit the work day to eight hours, and to establish a minimum wage of $5 per day. At Henry Ford's own admission, these policies were instituted more to improve productivity than to appease dissatisfied (and unrepresented) workers.

The British Ford Company was formed in 1928 and shortly thereafter the German Ford Company was founded. Henry Ford recognized the Soviet Union as a market with great potential, and like a number of other American industrialists, he fostered a relationship with officials in the Soviet government. Later, Ford participated in the construction of an automobile factory at Nishni-Novgogrod.

The economic crisis of October 1929, which led to the Great Depression, forced many companies to close. Ford Motor managed to remain in business, despite losses of as much as $68 million per year. By 1932, economic conditions became so difficult that the Ford minimum wage was reduced to $4 per day. But for its Model A, which sold 4.5 million units between 1927 and 1931, Ford's situation would have been much worse.

The economy of Detroit was heavily dependent on large, locally based industrial manufacturers and when companies less successful than Ford were forced to suspend operations, a banking crisis developed. The Ford Motor Company, and Edsel Ford personally, extended about $12 million in loans to these banks in an effort to maintain their solvency. But these efforts failed and the banks were forced to close in February 1933. Ford lost over $32 million in deposits and several million more in bank securities. The principal Ford bank, Guardian National, was subsequently reorganized by Ford interests as the Manufacturers National Bank of Detroit. Ford's largest business rival, General Motors, having suffered a similar crisis, emerged with control over the National Bank of Detroit.

The implementation of President Roosevelt's New Deal made conditions more favorable to the organization of labor unions. But Henry Ford, who had supported President Hoover in the election, advised his workers to resist union organization, and in 1935 raised the company's minimum wage to $6 per day.

In 1937, the United Automobile Workers (UAW) union began a campaign to organize Ford workers by sponsoring the employee occupation of a Ford plant in Kansas City. The conflict was resolved when Ford officials agreed to meet with union representatives. That same year, there was trouble at the River Rouge complex. Several men distributing UAW pamphlets at the gates were severely beaten by unidentified assailants, believed to have been agents of the Ford security office. Following an investigation by the National Labor Relations Board, Ford was cited for numerous unfair labor practices. The finding was contested, but eventually upheld when the Supreme Court refused to hear the case.

The War Years

In 1940, Henry Ford, who opposed American involvement in World War II, canceled a contract (arranged by Edsel) to build 6,000 Rolls-Royce Merlin aircraft engines for the British Royal Air Force, and 3,000 more for the U.S. Army. In time, however, public opinion led Ford to change his mind. Plans were made for the construction of a large new government-sponsored facility to manufacture aircraft at Willow Run, west of Dearborn.

Unionization activities climaxed in April 1941 when Ford employees went on strike. The NLRB called an employee election, under the terms of the Wagner Act, to establish a union representation for Ford workers. When the ballots were tabulated in June, the UAW drew 70 percent of the votes. Henry Ford, an avowed opponent of labor unions, suddenly altered his stand. He agreed to a contract with union representatives which met all worker demands.

The company devoted its resources to the construction of the Willow Run Aircraft plant. Eight months later, in December 1941, the Japanese bombing of Pearl Harbor resulted in a declaration of war by the United States against Japan, Germany, and Italy. Willow Run was completed the following May. It was the largest manufacturing facility in the world, occupying 2.5 million square feet of floor space, with an assembly line three miles long. Adjacent to the plant were hangars, covering 1.2 million square feet, and a large airfield. The airplanes produced at this facility were four-engine B-24E Liberator bombers, the Consolidated Aircraft version of the Boeing B-24. Production of aircraft got off to a slow start, but after adjustments the rate of production was raised to one plane per hour, 24 hours a day. During the war, other Ford Motor plants produced a variety of engines, as well as trucks, jeeps,4 tanks,10 tank destroyers, and transport gliders. The company also manufactured large quantities of tires, despite the removal of its tire plant to the Soviet Union.

Edsel Ford died unexpectedly in May 1943 at the age of 49. At the time of his death, Edsel was recognized as a far better manager than his father. Indeed, Henry Ford was often criticized for repeatedly undermining his son's efforts to improve the company, and the managerial crisis which occurred after Edsel's death is directly attributable to Henry Ford's persistent failure to prepare capable managers for future leadership of the company.

Key Dates:

1903:
Henry Ford sets up shop in a converted wagon factory.
1908:
Ford's Model T is introduced.
1922:
Lincoln Motor Company is acquired.
1945:
Henry Ford II is appointed company president.
1963:
Ford Mustang is released.
1985:
Ford Taurus is introduced.
1989:
Jaguar Cars Ltd. is acquired.
1999:
Swedish automaker Volvo is acquired in a $6.45 billion deal.
2001:
The company takes a $2.1 billion charge to cover the cost of replacing Firestone tires on its vehicles; William Clay Ford, Jr., is named CEO.

Edsel had been responsible for much of the company's wartime mobilization and his absence was deeply felt by his aging father, who was forced to resume the company presidency. In need of assistance, Henry Ford sought a special discharge from the Navy for Edsel's son Henry II. The navy complied, citing the special needs of Ford management during wartime. Henry Ford vigorously prepared his grandson to succeed him. By the end of the war, when the Willow Run plant was turned over to the government, Ford had produced 8,600 B-24E bombers and over 57,000 aircraft engines.

In September 1945, Henry Ford II, aged 28, was named president of the Ford Motor Company. The inexperienced man could not have started at a worse time. No longer supported by government contracts, the company began to lose money at a rate of $10 million per month. The source of the problem was Henry Ford I's financial management policy, specifically designed to perplex the Internal Revenue Service and discourage audits. The severe economic conditions after the war made Ford's finances an albatross.

Unable to bring the company's finances under control, Henry II hired Ernest R. Breech, a General Motors executive and past chairperson of Bendix, in 1946. Breech was placed in charge of two groupsa managerial group and a financial one. The first one was comprised of several managers hired away from General Motors, and the second group was made up of ten talented financial experts who had served with the Air Force Office of Statistical Control. The Air Force group included Robert S. McNamara, J. Edward Lundy, Arjay Miller, and Charles Tex Thornton; they spent several years reconstructing the company's system of financial management.

Henry Ford I, who had retained the title of chairperson since 1945, died in April 1947 at the age of 83. Henry II and Ernest Breech were then able to implement their own strategies for recovery, and these included the adoption of the proven General Motors management structure, and the decision to establish the Ford Motor Company in foreign markets. In its first year under Breech, the company registered a profit and it continued to gain strength in the late 1940s and early 1950s. Breech's top priority was strict adherence to a financial plan with strong profit margins; unfortunately, this proved to be at the expense of developing automobiles for an increasingly complex market.

Over the previous two decades, the Ford Motor Company had been a notable pioneer and achiever in the industry, and it was the first company to cast a V-8 engine block (1932). Ford had produced its 25 millionth automobile in 1937 and the following year its Lincoln Division introduced the Mercury line, which proved highly successful in the growing market for medium-priced automobiles. Ford's good image had been further enhanced by its contributions to the Allied effort in World War II; even Josef Stalin had kind words for the enterprising American company.

Before he died, Henry Ford I had created two classes of Ford stock. The B Class was reserved for family members and constituted the controlling 40 percent voting interest. The ordinary common shares were to be retained by the company until January 1956, when they were to be offered to the public for the first time.

Two years after Henry I's death, in 1949, the company unveiled a number of new automatic styles. But while the cars were practical, and to a degree fashionable, the company no longer appeared to be a pioneer; indeed it gained a reputation, not wholly justified, as being an imitator of General Motors.

Regaining its initiative, the Ford Motor Company decided to introduce a new model to fill a gap in the market between the Ford and Lincoln-Mercury lines. In 1958, the much heralded 410 horsepower Edsel made its debut. It was a terrible flop. Ford's market researchers had been very wrong; there was no gap in the market for the Edsel to fill. After just two years, production of the ill-fated car ceased110,847 units had been produced, at a loss of some $250 million.

The 1960s70s

The 1960s saw many changes at Ford: dissatisfied with his secondary role in the company decision-making, Henry Ford stripped Breech of his power, replacing him with Robert McNamara. But McNamara left the Ford Motor Company in 1961 to serve as Secretary of Defense in the Kennedy administration. Many of McNamara's duties were taken over by Arjay Miller, who succeeded the interim president, John Dykstra, in 1963.

The Ford Motor Company purchased the Philco Corporation in 1961 and established a tractor division in 1962. The following year, Ford introduced its highly successful Mustang; more than 500,000 of these cars were sold in 18 months. The man most responsible for developing the Mustang was a protege of Robert McNamara named Lee Iacocca.

In another move intended to assert his authority over management, Henry Ford II dismissed Arjay Miller in 1968 and named Semon E. Knudsen as president. Knudsen, a former executive vice-president at General Motors known for his aggressive personality, found himself in constant conflict with Henry Ford, and after 19 months he was replaced by Lee Iacocca. Iacocca was a popular figure, highly talented in marketing and sales, but like Knudsen, he frequently disagreed with Henry Ford.

Ford Motor Company subsidiaries in Europe entered a period of strong growth and high profitability in the early 1970s, and these subsidiaries produced components for the Pinto, a sub-compact introduced in the United States in 1971. Pinto models from 1971 to 1976 and similarly configured Bobcats from 1975 to 1976 drew a great deal of attention after several incidents in which the car's gas tank exploded in rear-end collisions. The unfavorable publicity from news reports damaged Ford's public image, as did wrongful death litigation.

In April 1977, Henry Ford II reduced Iacocca's power by creating a new executive triumvirate. Iacocca was a member of this, along with Ford himself and Philip Caldwell. But a year later, Ford added his brother William Clay Ford to the group and relegated Iacocca to a subordinate position; then within a few months, Ford suddenly fired Iacocca and installed Caldwell as president. Henry Ford was battling stockholder allegations of financial misconduct and bribery at the time and his dismissal of Iacocca made him more unpopular than ever. Iacocca went on to head Chrysler Corporation.

Henry Ford made a critical decision and a very misguided one. He cancelled development of a small car which had been proposed by Iacocca and which was intended to succeed the aging Pinto. Thus, as the Japanese compacts became increasingly popular in the United States, Ford found itself quite unable to compete. Adding to its woes, Ford, along with other U.S. car manufacturers, was obligated by Congressional legislation (particularly the Clean Air Act) to develop automobiles which would emit less pollutants. Henry Ford relinquished his position as chief executive officer to Philip Caldwell in October 1979. The following March, Ford retired and gave the chair to Caldwell, while retaining his seat on the board of directors.

Ford Motor Company encountered severe economic losses as a result of a reduction in market share, as well as the high costs incurred by labor contracts and the development of automobiles that met the new federal standards. In 1980, the company lost $1.54 billion, despite strong profits from the truck division and European operations. Ford lost a further $1.06 billion in 1981 and $658 million in 1982 while trying to effect a recovery; its market share fell from 3.6 percent in 1978 to 16.6 percent in 1981.

Company officials studied Japanese methods of industrial management, and worked more closely with Toyo Kogyo, the Japanese manufacturer of Mazda automobiles (Ford gained a 25 percent share of Toyo Kogyo in November 1979, when a Ford subsidiary merged with the company). Ford imported Mazda cars and trucks, and in many ways treated Toyo Kogyo as a small car division until the Escort, its successor to the Pinto, reached the showrooms. This new compact was modeled after the Ford (Europe) Erika; another version of it, the Lynx, was produced by Ford's Lincoln-Mercury division.

Caldwell transferred the talented manager Harold Poling from the European division to the United States in an attempt to apply successful European formulas to the American operation. In the restructuring that followed, several plants were closed and more than 100,000 workers were dismissed. Ford's weakness in the market was a major concern of the unions; consequently, the company inaugurated a policy of employee involvement in plant operations and was able to secure more favorable labor contracts. Productivity improved dramatically.

In 1984, with costs reduced, Ford started to repurchase 30 million shares (about 10 percent of the company's stock). Its production of cars in Mexico was increased, and through its interest in Kia Motors, output was stepped up in South Korea. The following year, Ford introduced the Taurus (another version, the Sable, was produced by its Mercury division), a modern full-size automobile which had taken five years to develop at a cost of $3 billion. The Taurus proved highly successful and won several design and safety awards.

Sales and profits reached record levels in 1984, and in 1986 Ford surpassed General Motors in income for the first time since 1924. In addition, Ford's market share increased to just under 20 percent. Ford Motor purchased several companies in the mid-1980s, including the First Nationwide Financial Corporation and the New Holland tractor division of Sperry, which was later merged with Ford Tractor. Ford also purchased a 30 percent share of Otosan, the automotive subsidiary of the Turkish KoX Group. The attempted acquisition of the Italian car maker Alfa Romeo in 1986 failed, due to a rival bid from Fiat.

Challenging Early 1990s

The diversification into financial services that began in the mid-1980s continued in earnest throughout the rest of the decade, as each of the major U.S. car manufacturers sought to insulate themselves against the cyclical nature of their business. Ford spent $5.5 billion acquiring assets for its financial services group during the latter half of the decade, including a $3.4 billion purchase in 1989 of The Associates, a Dallas-based finance company. That acquisition, completed the same year Ford purchased the venerable British car manufacturer Jaguar Cars Ltd. for $2.5 billion, made Ford the country's second largest provider of diversified financial services, ranking only behind Citicorp. With plans to eventually derive 30 percent of the company's profits from financial service-related business, Ford entered the 1990s with $115 billion worth of banking-related assets, a portfolio that provided the company's only bright moments during the otherwise deleterious early 1990s.

An economic recession crippled U.S. car manufacturers during the early 1990s, and Ford bore the brunt of the financial malaise that stretched around the globe. Domestically, car sales faltered abroad, particularly in Great Britain and Australia, Ford's sales plummeted. In 1991, Ford's worldwide automotive operations lost an enormous $3.2 billion after recording a $99 million profit the year before. In the United States, automotive losses reached an equally staggering $2.2 billion on the heels of a $17 million loss in 1990. The losses struck a serious blow to Ford, which as recently as 1989 had generated $3.3 billion in net income; however, the financial results of 1991 would have been worse without the company's strategic diversification into financial services. For the year, Ford's financial services group registered a record $927 million in earnings, up from the previous year's total of $761 million, which left the company with a $2.25 billion loss for the year, an inauspicious record in Ford's nearly 90-year history.

The financial disaster of 1991, however, was just a prelude to more pernicious losses the following year, as the global recession reached its greatest intensity. In 1992, with revenue swelling to slightly more than $100 billion, Ford posted a $7.38 billion loss. Although 1992 represented one of the bleakest years in Ford's history, the worst was over, and as the economic climate improved, the company emerged with renewed vitality. Against the backdrop of successive financial losses, Ford had increased its presence in the truck and minivan market niche, which represented the fastest-growing segment of the broadly defined automotive market. Roughly 200,000 minivans and sports utility vehicles were sold in the United States a decade earlier and now, as consumers once again returned to car dealers' showrooms, more than 2.3 million opted for minivans and light trucks, a trend that bolstered Ford's financial position and predicated its return to a profitable future.

During this time, the gap separating Japanese and American car manufacturers' production standards had narrowed considerably, with the U.S. manufacturers emerging from the early 1990s in a more enviable positionFord included. As the technological and managerial race between U.S. car manufacturers and their Japanese counterparts tightened, the importance of prudent product development and effective distribution networks increased. Toward this end, Ford reorganized its production and distribution operations in mid-1994 to better respond to the changing economic structure of the numerous countries in which Ford operated facilities. Regional trading areas, rather than nation states, would represent the primary focus of Ford's future efforts, a direction the company moved toward with its worldwide reorganization in 1994.

Ford's notable achievements during the latter half of the 1990s were philosophical in nature, as the company attempted to replace the corporate culture of its past with a new way of thinking for the future. The proponent of Ford's new vision was Lebanese-born, Melbourne, Australia-raised Jacques Nasser, who was named president and chief executive officer in January 1998, concurrent with the appointment of William Clay Ford, Jr., great-grandson of the founder, as chairman. Two years before his historic promotionat age 51, Nasser became the youngest, non-family chief executive in the company's historyNasser was named president of Ford's worldwide automotive operations, and he did not like what he saw. The company had the lowest profits from total vehicle sales of any U.S. automaker, an alarming statistic that Nasser began to improve by slashing costs. His cost-cutting efforts earned Nasser the nickname Jac the Knife, but once he was named Ford's chief executive in 1998, the characterization of his influence took on an added dimension. Nasser's aim was to replace the corporate culture of decades past with an entrepreneurial style that placed a much more intense emphasis on the customer. He continued making his trademark cuts in costs, realizing $5 billion in savings between 1997 and 1999, but he also worked toward instilling a new ethos at Ford.

As part of the new movement espoused by Nasser, the company's Lincoln-Mercury division was relocated from Detroit to Irvine, California, an unprecedented move for a major U.S. auto-maker. Nasser wanted the division to attract younger customersLincoln's typical customer was 63 years old, Mercury's was 56 years oldand to be closer to suppliers and to emerging auto trends. Nasser wanted the division to breathe new life into itself away from the scrutiny of company headquarters, to benefit from a more entrepreneurial-driven perspective.

The changes at Lincoln-Mercury typified the profound currents of change sweeping through Ford at the century's end. Much remained to be done to achieve Nasser's vision of a fundamentally revamped Ford, but by the end of the 1990s there were impressive signs of progress. The company ended the decade as the most profitable automaker in the world. Its stock price increased 130 percent between 1996 and 1999, outpacing the increases recorded by its rivals. Analysts predicted great things for Ford, thanks in large part to the company's increased ownership stake in Mazda Motor Corporation (from 25 percent to 33.4 percent in 1996) and its $6.45 billion acquisition of Swedish auto maker Volvo in 1999.

The New Millennium

However, Ford faced major challenges in the early years of the new millennium. While it continued to lay the groundwork for future growth by spinning off its Visteon unit, acquiring BMW's Land Rover SUV business, and purchasing the remaining shares of Hertz that it did not already own, it was dealt a significant blow when Bridgestone recalled over 6.5 million Firestone brand tirestires used as original equipment on Ford's popular Explorer model, the Mercury Mountaineer, the Ranger, and some of its F-150 pickups. In the largest recall in automotive history, Ford was forced to call back over 300,000 vehicles and replace over 13 million Firestone tires at a cost of $3 billion in 2001 alone. To make matters worse, several deaths had been linked to faulty tires on the Ford Explorer, and some alleged that Ford had known about the problem all along and had failed to act.

As a result of the tire debacle and several other product recalls, Ford was ranked last in the industry in terms of quality according to J.D. Power & Associates. In 2001, the company posted a loss of $5.45 billion. Nasser was ousted in late that year, leaving William Clay Ford, Jr., at the helm. The task set before him was monumental; he faced faltering employee morale, major quality issues, sluggish sales, and intense price wars.

In early 2002, Ford launched a major restructuring effort that included the closure of five plants, the elimination of 35,000 jobs, over $9 billion in cost cutting measures, and the shuttering of several car lines including the Mercury Cougar and the Lincoln Continental. Included in the plan were efforts to boost the morale of employees. In a speech quoted in a November 2002 Fortune article, CEO Ford reminded his work force "We've come back from adversity many times in our history. We're going to do it again. On the eve of our 100th anniversary, the stage is set for a dramatic return to greatness. We started the job; now let's finish it."

The company forged ahead in 2002 cutting its losses to $559 million. Market share continued to fall, however, hovering at 21 percent versus the 25 percent it held in 1998. In response, Ford sold some non-core assets and ramped up new product development, launching the Ford Focus C-MAX in Europe, the Jaguar XJ, the Volvo S40, a new Ford F-150, the Ford Freestar, and the Mercury Monterey in 2003. Ford anticipated launching 40 new products in 2004 including the new Mustang and the Escape Hybrid, the first gasoline/electric SUV. Overall, the company planned to have 150 new products in the marketplace by mid-decade.

While a turnaround at the Ford Credit subsidiary bolstered the company's income, automotive operations, especially the international arm, continued to struggle. James J. Padilla, elected chief operating officer in 2004, and William Clay Ford, Jr., indeed faced a long road ahead. Restoring Ford's image and getting the company back on a successful financial path would no doubt be their focus in the years to come.

Principal Subsidiaries

Ford Brasil Ltda.; Ford Capital B.V. (Netherlands); Ford Motor Company (Belgium) N.V.; Ford Espana S.A.; Ford European Holdings, Inc.; Ford Holdings LLC; Volvo Car Holding Germany GmbH; Ford Motor Land Development Corporation; The Hertz Corporation; Ford Global Technologies, LLC; Ford International Capital Corporation; Jaguar Ltd.; Ford Italia S.p.A.; Ford Mexico Holdings, Inc.; Ford Motor Company of Canada, Ltd.; Land Rover Holdings; Ford Motor Company of Southern Africa (Pty) Ltd.; Ford Motor Company of Australia Ltd.; Ford Deutschland Holding, GmbH; Ford Motor Credit Company; Ford Credit Canada Ltd.; Ford Motor Service Company; Ford Motor Vehicle Assurance Company; Ford Trading Company, LLC; Groupe FMC France SAS; Volvo Cars of North America, LLC.

Principal Competitors

DaimlerChrysler AG; General Motors Corporation; Toyota Motor Corporation.

Further Reading

Beynon, Huw, Working for Ford, London: Penguin, 1984.

"Carload of Trouble," Business Week, March 27, 2000, p. 56.

Connelly, Mary, "Ford's Biggest Job: Lift Lincoln," Automotive News, July 31, 2000, p. 23.

"A Crisis of Confidence," Business Week, September 18, 2000, p. 40.

Dubashi, Jagannath, "Ford: Looking Beyond the Shadows," FW, February 6, 1990, p. 23.

"Ford: Will Slow and Steady Win the Race?," Business Week, May 10, 2004, p. 43.

Gelderman, Barbara, Henry Ford: The Wayward Capitalist, New York: Dial Press, 1981.

Gross, Ken, "Ford: Big, Bigger, Biggest," Automotive Industries, July 2000, p. 64.

Keatley, Robert, "Ford Reorganizes to Stay Competitive and Reach New Markets in the World," Wall Street Journal, July 22, 1994, p. A4.

Kerwin, Kathleen, "One of Ford's Engines is Humming," Business Week, July 21, 2003, p. 26.

Kerwin, Kathleen, and Joann Muller, "Bill Takes the Wheel," Business Week, November 12, 2001, p. 50.

Lewis, David L., The Public Image of Henry Ford: An American Folk Hero and His Company, Detroit: Wayne State University Press, 1976.

Meyer, Stephen, The Five Dollar Day: Labor Management and Social Control in the Ford Motor Company 19081921, Albany: State University of New York Press, 1981.

Moreau, Dan, "Instant Prosperity: Behind Ford's Fast Turnaround," Kiplinger's Personal Finance Magazine, July 1993, p. 28.

Morris, Betsy, "Can Ford Save Ford?," Fortune, November 18, 2002, p. 52.

"Nasser: Ford Be Nimble," Business Week, September 27, 1999, p. 42.

Nye, David E., Henry Ford: Ignorant Idealist, Port Washington: Kennikat Press, 1979.

Reiff, Rick, "Slowing Traffic Ahead," Forbes, April 30, 1990, p. 82.

"Remaking Ford," Business Week, October 11, 1999, p. 132.

Sorge, Marjorie, "1999 Executive of the Year," Automotive Industries, February 1999, p. 54.

Taylor III, Alex, "Getting Ford in Gear," Fortune, May 12, 2003, p. 102.

, "The Fiasco at Ford," Fortune, February 4, 2002, p. 111.

, "Why Ford's Chairman Has Kept Mostly Mum," Fortune, October 2, 2000, p. 43.

Thomas, Charles M., "Ford Loses a Record $2.3 Billion," Automotive News, February 17, 1992, p. 4.

Zesiger, Sue, "Ford's Hip Transplant," Fortune, May 10, 1999, p. 82.

, "Mr. Ford and Mr. Nasser Learn to Share: The Lords of Ford," Fortune, October 12, 1998, p. 34.

updates: Jeffrey L. Covell and

Christina M. Stansell

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Ford Motor Company

Ford Motor Company

The American Road
Dearborn, Michigan 48121-1899
U.S.A.
Telephone: (313) 845-8540
Toll Free: (800) 555-5259
Fax: (313) 845-6073
Web site: http://www.ford.com

Public Company
Incorporated:
1919
Employees: 364,550
Sales: $162.55 billion (1999)
Stock Exchanges: New York Boston Pacific Midwest Toronto Montreal London
Ticker Symbol: F
NAIC: 336111 Automobile Manufacturing; 336112 Light Truck and Utility Vehicle Manufacturing; 33612 Heavy Duty Truck Manufacturing; 33621 Motor Vehicle Body Manufacturing (pt); 532112 Passenger Car Leasing; 524126 Direct Property and Casualty Insurance Carriers (pt)

One of a handful of companies that contributes significantly to the growth of the United States, Ford Motor Company represents a more than $150 billion multinational business empire. Known primarily as a manufacturer of automobiles, Ford also holds a considerable stake in financial services, which generate more than $1 billion in income, and owns 81 percent of The Hertz Corporation, the largest automobile rental company in the world. The company manufactures vehicles under the names Ford, Lincoln, Mercury, Jaguar, Volvo, and Aston Martin. Ford also maintains controlling interest in Mazda Motor Corporation.

Origins of an American Legend

Henry Ford, the founder of the Ford Motor Company, was born on a farm near Dearborn, Michigan, in 1863. He had a talent for engineering, which he pursued as a hobby from boy-hood, but it was not until 1890 that he commenced his engineering career as an employee of the Detroit Edison Company. In his spare time, Ford constructed experimental gasoline engines and in 1892 completed his first gasoline buggy. Dissatisfied with the buggys weight, he sold it in 1896 to help fund the construction of a new car. Fords superiors at the electric company felt his hobby distracted him from his regular occupation and, despite his promotion to chief engineer, he was forced to quit in 1899.

Shortly afterwards, with financial backing from private investors, Ford established the Detroit Automobile Company. He later withdrew from the venture after a disagreement with business associates over the numbers and prices of cars to be produced. Ford advocated a business strategy which combined a lower profit margin on each car with greater production volumes. In this way, he hoped to gain a larger market share and maintain profitability.

Independently in a small shed in Detroit, Henry Ford developed two four-cylinder, 80-horsepower race cars, called the 999 and the Arrow. These cars won several races and helped to create a new market for Ford automobiles. With $28,000 of capital raised from friends and neighbors, Henry Ford established a new shop on June 16, 1903. In this facility, a converted wagon factory on Mack Avenue in Detroit, the Ford Motor Company began production of a two-cylinder, eight-horsepower design called the Model A. The company produced 1,708 of these models in the first year of operation.

The Ford Motor Company was sued by the Licensed Association of Automobile Manufacturers, an industrial syndicate which held patent rights for road locomotives with internal combustion engines. Ford responded by taking the matter to the courts, arguing that the patent, granted to George B. Selden in 1895, was invalid. During the long process of adjudication, Ford continued to manufacture cars and relocated to a larger plant on Piquette and Beaubien Streets. A Canadian plant was established in Walkerville, Ontario, on August 17, 1904.

Henry Ford and his engineers designed several automobiles, each one designated by a letter of the alphabet; these included the small, four-cylinder Model N (which sold for $500), and the more luxurious six-cylinder Model K (which sold poorly for $2,500). The failure of the Model K, coupled with Henry Fords persistence in developing inexpensive cars for mass production, caused a dispute between Ford and his associate Alexander Malcolmson. The latter, who helped to establish the company in 1903, resigned and his share of the company was acquired by Henry Ford. Fords holdings then amounted to 58.5 percent. In a further consolidation of his control, Ford replaced John S. Gray, a Detroit banker, as president of the company in 1906.

In October 1908, despite the continuing litigation with the Selden syndicate, Ford introduced the durable and practical Model T. Demand for this car was so great that Ford was forced to enlarge its production facilities. Over 10,000 Model Ts were produced in 1909. Able to vote down business associates who favored more conventional methods of production, Henry Ford applied his assembly line concept of manufacturing to the Model T.

In developing the assembly line, Ford noted that the average worker performed several tasks in the production of each component, and used a variety of tools in the process. He improved efficiency by having each worker specialize in one task with one tool. The component on which the employee worked was conveyed to him on a moving belt, and after allowing a set time for the task to be performed, the component was moved on to the next operation. Slower workers thus needed to increase their work rate in order to maintain production at the rate determined by the speed of the belts.

Fords battle with the Selden group led to a decision by the Supreme Court in 1911, eight years after the initial suit. The Court ruled that the Selden patent was invalid. The decision freed many automobile manufacturers from costly licensing obligations; it also enabled others to enter the business.

When the United States became involved in World War I (April 1917), the Ford Motor Company placed its resources at the disposal of the government. For the duration of the war, Ford Motor produced large quantities of automobiles, trucks, and ambulances, as well as Liberty airplane motors, Whippet tanks, Eagle submarine chasers, and munitions.

In 1918, Henry Ford officially retired from the company, naming his son Edsel president and ceding to him a controlling interest. But, in fact, Henry continued to direct company strategy and spent much of his time developing a farm tractor called the Fordson. He also published a conservative weekly journal, the Dearborn Independent. Edsel, who was more reserved and pragmatic than his father, concerned himself with routine operations.

At the end of the war Henry and Edsel Ford disagreed with fellow stockholders over the planned expenditure of several million dollars for a large new manufacturing complex at River Rouge, near Detroit. The Fords eventually resolved the conflict by buying out all the other shareholders. Their company was re-registered as a Delaware corporation in July 1919. The River Rouge facility, built shortly afterward, was a large integrated manufacturing and assembly complex which included a steel mill of substantial capacity.

Cash-Strapped in the 1920s

Between January 1 and April 19, 1921, the Ford Motor Company had $58 million in financial obligations due, and only $20 million available to meet them. Convinced that Ford Motor would be forced into bankruptcy, representatives of several large financial houses offered to extend loans to the company, on the condition that the Fords yield financial control. When the offer was refused, the bankers retreated, certain that they would soon be called upon to repossess the company.

With little time available, Henry Ford transferred as many automobiles as possible to his dealerships, who were instructed to pay in cash. Almost immediately, this generated $25 million. Next, Ford purchased the Detroit, Toledo & Ironton railroad, the primary medium of transportation for his companys sup-plies. By rearranging the railroads schedules, Ford was able to reduce by one-third the time that automotive components spent in transit. This allowed him to reduce inventories by one-third, thereby releasing $28 million. With additional income from other sources, and reduction in production costs, Ford had $87 million in cash by April 1, $27 million more than he needed to pay off the company debts.

The Ford Motor Companys only relationship with banks after this crisis was as a depositor. Moreover, despite poor financial management, Ford maintained such strong profitability that it offered to lend money on the New York markets, in competition with banks. With large quantities of cash still available, Ford acquired the financially troubled Lincoln Motor Company in 1922.

Edsel Ford was more enthusiastic about the development of the aircraft industry than his father, and in 1925 persuaded his fellow shareholders (all family members) to purchase the Stout Metal Airplane Company. His close friend William Stout, who was retained as vice-president and general manager of the company, developed a popular three-engine passenger aircraft known as the Ford Trimotor. Nearly 200 of these aircraft were built during its production run.

Company Perspectives

Ford Motor Company is committed to fully utilizing the rich diversity of its human resources. Company leadership believes that diversity will be the engine that powers the creative energy of corporations of the 21st century. Successful companies will be those that are able to draw on the diverse talents of their people to stay on the innovative and competitive edges of their fields. Ford Motor Company started this century with a single man envisioning products that would meet the needs of people in a world on the verge of high-gear industrialization. The company is ending the century with a worldwide organization that retains and expands Henry Fords heritage by developing products that serve the varying and ever-changing needs of people in the global community.

After 18 years producing the Model T, the Ford Motor Company faced its first serious threat from a competitor. In 1926, General Motors Corporation introduced its Chevrolet automobile, a more stylish and powerful car. Sales of the Model T dropped sharply. After months of experimenting with a six-cylinder model, Ford decided to discontinue the Model T in favor of the new Model A. On May 31,1926, Ford plants across the country were closed for six months while assembly lines were retooled.

That year Ford voluntarily reduced its work week to five days, declaring that workers should also benefit from the success of the company. Ford was also one of the first companies to limit the work day to eight hours, and to establish a minimum wage of $5 per day. At Henry Fords own admission, these policies were instituted more to improve productivity than to appease dissatisfied (and unrepresented) workers.

The British Ford Company was formed in 1928 and shortly thereafter the German Ford Company was founded. Henry Ford recognized the Soviet Union as a market with great potential, and like a number of other American industrialists, he fostered a relationship with officials in the Soviet government. Later, Ford participated in the construction of an automobile factory at Nishni-Novgogrod.

The economic crisis of October 1929, which led to the Great Depression, forced many companies to close. Ford Motor man-aged to remain in business, despite losses of as much as $68 million per year. By 1932, economic conditions became so difficult that the Ford minimum wage was reduced to $4 per day. But for its Model A, which sold 4.5 million units between 1927 and 1931, Fords situation would have been much worse.

The economy of Detroit was heavily dependent on large, locally based industrial manufacturers and when companies less successful than Ford were forced to suspend operations, a banking crisis developed. The Ford Motor Company, and Edsel Ford personally, extended about $12 million in loans to these banks in an effort to maintain their solvency. But these efforts failed and the banks were forced to close in February 1933. Ford lost over $32 million in deposits and several million more in bank securities. The principal Ford bank, Guardian National, was subsequently reorganized by Ford interests as the Manufacturers National Bank of Detroit. Fords largest business rival, General Motors, having suffered a similar crisis, emerged with control over the National Bank of Detroit.

The implementation of President Roosevelts New Deal made conditions more favorable to the organization of labor unions. But Henry Ford, who had supported President Hoover in the election, advised his workers to resist union organization, and in 1935 raised the companys minimum wage to $6 per day.

In 1937, the United Automobile Workers union began a campaign to organize Ford workers by sponsoring the employee occupation of a Ford plant in Kansas City. The conflict was resolved when Ford officials agreed to meet with union representatives. That same year, there was trouble at the River Rouge complex. Several men distributing UAW pamphlets at the gates were severely beaten by unidentified assailants, believed to have been agents of the Ford security office. Following an investigation by the National Labor Relations Board, Ford was cited for numerous unfair labor practices. The finding was contested, but eventually upheld when the Supreme Court re-fused to hear the case.

In 1940, Henry Ford, who opposed American involvement in World War II, canceled a contract (arranged by Edsel) to build 6,000 Rolls-Royce Merlin aircraft engines for the British Royal Air Force, and 3,000 more for the U.S. Army. In time, however, public opinion led Ford to change his mind. Plans were made for the construction of a large new government-sponsored facility to manufacture aircraft at Willow Run, west of Dearborn.

Unionization activities climaxed in April 1941 when Ford employees went on strike. The NLRB called an employee election, under the terms of the Wagner Act, to establish a union representation for Ford workers. When the ballots were tabulated in June, the UAW drew 70 percent of the votes. Henry Ford, an avowed opponent of labor unions, suddenly altered his stand. He agreed to a contract with union representatives which met all worker demands.

The company devoted its resources to the construction of the Willow Run Aircraft plant. Eight months later, in December 1941, the Japanese bombing of Pearl Harbor resulted in a declaration of war by the United States against Japan, Germany, and Italy. Willow Run was completed the following May. It was the largest manufacturing facility in the world, occupying 2.5 million square feet of floor space, with an assembly line three miles long. Adjacent to the plant were hangars, covering 1.2 million square feet, and a large airfield. The airplanes produced at this facility were four-engine B-24E Liberator bombers, the Consolidated Aircraft version of the Boeing B-24. Production of aircraft got off to a slow start, but after adjustments the rate of production was raised to one plane per hour, 24 hours a day. During the war, other Ford Motor plants produced a variety of engines, as well as trucks, jeeps, M-4 tanks, M-10 tank destroyers, and transport gliders. The company also manufactured large quantities of tires, despite the removal of its tire plant to the Soviet Union.

Edsel Ford died unexpectedly in May 1943 at the age of 49. At the time of his death, Edsel was recognized as a far better manager than his father. Indeed, Henry Ford was often criticized for repeatedly undermining his sons efforts to improve the company, and the managerial crisis which occurred after Edsels death is directly attributable to Henry Fords persistent failure to prepare capable managers for future leadership of the company.

Key Dates

1903:
Henry Ford sets up shop in a converted wagon factory.
1908:
Fords Model T is introduced.
1922:
Lincoln Motor Company is acquired.
1945:
Henry Ford II is appointed company president.
1963:
Ford Mustang is released.
1985:
Ford Taurus is introduced.
1989:
Jaguar Cars Ltd. is acquired.
1999:
Swedish automaker Volvo is acquired in a $6.45 billion deal.

Edsel had been responsible for much of the companys war-time mobilization and his absence was deeply felt by his aging father, who was forced to resume the company presidency. In need of assistance, Henry Ford sought a special discharge from the Navy for Edsels son Henry II. The navy complied, citing the special needs of Ford management during wartime. Henry Ford vigorously prepared his grandson to succeed him. By the end of the war, when the Willow Run plant was turned over to the government, Ford had produced 8,600 B-24E bombers and over 57,000 aircraft engines.

In September 1945, Henry Ford II, aged 28, was named president of the Ford Motor Company. The inexperienced man could not have started at a worse time. No longer supported by government contracts, the company began to lose money at a rate of $10 million per month. The source of the problem was Henry Ford Fs financial management policy, specifically de-signed to perplex the Internal Revenue Service and discourage audits. The severe economic conditions after the war made Fords finances an albatross.

Unable to bring the companys finances under control, Henry II hired Ernest R. Breech, a General Motors executive and past chairperson of Bendix, in 1946. Breech was placed in charge of two groupsa managerial group and a financial one. The first one was comprised of several managers hired away from General Motors, and the second group was made up often talented financial experts who had served with the Air Force Office of Statistical Control. The Air Force group included Robert S. McNamara, J. Edward Lundy, Arjay Miller, and Charles Tex Thornton; they spent several years reconstructing the companys system of financial management.

Henry Ford I, who had retained the title of chairperson since 1945, died in April 1947 at the age of 83. Henry II and Ernest Breech were then able to implement their own strategies for recovery, and these included the adoption of the proven General Motors management structure, and the decision to establish the Ford Motor Company in foreign markets. In its first year under Breech, the company registered a profit and it continued to gain strength in the late 1940s and early 1950s. Breechs top priority was strict adherence to a financial plan with strong profit mar-gins; unfortunately, this proved to be at the expense of developing automobiles for an increasingly complex market.

Over the previous two decades, the Ford Motor Company had been a notable pioneer and achiever in the industry, and it was the first company to cast a V-8 engine block (1932). Ford had produced its 25 millionth automobile in 1937 and the following year its Lincoln Division introduced the Mercury line, which proved highly successful in the growing market for medium-priced automobiles. Fords good image had been further enhanced by its contributions to the Allied effort in World War II; even Josef Stalin had kind words for the enterprising American company.

Before he died, Henry Ford I had created two classes of Ford stock. The B Class was reserved for family members and constituted the controlling 40 percent voting interest. The ordinary common shares were to be retained by the company until January 1956, when they were to be offered to the public for the first time.

Two years after Henry Is death, in 1949, the company unveiled a number of new automatic styles. But while the cars were practical, and to a degree fashionable, the company no longer appeared to be a pioneer; indeed it gained a reputation, not wholly justified, as being an imitator of General Motors.

Regaining its initiative, the Ford Motor Company decided to introduce a new model to fill a gap in the market between the Ford and Lincoln-Mercury lines. In 1958, the much heralded 410 horsepower Edsel made its debut. It was a terrible flop. Fords market researchers had been very wrong; there was no gap in the market for the Edsel to fill. After just two years, production of the ill-fated car ceased110,847 units had been produced, at a loss of some $250 million.

The 1960s and 1970s

The 1960s saw many changes at Ford: dissatisfied with his secondary role in the company decision-making, Henry Ford stripped Breech of his power, replacing him with Robert McNamara. But McNamara left the Ford Motor Company in 1961 to serve as Secretary of Defense in the Kennedy administration. Many of McNamaras duties were taken over by Arjay Miller, who succeeded the interim president, John Dykstra, in 1963.

The Ford Motor Company purchased the Philco Corporation in 1961 and established a tractor division in 1962. The following year, Ford introduced its highly successful Mustang; more than 500,000 of these cars were sold in 18 months. The man most responsible for developing the Mustang was a protege of Robert McNamara named Lee lacocca.

In another move intended to assert his authority over management, Henry Ford II dismissed Arjay Miller in 1968 and named Semon E. Knudsen as president. Knudsen, a former executive vice-president at General Motors known for his aggressive personality, found himself in constant conflict with Henry Ford, and after 19 months he was replaced by Lee lacocca. lacocca was a popular figure, highly talented in marketing and sales, but like Knudsen, he frequently disagreed with Henry Ford.

Ford Motor Company subsidiaries in Europe entered a period of strong growth and high profitability in the early 1970s, and these subsidiaries produced components for the Pinto, a sub-compact introduced in the United States in 1971. Pinto models from 1971 to 1976 and similarly configured Bobcats from 1975 to 1976 drew a great deal of attention after several incidents in which the cars gas tank exploded in rear-end collisions. The unfavorable publicity from news reports dam-aged Fords public image, as did wrongful death litigation.

In April 1977, Henry Ford II reduced lacoccas power by creating a new executive triumvirate. lacocca was a member of this, along with Ford himself and Philip Caldwell. But a year later, Ford added his brother William Clay Ford to the group and relegated lacocca to a subordinate position; then within a few months, Ford suddenly fired lacocca and installed Caldwell as president. Henry Ford was battling stockholder allegations of financial misconduct and bribery at the time and his dismissal of lacocca made him more unpopular than ever (lacocca, of course, went on to head Chrysler Corporation).

Henry Ford made a critical decision and a very misguided one. He cancelled development of a small car which had been proposed by lacocca and which was intended to succeed the aging Pinto. Thus, as the Japanese compacts became increasingly popular in the United States, Ford found itself quite unable to compete. Adding to its woes, Ford, along with other U.S. car manufacturers, was obligated by Congressional legislation (particularly the Clean Air Act) to develop automobiles which would emit less pollutants. Henry Ford relinquished his position as chief executive officer to Philip Caldwell in October 1979. The following March, Ford retired and gave the chair to Caldwell, while retaining his seat on the board of directors.

The Ford Motor Company encountered severe economic losses as a result of a reduction in market share, as well as the high costs incurred by labor contracts and the development of automobiles that met the new federal standards. In 1980, the company lost $1.54 billion, despite strong profits from the truck division and European operations. Ford lost a further $1.06 billion in 1981 and $658 million in 1982 while trying to effect a recovery; its market share fell from 23.6 percent in 1978 to 16.6 percent in 1981.

Company officials studied Japanese methods of industrial management, and worked more closely with Toyo Kogyo, the Japanese manufacturer of Mazda automobiles (Ford gained a 25 percent share of Toyo Kogyo in November 1979, when a Ford subsidiary merged with the company). Ford imported Mazda cars and trucks, and in many ways treated Toyo Kogyo as a small car division until the Escort, its successor to the Pinto, reached the showrooms. This new compact was modeled after the Ford (Europe) Erika; another version of it, the Lynx, was produced by Fords Lincoln-Mercury division.

Caldwell transferred the talented manager Harold Poling from the European division to the United States in an attempt to apply successful European formulas to the American operation. In the restructuring that followed, several plants were closed and more than 100,000 workers were dismissed. Fords weakness in the market was a major concern of the unions; consequently, the company inaugurated a policy of employee involvement in plant operations and was able to secure more favorable labor contracts. Productivity improved dramatically.

In 1984, with costs reduced, Ford started to repurchase 30 million shares (about ten percent of the companys stock). Its production of cars in Mexico was increased, and through its interest in Kia Motors, output was stepped up in South Korea. The following year, Ford introduced the Taurus (another version, the Sable, was produced by its Mercury division), a modern full-size automobile which had taken five years to develop at a cost of $3 billion. The Taurus proved highly successful and won several design and safety awards.

Sales and profits reached record levels in 1984, and in 1986 Ford surpassed General Motors in income for the first time since 1924. In addition, Fords market share increased to just under 20 percent. Ford Motor purchased several companies in the mid-1980s, including the First Nationwide Financial Corporation and the New Holland tractor division of Sperry, which was later merged with Ford Tractor. Ford also purchased a 30 percent share of Otosan, the automotive subsidiary of the Turkish Kog Group. The attempted acquisition of the Italian car maker Alfa Romeo in 1986 failed, due to a rival bid from Fiat.

Torturous Early 1990s

The diversification into financial services that began in the mid-1980s continued in earnest throughout the rest of the decade, as each of the major U.S. car manufacturers sought to insulate themselves against the cyclical nature of their business. Ford spent $5.5 billion acquiring assets for its financial services group during the latter half of the decade, including a $3.4 billion purchase in 1989 of the Associates, a Dallas-based finance company. That acquisition, completed the same year Ford purchased the venerable British car manufacturer Jaguar Cars Ltd. for $2.5 billion, made Ford the countrys second largest provider of diversified financial services, ranking only behind Citicorp. With plans to eventually derive 30 percent of the companys profits from financial service-related business, Ford entered the 1990s with $115 billion worth of banking-related assets, a portfolio that provided the companys only bright moments during the otherwise deleterious early 1990s.

An economic recession crippled U.S. car manufacturers during the early 1990s, and Ford bore the brunt of the financial malaise that stretched around the globe. Domestically, car sales faltered abroad, particularly in Great Britain and Australia, Fords sales plummeted. In 1991, Fords worldwide automotive operations lost an enormous $3.2 billion after recording a $99 million profit the year before. In the United States, automotive losses reached an equally staggering $2.2 billion on the heels of a $17 million loss in 1990. The losses struck a serious blow to Ford, which as recently as 1989 had generated $3.3 billion in net income; however, the financial results of 1991 would have been worse without the companys strategic diversification into financial services. For the year, Fords financial services group registered a record $927 million in earnings, up from the previous years total of $761 million, which left the company with a $2.25 billion loss for the year, an inauspicious record in Fords nearly 90-year history.

The financial disaster of 1991, however, was just a prelude to more pernicious losses the following year, as the global recession reached its greatest intensity. In 1992, with revenue swelling to slightly more than $100 billion, Ford posted a crushing $7.38 billion loss. Although 1992 represented one of the bleakest years in Fords history, the worst was over, and as the economic climate improved, the company emerged with renewed vitality. Against the backdrop of successive financial losses, Ford had increased its presence in the truck and minivan market niche, which represented the fastest-growing segment of the broadly defined automotive market. Roughly 200,000 mini-vans and sports utility vehicles were sold in the United States a decade earlier and now, as consumers once again returned to car dealers showrooms, more than 2.3 million opted for minivans and light trucks, a trend that bolstered Fords financial position and predicated its return to a profitable future.

In 1993, Ford generated $2.52 billion in net income from $108.5 billion in revenue during a year in which the company actually lost money on passenger car sales, yet recouped the losses through minivan and truck sales. By 1994, such vehicles accounted for 50 percent of Fords automotive sales, a prodigious increase from the preceding decade and the primary engine driving the companys growth.

Despite the losses suffered several years earlier, there was justifiable hope for further growth as Ford entered the mid-1990s. The gap separating Japanese and American car manufacturers production standards had narrowed considerably, with the U.S. manufacturers emerging from the early 1990s in a more enviable positionFord included. As the technological and managerial race between U.S. car manufacturers and their Japanese counterparts tightened, the importance of prudent product development and effective distribution networks in-creased. Toward this end, Ford reorganized its production and distribution operations in mid-1994 to better respond to the changing economic structure of the numerous countries in which Ford operated facilities. Regional trading areas, rather than nation states, would represent the primary focus of Fords future efforts, a direction the company moved toward with its worldwide reorganization in 1994.

Fords notable achievements during the latter half of the 1990s were philosophical in nature, as the company attempted to replace the corporate culture of its past with a new way of thinking for the future. The proponent of Fords new vision was Lebanese-born, Melbourne, Australia-raised Jacques Nasser, who was named president and chief executive officer in January 1998, concurrent with the appointment of William Clay Ford, Jr., great-grandson of the founder, as chairman. Two years before his historic promotionat age 51, Nasser became the youngest, non-family chief executive in the companys historyNasser was named president of Fords worldwide auto-motive operations. He did not like what he saw. The company had the lowest profits from total vehicle sales of any U.S. automaker, an alarming statistic that Nasser began to improve by slashing costs. His cost-cutting efforts earned Nasser the nickname Jac the Knife, but once he was named Fords chief executive in 1998, the characterization of his influence took on an added dimension.

At a gathering of Fords top 300 executives shortly after his promotion, Nasser delivered the essence of the new spirit he hoped to inculcate. We are all bureaucrats, he informed his management team, as quoted in the February 1999 issue of Automotive Industries. I hope that offends you. I want you to be lousy bureaucrats, not sit there with your tie buttoned up, polishing your shoes. Nassers aim was to replace the corporate culture of decades past with an entrepreneurial style that placed a much more intense emphasis on the customer. He continued making his trademark cuts in costs, realizing $5 billion in savings between 1997 and 1999, but he also worked toward instilling a new ethos at Ford, one in which the retirement of one executive did not automatically trigger the promotion of the next executive in line.

As part of the new movement espoused by Nasser, the companys Lincoln-Mercury division was relocated from Detroit to Irvine, California, an unprecedented move for a major U.S. automaker. Nasser wanted the division to attract younger customersLincolns typical customer was 63 years old, Mercurys was 56 years oldand to be closer to suppliers and to emerging auto trends. Nasser wanted the division to breathe new life into itself away from the scrutiny of company headquarters, to benefit from a more entrepreneurial-driven perspective.

The changes at Lincoln-Mercury typified the profound cur-rents of change sweeping through Ford at the centurys end. Much remained to be done to achieve Nassers vision of a funda-mentally revamped Ford, but by the end of the 1990s there were impressive signs of progress. The company ended the decade as the most profitable automaker in the world. Its stock price in-creased 130 percent between 1996 and 1999, outpacing the in-creases recorded by its rivals. Further, some analysts projected Ford would eclipse General Motors in worldwide sales by 2001, thanks in large part to the companys increased ownership stake in Mazda Motor Corporation (from 25 percent to 33.4 percent in 1996) and its $6.45 billion acquisition of Swedish auto maker Volvo in 1999. The ultimate success or failure of the Nasser-led era, however, was to be determined in the first decade of the 21st century, as Ford concluded its first 100 years of business and redefined its style of operation for the future.

Principal Subsidiaries

Ford Electronics and Refrigeration Corp.; Ford Export Corp.; Ford International Capital Corp.; Ford International Finance Corp.; Ford Holdings, Inc.; Ford Motor Credit Co.; Ford Leasing Development Co.; Ford Motor Land Development Corp.; First Nationwide Financial Corp.; First Nationwide Savings; Ford Motor Company Ltd. (U.K.); Ford Motor Credit Company Ltd. (U.K.); Ford-Werke A.G. (Germany); Ford Credit Bank A.G. (Germany); Ford Motor Company of Canada Ltd.; Ensite Ltd. (Canada); Ford Glass Ltd. (Canada); Ford Motor Company of Australia Ltd.; Ford Motor Company of New Zealand Ltd.; Ford Brasil S.A. (Brazil); Ford Motor de Venezuela; Ford France S.A.; Ford Motor Company (Belgium) N.V.; Ford Credit N.V. (Belgium); Ford Italiana S.p.A. (Italy); Ford Credit S.p.A. (Italy); Ford Leasing S.p.A. (Italy); Ford Motor Argentina S.A.; Ford Motor Company AS (Denmark); Ford Motor Company S.A. (Mexico); Ford Nederland B.V. (Netherlands); Ford Espana S.A. (Spain); Ford Credit S.A. (Spain); Ford Leasing S.A. (Spain); Ford Credit A.B. (Sweden); Ford Credit S.A. (Switzerland); Transcom Insurance Ltd. (Bermuda); Mazda Motor Corporation (Japan; 33.4%); Ford Motor Company (Japan) Ltd.; Ford Lio Ho Motor Company Ltd. (Taiwan); Jaguar Ltd.

Principal Competitors

DaimlerChrysler AG; General Motors Corporation; Toyota Motor Corporation.

Further Reading

Beynon, Huw, Working for Ford, London: Penguin, 1984.

Carload of Trouble, Business Week, March 27, 2000, p. 56.

Connelly, Mary, Fords Biggest Job: Lift Lincoln, Automotive News, July 31, 2000, p. 23.

Dubashi, Jagannath, Ford: Looking Beyond the Shadows, FW, February 6, 1990, p. 23.

Gelderman, Barbara, Henry Ford, the Wayward Capitalist, New York: Dial Press, 1981.

Gross, Ken, Ford: Big, Bigger, Biggest, Automotive Industries, July 2000, p. 64.

Keatley, Robert, Ford Reorganizes to Stay Competitive and Reach New Markets in the World, Wall Street Journal, July 22, 1994, p. A4.

Lewis, David L., The Public Image of Henry Ford: An American Folk Hero and His Company, Detroit: Wayne State University Press, 1976.

Meyer, Stephen, The Five Dollar Day: Labor Management and Social Control in the Ford Motor Company 19081921, Albany: State University of New York Press, 1981.

Moreau, Dan, Instant Prosperity: Behind Fords Fast Turnaround, Kiplingers Personal Finance Magazine, July 1993, p. 28.

Nasser: Ford Be Nimble, Business Week, September 27,1999, p. 42.

Nye, David E., Henry Ford: Ignorant Idealist, Port Washington: Kennikat Press, 1979.

Reiff, Rick, Slowing Traffic Ahead, Forbes, April 30, 1990, p. 82.

Remaking Ford, Business Week, October 11, 1999, p. 132.

Sorge, Marjorie, 1999 Executive of the Year, Automotive Industries, February 1999, p. 54.

Thomas, Charles M., Ford Loses a Record $2.3 Billion, Automotive News, February 17, 1992, p. 4.

Zesiger, Sue, Fords Hip Transplant, Fortune, May 10, 1999, p. 82.

______, Mr. Ford and Mr. Nasser Learn to Share: The Lords of Ford, Fortune, October 12, 1998, p. 34.

updated by Jeffrey L. Covell

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Ford Motor Company

Ford Motor Company

The American Road
Dearborn, Michigan 48121-3236
U.S.A.
(313) 322-3000
Fax: (313) 322-7896

Public Company
Incorporated:
1919
Employees: 322,213
Sales: $108.52 billion
Stock Exchanges: New York Boston Pacific Midwest
Toronto Montreal London
SICs: 3711 Motor Vehicles and Car Bodies; 3714 Motor
Vehicles Parts and Accessories; 6159 Miscellaneous
Business Credit Institutions; 6141 Personal Credit
Institutions; 6035 Federal Savings Institutions; 6331 Fire,
Marine, and Casualty Insurance; 7515 Passenger Car
Leasing

One of a handful of companies that contributed significantly to the growth of the United States, Ford Motor Company represents a more than $100 billion multinational empire. Known primarily as a manufacturer of automobiles, Ford also holds a considerable stake in financial services, which by themselves generated more than $1 billion in income. With these vast resources in banking-related assets complementing its storied record of automobile production, Ford stood as formidable economic force.

Henry Ford, the founder of the Ford Motor Company, was born on a farm near Dearborn, Michigan, in 1863. He had a talent for engineering, which he pursued as a hobby from boyhood, but it was not until 1890 that he commenced his engineering career as an employee of the Detroit Edison Company. In his spare time, Ford constructed experimental gasoline engines and in 1892 completed his first gasoline buggy. Dissatisfied with the buggys weight, he sold it in 1896 to help fund the construction of a new car. Fords superiors at the electric company felt his hobby distracted him from his regular occupation, and despite his promotion to chief engineer, he was forced to quit in 1899.

Shortly afterwards, with financial backing from private investors, Ford established the Detroit Automobile Company. He later withdrew from the venture after a disagreement with business associates over the numbers and prices of cars to be produced. Ford advocated a business strategy which combined a lower profit margin on each car with greater production volumes. In this way, he hoped to gain a larger market share and maintain profitability.

Working independently in a small shed in Detroit, Henry Ford developed two four-cylinder, 80-horsepower race cars, called the 999 and the Arrow. These cars won several races and helped to create a new market for Ford automobiles. With $28,000 of capital raised from friends and neighbors, Henry Ford established a new shop on June 16, 1903. In this facility, a converted wagon factory on Mack Avenue in Detroit, the Ford Motor Company began production of a two-cylinder, eight-horsepower design called the Model A. The company produced 1,708 of these models in the first year of operation.

The Ford Motor Company was sued by the Licensed Association of Automobile Manufacturers, an industrial syndicate which held patent rights for road locomotives with internal combustion engines. Ford responded by taking the matter to the courts, arguing that the patent, granted to George B. Selden in 1895, was invalid. During the long process of adjudication, Ford continued to manufacture cars and relocated to a larger plant on Piquette and Beaubien Streets. A Canadian plant was established in Walkerville, Ontario, on August 17, 1904.

Henry Ford and his engineers designed several automobiles, each one designated by a letter of the alphabet; these included the small, four-cylinder Model N (which sold for $500), and the more luxurious six-cylinder Model K (which sold poorly for $2500). The failure of the Model K, coupled with Henry Fords persistence in developing inexpensive cars for mass production, caused a dispute between Ford and his associate Alexander Malcolmson. The latter, who helped to establish the company in 1903, resigned and his share of the company was acquired by Henry Ford. Fords holdings then amounted to 58 and one-half percent. In a further consolidation of his control, Ford replaced John S. Gray, a Detroit banker, as president of the company in 1906.

In October 1908, despite the continuing litigation with the Selden syndicate, Ford introduced the durable and practical Model T. Demand for this car was so great that Ford was forced to enlarge its production facilities. Over 10,000 Model Ts were produced in 1909. Able to vote down business associates who favored more conventional methods of production, Henry Ford applied his assembly line concept of manufacturing to the Model T.

In developing the assembly line, Ford noted that the average worker performed several tasks in the production of each component, and used a variety of tools in the process. He improved efficiency by having each worker specialize in one task with one tool. The component on which the employee worked was conveyed to him on a moving belt, and after allowing a set time for the task to be performed, the component was moved on to the next operation. Slower workers thus needed to increase their work rate in order to maintain production at the rate determined by the speed of the belts.

Fords battle with the Selden group led to a decision by the Supreme Court in 1911, eight years after the initial suit. The Court ruled that the Selden patent was invalid. The decision freed many automobile manufacturers from costly licensing obligations; it also enabled others to enter the business.

When the United States became involved in World War I (April 1917), the Ford Motor Company placed its resources at the disposal of the government. For the duration of the war, Ford Motor produced large quantities of automobiles, trucks, and ambulances, as well as Liberty airplane motors, Whippet tanks, Eagle submarine chasers, and munitions.

In 1918, Henry Ford officially retired from the company, naming his son Edsel president and ceding to him a controlling interest. But, in fact, Henry continued to direct company strategy and spent much of his time developing a farm tractor called the Fordson. He also published a conservative weekly journal, The Dearborn Independent. Edsel, who was more reserved and pragmatic than his father, concerned himself with routine operations.

At the end of the war Henry and Edsel Ford disagreed with fellow stockholders over the planned expenditure of several million dollars for a large new manufacturing complex at River Rouge, near Detroit. The Fords eventually resolved the conflict by buying out all the other shareholders. Their company was reregistered as a Delaware corporation in July 1919. The River Rouge facility, built shortly afterward, was a large integrated manufacturing and assembly complex which included a steel mill of substantial capacity.

Between January 1 and April 19, 1921, the Ford Motor Company had $58 million in financial obligations due, and only $20 million available to meet them. Convinced that Ford Motor would be forced into bankruptcy, representatives of several large financial houses offered to extend loans to the company, on the condition that the Fords yield financial control. When the offer was refused, the bankers retreated, certain that they would soon be called upon to repossess the company.

With little time available, Henry Ford transferred as many automobiles as possible to his dealerships, who were instructed to pay in cash. Almost immediately, this generated $25 million. Next, Ford purchased the Detroit, Toledo & Ironton railroad, the primary medium of transportation for his companys supplies. By rearranging the railroads schedules, Ford was able to reduce by one-third the time that automotive components spent in transit. This allowed him to reduce inventories by one-third, thereby releasing an additional $28 million. With additional income from other sources, and reduction in production costs, Ford had $87 million in cash by April 1, $27 million more than he needed to pay off the company debts.

The Ford Motor Companys only relationship with banks after this crisis was as a depositor. And despite poor financial management, Ford maintained such strong profitability that it offered to lend money on the New York markets, in competition with banks. With large quantities of cash still available, Ford acquired the financially troubled Lincoln Motor Company in 1922.

Edsel Ford was more enthusiastic about the development of the aircraft industry than his father, and in 1925 persuaded his fellow shareholders (all family members) to purchase the Stout Metal Airplane Company. His close friend William Stout, who was retained as vice-president and general manager of the company, developed a popular three-engine passenger aircraft known as the Ford Trimotor. 196 of these aircraft were built during its production run.

After 18 years producing the Model T, the Ford Motor Company faced its first serious threat from a competitor. In 1926, the General Motors Corporation introduced its Chevrolet automobile, a more stylish and powerful car. Sales of the Model T dropped sharply. After months of experimenting with a six-cylinder model, Ford decided to discontinue the Model T in favor of the new Model A. On May 31 1926, Ford plants across the country were closed for six months while assembly lines were retooled.

That year Ford voluntarily reduced its work week to five days declaring that workers should also benefit from the success of the company. Ford was also one of the first companies to limit the work day to eight hours, and to establish a minimum wage of $5 per day. At Henry Fords own admission, these policies were instituted more to improve productivity than to appease dissatisfied (and unrepresented) workers.

The British Ford Company was formed in 1928 and shortly thereafter the German Ford Company was founded. Henry Ford recognized the Soviet Union as a market with great potential, and like a number of other American industrialists, he fostered a relationship with officials in the Soviet government. Later, Ford participated in the construction of an automobile factory at Nishni-Novgogrod.

The economic crisis of October 1929, which led to the Great Depression, forced many companies to close. Ford Motor managed to remain in business, despite losses of as much as $68 million per year. By 1932, economic conditions became so difficult that the Ford minimum wage was reduced to $4 per day. But for its Model A, which sold 4.5 million units between 1927 and 1931, Fords situation would have been much worse.

The economy of Detroit was heavily dependent on large, locally based industrial manufacturers and when companies less successful than Ford were forced to suspend operations, a banking crisis developed. The Ford Motor Company, and Edsel Ford personally, extended about $12 million in loans to these banks in an effort to maintain their solvency. But these efforts failed and the banks were forced to close in February 1933. Ford lost over $32 million in deposits and several millions more in bank securities. The principal Ford bank, Guardian National, was subsequently reorganized by Ford interests as the Manufacturers National Bank of Detroit. Fords largest business rival, General Motors, having suffered a similar crisis, emerged with control over the National Bank of Detroit.

The implementation of President Roosevelts New Deal, made conditions more favorable to the organization of labor unions. But Henry Ford, who had supported President Hoover in the election, advised his workers to resist union organization, and in 1935 raised the companys minimum wage to $6 per day.

In 1937, the United Automobile Workers union began a campaign to organize Ford workers by sponsoring the employee occupation of a Ford plant in Kansas City. The conflict was resolved when Ford officials agreed to meet with union representatives. That same year, there was trouble at the River Rouge complex. Several men distributing UAW pamphlets at the gates were severely beaten by unidentified assailants, believed to have been agents of the Ford security office. Following an investigation by the National Labor Relations Board, Ford was cited for numerous unfair labor practices. The finding was contested, but eventually upheld when the Supreme Court refused to hear the case.

In 1940, Henry Ford, who opposed American involvement in World War II, cancelled a contract (arranged by Edsel) to build 6000 Rolls-Royce Merlin aircraft engines for the British Royal Air Force, and 3000 more for the United States Army. In time, however, public opinion led Ford to change his mind. Plans were made for the construction of a large new government-sponsored facility to manufacture aircraft at Willow Run, west of Dearborn.

Unionization activities climaxed in April 1941 when Ford employees went on strike. The NLRB called an employee election, under the terms of the Wagner Act, to establish a union representation for Ford workers. When the ballots were tabulated in June, the UAW drew 70 percent of the votes. Henry Ford, an avowed opponent of labor unions, suddenly altered his stand. He agreed to a contract with union representatives which met all worker demands.

The company devoted its resources to the construction of the Willow Run Aircraft plant. Eight months later, in December 1941, the Japanese bombing of Pearl Harbor resulted in a declaration of war by the United States against Japan, Germany, and Italy. Willow Run was completed the following May. It was the largest manufacturing facility in the world, occupying 2.5 million square feet of floor space, with an assembly line three miles long. Adjacent to the plant were hangars, covering 1.2 million square feet, and a large airfield. The airplanes produced at this facility were four-engine B-24E Liberator bombers, the Consolidated Aircraft version of the Boeing B-24. Production of aircraft got off to a slow start, but after adjustments the rate of production was raised to one plane per hour, 24 hours a day. During the war, other Ford Motor plants produced a variety of engines, as well as trucks, jeeps, M-4 tanks, M-10 tank destroyers, and transport gliders. The company also manufactured large quantities of tires, despite the removal of its tire plant to the Soviet Union.

Edsel Ford died unexpectedly in May 1943 at the age of 49. At the time of his death, Edsel was recognized as a far better manager than his father. Indeed, Henry Ford was often criticized for repeatedly undermining his sons efforts to improve the company, and the managerial crisis which occurred after Edsels death is directly attributable to Henry Fords persistent failure to prepare capable managers for future leadership of the company.

Edsel had been responsible for much of the companys wartime mobilization and his absence was deeply felt by his aging father, who was forced to resume the company presidency. In need of assistance, Henry Ford sought a special discharge from the Navy for Edsels son Henry II. The navy complied, citing the special needs of Ford management during wartime. Henry Ford vigorously prepared his grandson to succeed him. By the end of the war, when the Willow Run plant was turned over to the government, Ford had produced 8600 B-24E bombers and over 57,000 aircraft engines.

In September 1945, Henry Ford II, aged 28, was named president of the Ford Motor Company. The inexperienced man could not have started at a worse time. No longer supported by government contracts, the company began to lose money at a rate of $10 million per month. The source of the problem was Henry Ford Is financial management policy, specifically designed to perplex the Internal Revenue Service and discourage audits. The severe economic conditions after the war made Fords finances an albatross.

Unable to bring the companys finances under control, Henry II hired Ernest R. Breech, a General Motors executive and past chairperson of Bendix, in 1946. Breech was placed in charge of two groupsa managerial group and a financial one. The first one was comprised of several managers hired away from General Motors, and the second group was made up of ten talented financial experts who had served with the Air Force Office of Statistical Control. The Air Force group included Robert S. McNamara, J. Edward Lundy, Arjay Miller, and Charles Tex Thornton; they spent several years reconstructing the companys system of financial management.

Henry Ford I, who had retained the title of chairperson since 1945, died in April 1947 at the age of 83. Henry II and Ernest Breech were then able to implement their own strategies for recovery, and these included the adoption of the proven General Motors management structure, and the decision to establish the Ford Motor Company in foreign markets. In its first year under Breech, the company registered a profit and it continued to gain strength in the late 1940s and early 1950s. Breechs top priority was strict adherence to a financial plan with strong profit margins; unfortunately, this proved to be at the expense of developing automobiles for an increasingly complex market.

Over the previous two decades, the Ford Motor Company had been a notable pioneer and achiever in the industry, and it was the first company to cast a V-8 engine block (1932). Ford had produced its 25 millionth automobile in 1937 and the following year, its Lincoln Division introduced the Mercury line which proved highly successful in the growing market for medium-priced automobiles. Fords good image had been further enhanced by its contributions to the Allied effort in World War II; even Josef Stalin had kind words for the enterprising American company.

Before he died, Henry Ford I had created two classes of Ford stock. The B Class was reserved for family members and constituted the controlling 40 percent voting interest. The ordinary common shares were to be retained by the company until January 1956, when they were to be offered to the public for the first time.

Two years after Henry Is death, in 1949, the company unveiled a number of new automatic styles. But while the cars were practical, and to a degree fashionable, the company no longer appeared to be a pioneer; indeed it gained a reputation, not wholly justified, as being an imitator of General Motors.

Regaining its initiative, the Ford Motor Company decided to introduce a new model to fill a gap in the market between the Ford and Lincoln-Mercury lines. In 1958, the much heralded 410 horsepower Edsel made its debut. It was a terrible flop. Fords market researchers had been very wrong; there was no gap in the market for the Edsel to fill. After just two years, production of the ill-fated car ceased. 110,847 units had been produced, at a loss of some $250 million.

The 1960s saw many changes at Ford: dissatisfied with his secondary role in the company decision-making, Henry Ford stripped Breech of his power, replacing him with Robert McNamara. But McNamara left the Ford Motor Company in 1961 to serve as Secretary of Defense in the Kennedy administration. Many of McNamaras duties were taken over by Arjay Miller, who succeeded the interim president, John Dykstra, in 1963.

The Ford Motor Company purchased the Philco Corporation in 1961 and established a tractor division in 1962. The following year, Ford introduced its highly successful Mustang; more than 500,000 of these cars were sold in 18 months. The man most responsible for developing the Mustang was a protege of Robert McNamara named Lee Iacocca.

In another move intended to assert his authority over management, Henry Ford dismissed Arjay Miller in 1968 and named Semon E. Knudsen as president. Knudsen, a former executive vice-president at General Motors, known for his aggressive personality, found himself in constant conflict with Henry Ford, and after 19 months he was replaced by Lee Iacocca. Iacocca was a popular figure, highly talented in marketing and sales, but like Knudsen, he frequently disagreed with Henry Ford.

Ford Motor Company subsidiaries in Europe entered a period of strong growth and high profitability in the early 1970s, and these subsidiaries produced components for the Pinto, a sub-compact introduced in the U.S. in 1971. Pinto models from 1971 to 1976 and similarly configured Bobcats from 1975 to 1976 drew a great deal of attention after several incidents in which the cars gas tank exploded in rear-end collisions. The unfavorable publicity from news reports damaged Fords public image, as did the wrongful death litigation.

In April 1977, Henry Ford II reduced Iacoccas power by creating a new executive triumvirate. Iacocca was a member of this, along with Ford himself and Philip Caldwell. But a year later, Ford added his brother William Clay Ford to the group and relegated Iacocca to a subordinate position; then within a few months, Ford suddenly fired Iacocca and installed Caldwell as president. Henry Ford was battling stockholder allegations of financial misconduct and bribery at the time and his dismissal of Iacocca made him more unpopular than ever.

Henry Ford made a critical decision and a very misguided one. He cancelled development of a small car which had been proposed by Iacocca and which was intended to succeed the aging Pinto. Thus, as the Japanese compacts became increasingly popular in the United States, Ford found itself quite unable to compete. Adding to its woes, Ford, along with other U.S. car manufacturers, was obligated by Congressional legislation (particularly the Clean Air Act) to develop automobiles which would emit less pollutants.

Henry Ford relinquished his position as chief executive officer to Philip Caldwell in October 1979. The following March, Ford retired and gave the chair to Caldwell, while retaining his seat on the board of directors.

The Ford Motor Company encountered severe economic losses as a result of a reduction in market share, as well as the high costs incurred by labor contracts and the development of automobiles that met the new federal standards. In 1980, the company lost $1.54 billion, despite strong profits from the truck division and European operations. Ford lost a further $1.06 billion in 1981 and $658 million in 1982 while trying to effect a recovery; its market share fell from 23.6 percent in 1978 to 16.6 percent in 1981.

Company officials studied Japanese methods of industrial management, and worked more closely with Toyo Kogyo, the Japanese manufacturer of Mazda automobiles (Ford gained a 25 percent share of Toyo Kogyo in November 1979, when a Ford subsidiary merged with the company). Ford imported Mazda cars and trucks, and in many ways treated Toyo Kogyo as a small car division until the Escort, its successor to the Pinto, reached the showrooms. This new compact was modelled after the Ford (Europe) Erika; another version of it, the Lynx, was produced by Fords Lincoln-Mercury division.

Caldwell transferred the talented manager Harold Poling from the European division to the United States in an attempt to apply successful European formulas to the American operation. In the restructuring which followed several plants were closed and more than 100,000 workers were dismissed. Fords weakness in the market was a major concern of the unions; consequently, the company inaugurated a policy of employee involvement in plant operations and was able to secure more favorable labor contracts. Productivity improved dramatically.

In 1984, with costs reduced, Ford started to repurchase 30 million shares (about ten percent of the companys stock). Its production of cars in Mexico was increased, and through its interest in Kia Motors, output was stepped up in South Korea. The following year, Ford introduced the Taurus (another version, the Salde, was produced by its Mercury division), a modern full-size automobile which had taken five years to develop at a cost of $3 billion. The Taurus proved highly successful and won several design awards.

Sales and profits reached record levels in 1984, and in 1986 Ford surpassed General Motors in income for the first time since 1924. In addition, Fords market share increased to just under 20 percent. Ford Motor purchased several companies in the mid 1980s, including the First Nationwide Financial Corporation and the New Holland tractor division of Sperry, which was later merged with Ford Tractor. Ford also purchased a 30 percent share of Otosan, the automotive subsidiary of the Turkish Koc Group. The attempted acquisition of the Italian car maker Alfa Romeo in 1986 failed, due to a rival bid from Fiat.

The diversification into financial services that began in the mid-1980s continued in earnest throughout the rest of the decade, as each of the major U.S. car manufacturers sought to insulate themselves against the cyclical nature of their business. Ford spent $5.5 billion acquiring assets for its financial services group during the latter half of the decade, including a $3.4 billion purchase in 1989 of the Associates, a Dallas-based finance company. That acquisition, completed the same year Ford purchased the venerable British car manufacturer, Jaguar Cars Ltd., for $2.5 billion, made Ford the countrys second largest provider of diversified financial services, ranking only behind Citicorp. With plans to eventually derive 30 percent of the companys profits from financial service-related business, Ford entered the 1990s with $115 billion worth of banking-related assets, a portfolio that provided the companys only bright moments during the otherwise deleterious early 1990s.

An economic recession crippled U.S. car manufacturers during the early 1990s, and Ford bore the brunt of the financial malaise that stretched around the globe. Domestically, car sales faltered and abroad, particularly in Great Britain and Australia, Fords international sales plummeted. In 1991, Fords worldwide automotive operations lost an enormous $3.2 billion after recording a $99 million profit the year before. In the United States, automotive losses reached an equally staggering $2.2 billion on the heels of a $17 million loss in 1990. The losses struck a serious blow to Ford, which as recently as 1989 had generated $3.3 billion in net income, but the financial results of 1991 would have been worse without the companys strategic diversification into financial services. For the year, Fords financial services group registered a record $927 million in earnings, up from the previous years total of $761 million, which left the company with a $2.25 billion loss for the year, an inauspicious record in Fords nearly 90-year history.

The financial disaster of 1991, however, was just a prelude to more pernicious losses the following year, as the global recession reached its greatest intensity. In 1992, with revenue swelling to slightly more than $100 billion, Ford posted a crushing $7.38 billion loss. Although 1992 represented one of the bleakest years in Fords history, the worst was over, and as the economic climate improved, the company emerged with renewed vitality. Against the backdrop of successive financial losses, Ford had increased its presence in the truck and minivan market niche, which represented the fastest growing segment of the broadly defined automotive market. Roughly 200,000 mini-vans and sports-utility vehicles were sold in the United States a decade earlier and now, as consumers once again returned to car dealersshowrooms, more than 2.3 million opted for minivans and light trucks, a trend that bolstered Fords financial position and predicated its return to a profitable future.

In 1993, Ford generated $2.52 billion in net income from $108.5 billion in revenue during a year in which the company actually lost money on passenger car sales, yet recouped the losses through minivan and truck sales. By 1994, such vehicles accounted for 50 percent of Fords automotive sales, a prodigious increase from the preceding decade and the primary engine driving the companys growth.

Despite the losses suffered several years earlier, there was justifiable hope for further growth as Ford entered the mid-1990s. The gap separating Japanese and American car manufacturers production standards had narrowed considerably, with the U.S. manufacturers emerging from the early 1990s in a more enviable positionFord included. As the technological and managerial race between U.S. car manufacturers and their Japanese counterparts tightened, the importance of prudent product development and effective distribution networks increased. Toward this end, Ford reorganized its production and distribution operations in mid-1994 to better respond to the changing economic structure of the numerous countries in which Ford operated facilities. Regional trading areas, rather than nation states, would represent the primary focus of Fords future efforts, a direction the company moved toward with its worldwide reorganization in 1994 and a direction that promised to redefine its style of operation for the twenty-first century.

Principal Subsidiaries

Ford Electronics and Refrigeration Corp.; Ford Export Corp.; Ford International Capital Corp.; Ford International Finance Corp.; Ford Holdings, Inc.; Ford Motor Credit Co.; Ford Leasing Development Co.; Ford Motor Land Development Corp.; First Nationwide Financial Corp.; First Nationwide Savings; Ford Motor Company Ltd. (England); Ford Motor Credit Company Ltd. (England); Ford-Werke A.G. (Germany); Ford Credit Bank A.G. (Germany); Ford Motor Company of Canada Ltd.; Ensite Ltd. (Canada); Ford Glass Ltd. (Canada); Ford Motor Company of Australia Ltd.; Ford Motor Company of New Zealand Ltd.; Ford Brasil S.A. (Brazil); Ford Motor de Venezuela; Ford France S.A.; Ford Motor Company (Belgium) N.V.; Ford Credit N.V. (Belgium); Ford Italiana S.p.A. (Italy); Ford Credit S.p.A. (Italy); Ford Leasing S.p.A. (Italy); Ford Motor Argentina S.A.; Ford Motor Company AS (Denmark); Ford Motor Company S.A. (Mexico); Ford Nederland B.V. (Netherlands); Ford Espana S.A. (Spain); Ford Credit S.A. (Spain); Ford Leasing S.A. (Spain); Ford Credit A.B. (Sweden); Ford Credit S.A. (Switzerland); Trans-corn Insurance Ltd. (Bermuda); Mazda Motor Corporation (Japan); Ford Motor Company (Japan) Ltd.; Ford Lio Ho Motor Company Ltd. (Taiwan); Jaguar Ltd.

Further Reading

Beynon, Huw, Working for Ford, London: Penguin, 1984.

Dubashi, Jagannath, Ford: Looking Beyond the Shadows, FW, February 6, 1990, p. 23.

Gelderman, Barbara, Henry Ford, the Wayward Capitalist, New York: Dial Press, 1981.

Keatley, Robert, Ford Reorganizes to Stay Competitive and Reach New Markets in the World, Wall Street Journal, July 22, 1994, p. A4.

Lewis, David L., The Public Image of Henry Ford: An American Folk Hero and His Company, Detroit: Wayne State University Press, 1976.

Meyer, Stephen, The Five Dollar Day: Labor Management and Social Control in the Ford Motor Company 1908-1921, Albany: State University of New York Press, 1981.

Moreau, Dan, Instant Prosperity: Behind Fords Fast Turnaround, Kiplingers Personal Finance Magazine, July 1993, p. 28.

Nye, David E., Henry Ford: Ignorant Idealist, Port Washington: Kennikat Press, 1979.

Reiff, Rick, Slowing Traffic Ahead, Forbes, April 30, 1990, p. 82.

Thomas, Charles M., Ford Loses a Record $2.3 Billion, Automotive News, February 17, 1992, p. 4.

updated by Jeffrey L. Covell

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Ford Motor Company

Ford Motor Company

The American Road
Dearborn, Michigan 48121
U.S.A.
(313) 322-3000

Public Company
Incorporated:
July 9, 1919
Employees: 383,300
Sales: $62.17 billion
Market value: $21.2 billion
Stock Index: New York Boston Pacific Midwest
Toronto Montreal London

Until recently, the Ford Motor Company has been one of the most dynastic of major American enterprises, a factor which has both benefited the company and brought it to the brink of disaster. Today, Ford is the second largest manufacturer of automobiles and trucks in the world, and its operations are well diversified, both operationally and geographically. The company operates the worlds second largest finance company in the world, and is a major producer of tractors, glass, and steel. It is most prominent in the United States, but also has plants in Canada, Britain, and West Germany, and facilities in almost 100 other countries.

Henry Ford, the founder of the Ford Motor Company, was born on a farm near Dearborn, Michigan in 1863. He had a talent for engineering, which he pursued as a hobby from boyhood, but it was not until 1890 that he commenced his engineering career as an employee of the Detroit Edison Company. In his spare time Ford constructed experimental gasoline engines, and in 1892 completed his first gasoline buggy. Dissatisfied with the buggys weight, he sold it in 1896 to help fund the construction of a new car. Fords superiors at the electric company felt his hobby distracted him from his regular occupation, and despite his promotion to chief engineer, he was forced to quit in 1899.

Shortly afterwards, with financial backing from private investors, Ford established the Detroit Automobile Company. He later withdrew from the venture after a disagreement with business associates over the numbers and prices of cars to be produced. Ford advocated a business strategy which combined a lower profit margin on each car with greater production volumes. In this way, he hoped to gain a larger market share and maintain profitability.

Working independently in a small shed in Detroit, Henry Ford developed two four-cylinder, 80-horsepower race cars, called the 999 and the Arrow. These cars won several races and helped to create a new market for Ford automobiles. With $28,000 of capital raised from friends and neighbors, Henry Ford established a new shop on June 16, 1903. In this facility, a converted wagon factory on Mack Avenue in Detroit, the Ford Motor Company began production of a two-cylinder, eight-horsepower design called the Model A. The company produced 1,708 of these models in the first year of operation.

The Ford Motor Company was sued by the Licensed Association of Automobile Manufacturers, an industrial syndicate which held patent rights for road locomotives with internal combustion engines. Ford responded by taking the matter to the courts, arguing that the patent, granted to George B. Selden in 1895, was invalid. During the long process of adjudication, Ford continued to manufacture cars and relocated to a larger plant on Piquette and Beaubien Streets. A Canadian plant was established in Walkerville, Ontario on August 17, 1904.

Henry Ford and his engineers designed several automobiles, each one designated by a letter of the alphabet; these included the small, four-cylinder Model N (which sold for $500), and the more luxurious six-cylinder Model K (which sold poorly for $2500). The failure of the Model K, coupled with Henry Fords persistence in developing inexpensive cars for mass-production, caused a dispute between Ford and his associate Alexander Malcolmson. The latter, who helped to establish the company in 1903, resigned and his share of the company was acquired by Henry Ford. Fords holdings then amounted to 581/2%. In a further consolidation of his control, Ford replaced John S. Gray, a Detroit banker, as president of the company in 1906.

In October 1908, despite the continuing litigation with the Selden syndicate, Ford introduced the durable and practical Model T. Demand for this car was so great that Ford was forced to enlarge its production facilities. Over 10,000 Model Ts were produced in 1909. Able to vote down business associates who favored more conventional methods of production, Henry Ford applied his assembly line concept of manufacturing to the Model T.

In developing the assembly line, Ford noted that the average worker performed several tasks in the production of each component, and used a variety of tools in the process. He improved efficiency by having each worker specialize in one task with one tool. The component on which the employee worked was conveyed to him on a moving belt, and after allowing a set time for the task to be performed, the component was moved on to the next operation. Slower workers thus needed to increase their work rate in order to maintain production at the rate determined by the speed of the belts.

Fords battle with the Selden group led to a decision by the Supreme Court in 1911, eight years after the initial suit. The Court ruled that the Selden patent was invalid. The decision freed many automobile manufacturers from costly licensing obligations; it also enabled others to enter the business.

When the United States became involved in World War I (April 1917), the Ford Motor Company placed its resources at the disposal of the government. For the duration of the war, Ford Motor produced large quantities of automobiles, trucks, and ambulances, as well as Liberty airplane motors, Whippet tanks, Eagle submarine chasers, and munitions.

In 1918 Henry Ford officially retired from the company, naming his son Edsel president, and ceding to him a controlling interest. But in fact, Henry continued to direct company strategy, and spent much of his time developing a farm tractor called the Fordson. He also published a conservative weekly journal, The Dearborn Independent. Edsel, who was more reserved and pragmatic than his father, concerned himself with routine operations.

At the end of the war Henry and Edsel Ford disagreed with fellow stockholders over the planned expenditure of several million dollars for a large new manufacturing complex at River Rouge, near Detroit. The Fords eventually resolved the conflict by buying out all the other shareholders. Their company was re-registered as a Delaware corporation in July 1919. The River Rouge facility, built shortly afterward, was a large integrated manufacturing and assembly complex which included a steel mill of substantial capacity.

Between January 1 and April 19, 1921 the Ford Motor Company had $58 million in financial obligations due, and only $20 million available to meet them. Convinced that Ford Motor would be forced into bankruptcy, representatives of several large financial houses offered to extend loans to the company, on the condition that the Fords yield financial control. When the offer was refused, the bankers retreated, certain that they would soon be called upon to repossess the company.

With little time available, Henry Ford transferred as many automobiles as possible to his dealerships, who were instructed to pay in cash. Almost immediately, this generated $25 million. Next, Ford purchased the Detroit, Toledo & Ironton railroad, the primary medium of transportation for his companys supplies. By rearranging the railroads schedules, Ford was able to reduce by one-third the time that automotive components spent in transit. This allowed him to reduce inventories by one-third, thereby releasing an additional $28 million. With additional income from other sources, and reduction in production costs, Ford had $87 million in cash by April 1, $27 million more than he needed to pay off the company debts.

The Ford Motor Companys only relationship with banks after this crisis was as a depositor. And despite poor financial management, Ford maintained such strong profitability that it offered to lend money on the New York markets, in competition with banks. With large quantities of cash still available, Ford acquired the financially troubled Lincoln Motor Company in 1922.

Edsel Ford was more enthusiastic about the development of the aircraft industry than his father, and in 1925 persuaded his fellow shareholders (all family members) to purchase the Stout Metal Airplane Company. His close friend William Stout, who was retained as vice president and general manager of the company, developed a popular three-engine passenger aircraft known as the Ford Trimotor. 196 of these aircraft were built during its production run.

After 18 years producing the Model T, the Ford Motor Company faced its first serious threat from a competitor. In 1926 the General Motors Corporation introduced its Chevrolet automobile, a more stylish and powerful car. Sales of the Model T dropped sharply. After months of experimenting with a six-cylinder model, Ford decided to discontinue the Model T in favor of the new Model A. On May 31 1926, Ford plants across the country were closed for six months while assembly lines were retooled.

That year Ford voluntarily reduced its work week to five days declaring that workers should also benefit from the success of the company. Ford was also one of the first companies to limit the work day to eight hours, and to establish a minimum wage of $5 per day. At Henry Fords own admission, these policies were instituted more to improve productivity than to appease dissatisfied (and unrepresented) workers.

The British Ford Company was formed in 1928 and shortly thereafter the German Ford Company was founded. Henry Ford recognized the Soviet Union as a market with great potential, and like a number of other American industrialists, he fostered a relationship with officials in the Soviet government. Later, Ford participated in the contruction of an automobile factory at Nishni-Novgogrod.

The economic crisis of October 1929, which led to the Great Depression, forced many companies to close. Ford Motor managed to remain in business, despite losses of as much as $68 million per year. By 1932 economic conditions became so difficult that the Ford minimum wage was reduced to $4 per day. But for its Model A, which sold 4.5 million units between 1927 and 1931, Fords situation would have been much worse.

The economy of Detroit was heavily dependent on large, locally based industrial manufacturers and when companies less successful than Ford were forced to suspend operations, a banking crisis developed. The Ford Motor Company, and Edsel Ford personally, extended about $12 million in loans to these banks in an effort to maintain their solvency. But these efforts failed and the banks were forced to close in February 1933. Ford lost over $32 million in deposits and several millions more in bank securities. The principal Ford bank, Guardian National, was subsequently reorganized by Ford interests as the Manufacturers National Bank of Detroit. Fords largest business rival, General Motors, having suffered a similar crisis, emerged with control over the National Bank of Detroit.

The implementation of President F.D. Roosevelts New Deal, made conditions more favorable to the organization of labor unions. But Henry Ford, who had supported President Hoover in the election, advised his workers to resist union organization, and in 1935 raised the companys minimum wage to $6 per day.

In 1937 the United Automobile Workers union began a campaign to organize Ford workers by sponsoring the employee occupation of a Ford plant in Kansas City. The conflict was resolved when Ford officials agreed to meet with union representatives. That same year there was trouble at the River Rouge complex. Several men distributing UAW pamphlets at the gates were severely beaten by unidentified assailants, believed to have been agents of the Ford security office. Following an investigation by the National Labor Relations Board, Ford was cited for numerous unfair labor practices. The finding was contested, but eventually upheld when the Supreme Court refused to hear the case.

In 1940 Henry Ford, who opposed American involvement in World War II, cancelled a contract (arranged by Edsel) to build 6000 Rolls-Royce Merlin aircraft engines for the British Royal Air Force, and 3000 more for the United States Army. In time, however, public opinion led Ford to change his mind. Plans were made for the construction of a large new government-sponsored facility to manufacture aircraft at Willow Run, west of Dearborn.

Unionization activities climaxed in April 1941 when Ford employees went on strike. The NLRB called an employee election, under the terms of the Wagner Act, to establish a union representation for Ford workers. When the ballots were tabulated in June, the UAW drew 70% of the votes. Henry Ford, an avowed opponent of labor unions, suddenly altered his stand. He agreed to a contract with union representatives which met all worker demands.

The company devoted its resources to the construction of the Willow Run Aircraft plant. Eight months later, in December 1941, the Japanese bombing of Pearl Harbor resulted in a declaration of war by the United States against Japan, Germany, and Italy. Willow Run was completed the following May. It was the largest manufacturing facility in the world, occupying 2.5 million square feet of floor space, with an assembly line three miles long. Adjacent to the plant were hangars, covering 1.2 million square feet, and a large airfield. The airplanes produced at this facility were four-engine B-24E Liberator bombers, the Consolidated Aircraft version of the Boeing B-24. Production of aircraft got off to a slow start, but after adjustments the rate of production was raised to one plane per hour, 24 hours a day. During the war, other Ford Motor plants produced a variety of engines, as well as trucks, jeeps, M-4 tanks, M-10 tank destroyers, and transport gliders. The company also manufactured large quantities of tires, despite the removal of its tire plant to the Soviet Union.

Edsel Ford died unexpectedly in May 1943 at the age of 49. At the time of his death, Edsel was recognized as a far better manager than his father. Indeed, Henry Ford was often criticized for repeatedly undermining his sons efforts to improve the company, and the managerial crisis which occurred after Edsels death is directly attributable to Henry Fords persistent failure to prepare capable managers for future leadership of the company.

Edsel had been responsible for much of the companys wartime mobilization and his absence was deeply felt by his aging father, who was forced to resume the company presidency. In need of assistance, Henry Ford sought a special discharge from the Navy for Edsels son Henry II. The navy complied, citing the special needs of Ford management during wartime. Henry Ford vigorously prepared his grandson to succeed him.

By the end of the war, when the Willow Run plant was turned over to the government, Ford had produced 8600 B-24E bombers and over 57,000 aircraft engines.

In September 1945, Henry Ford II, aged 28, was named president of the Ford Motor Company. The inexperienced man could not have started at a worse time. No longer supported by government contracts, the company began to lose money at a rate of $10 million per month. The source of the problem was Henry Ford Is financial management policy, specifically designed to perplex the Internal Revenue Service and discourage audits. The severe economic conditions after the war made Fords finances an albatross.

Unable to bring the companys finances under control, Henry II hired Ernest R. Breech, a General Motors executive and past chairman of Bendix, in 1946. Breech was placed in charge of two groupsa managerial group and a financial one. The first one was comprised of several managers hired away from General Motors, and the second group was made up of ten talented financial experts who had served with the Air Force Office of Statistical Control. The Air Force group included Robert S. McNamara, J. Edward Lundy, Arjay Miller, and Charles Tex Thornton; they spent several years reconstructing the companys system of financial management.

Henry Ford I, who had retained the title of chairman since 1945, died in April 1947 at the age of 83. Henry II and Ernest Breech were then able to implement their own strategies for recovery, and these included the adoption of the proven General Motors management structure, and the decision to establish the Ford Motor Company in foreign markets. In its first year under Breech, the company registered a profit and it continued to gain strength in the late 1940s and early 1950s. Breechs top priority was strict adherence to a financial plan with strong profit margins; unfortunately, this proved to be at the expense of developing automobiles for an increasingly complex market.

Over the previous two decades, the Ford Motor Company had been a notable pioneer and achiever in the industry, and it was the first company to cast a V-8 engine block (1932). Ford had produced its 25 millionth automobile in 1937 and the following year, its Lincoln Division introduced the Mercury line which proved highly successful in the growing market for medium-priced automobiles. Fords good image had been further enhanced by its contributions to the Allied effort in World War II; even Josef Stalin had kind words for the enterprising American company.

Before he died, Henry Ford I had created two classes of Ford stock. The B Class was reserved for family members and constituted the controlling 40% voting interest. The ordinary common shares were to be retained by the company until January 1956, when they were to be offered to the public for the first time.

Two years after Henry Is death, in 1949, the company unveiled a number of new automatic styles. But while the cars were practical, and to a degree fashionable, the company no longer appeared to be a pioneer; indeed it gained a reputation, not wholly justified, as being an imitator of General Motors.

Regaining its initiative, the Ford Motor Company decided to introduce a new model to fill a gap in the market between the Ford and Lincoln-Mercury lines. In 1958 the much heralded, 410 horsepower Edsel made its debut. It was a terrible flop. Fords market researchers had been very wrong; there was no gap in the market for the Edsel to fill. After just two years, production of the ill-fated car ceased. 110,847 units had been produced, at a loss of some $250 million.

The 1960s saw many changes at Ford: dissatisfied with his secondary role in the company decision-making, Henry Ford stripped Breech of his power, replacing him with Robert McNamara. But McNamara left the Ford Motor Company in 1961 to serve as Secretary of Defense in the Kennedy administration. Many of McNamaras duties were taken over by Arjay Miller, who succeeded the interim president, John Dykstra, in 1963.

The Ford Motor Company purchased the Philco Corporation in 1961 and established a tractor division in 1962. The following year Ford introduced its highly successful Mustang; more than 500,000 of these cars were sold in 18 months. The man most responsible for developing the Mustang was a protege of Robert McNamara named Lee Iacocca.

In another move intended to assert his authority over management, Henry Ford dismissed Arjay Miller in 1968 and named Semon E. Knudsen as president. Knudsen, a former executive vice president at General Motors, known for his strong personality, found himself in constant conflict with Henry Ford, and after 19 months he was replaced by Lee Iacocca. Iacocca was a popular figure, highly talented in marketing and sales, but like Knudsen, he frequently disagreed with Henry Ford.

Ford Motor Company subsidiaries in Europe entered a period of strong growth and high profitability in the early 1970s, and these subsidiaries produced components for the Pinto, a sub-compact introduced in the U.S. in 1971. Pinto models from 1971 to 1976 and similarly configured Bobcats from 1975 to 1976 drew a great deal of attention after numerous incidents in which the cars gas tank exploded in rear-end collisions. The unfavorable publicity from news reports damaged Fords public image, as did the wrongful death litigation.

In April 1977 Henry Ford reduced Iacoccas power by creating a new executive triumvirate. Iacocca was a member of this, along with Ford himself and Philip Caldwell. But a year later, Henry Ford added his brother William Clay Ford to the group and relegated Iacocca to a subordinate position; then within a few months, Ford suddenly fired Iacocca and installed Caldwell as president. Henry Ford was battling stockholder allegations of financial misconduct and bribery at the time and his dismissal of Iacocca made him more unpopular than ever.

Henry Ford made a critical decision and a very misguided one. He cancelled development of a small car which had been proposed by Iacocca and which was intended to succeed the aging Pinto. Thus, as the Japanese compacts became increasingly popular in the U.S., Ford found itself quite unable to compete. Adding to its woes, Ford Motor, along with other U.S. car manufacturers, was obligated by Congressional legislation (particularly the Clean Air Act) to develop automobiles which would emit less pollutants.

Henry Ford relinquished his position as chief executive officer to Philip Caldwell in October 1979. The following March, Ford retired and gave the chairmanship to Cald-well, but he retained his seat on the board of directors.

The Ford Motor Company encountered severe economic losses as a result of a reduction in market share, and high costs incurred by labor contracts and the development of automobiles that met the new federal standards. In 1980 the company lost $1.54 billion, despite strong profits from the truck division and European operations. Ford lost a further $1.06 billion in 1981 and $658 million in 1982 while trying to effect a recovery; its market share fell from 23.6% in 1978 to 16.6% in 1981.

Company officials studied Japanese methods of industrial management, and worked more closely with Toyo Kogyo, the Japanese manufacturer of Mazda automobiles (Ford gained a 25% share of Toyo Kogyo in November 1979, when a Ford subsidiary merged with the company). Ford imported Mazda cars and trucks, and in many ways treated Toyo Kogyo as a small car division until the Escort, its successor to the Pinto, reached the showrooms. This new compact was modelled after the Ford (Europe) Erika; another version of it, the Lynx, was produced by Fords Lincoln-Mercury division.

Caldwell transferred the talented manager Harold Poling from the European division to the United States in an attempt to apply successful European formulas to the American operation. In the restructuring which followed several plants were closed and more than 100,000 workers were dismissed. Fords weakness in the market was a major concern of the unions; consequently, the company inaugurated a policy of employee involvement in plant operations and was able to secure more favorable labor contracts. Productivity improved dramatically.

In 1984, with costs reduced, Ford started to repurchase 30 million shares (about 10% of the companys stock). Its production of cars in Mexico was increased, and through its interest in Kia Motors, output was stepped up in South Korea. The following year Ford introduced the Taurus (another version, the Salde, was produced by its Mercury division), a modern full-size automobile which had taken five years to develop at a cost of $3 billion. The Taurus proved highly successful and won several design awards.

Sales and profits reached record levels in 1984, and in 1986 Ford surpassed General Motors in income for the first time since 1924. In addition, Fords market share increased to just under 20%. Ford Motor purchased several companies in the mid 1980s, including the First Nationwide Financial Corporation and the New Holland tractor division of Sperry, which was later merged with Ford Tractor. Ford also purchased a 30% share of Otosan, the automotive subsidiary of the Turkish Koc Group. The attempted acquisition of the Italian car maker Alfa Romeo in 1986 failed, due to a rival bid from Fiat.

Philip Caldwell retired as chairman and chief executive officer in February 1985 and was succeeded by Donald Petersen. While Ford family interests continue to control the Ford Motor Company, it is unlikely that a Ford family member will play an active role in the management of the company for some time to come.

Principal Subsidiaries

Rouge Steel Co.; Ford Aerospace & Communications Corp.; Ford Electronics and Refrigeration Corp.; Ford Export Corp.; Ford International Capital Corp.; Ford International Finance Corp.; Ford Motor Credit Co.; Parker Chemical Co.; The American Road Insurance Co.; Ford Leasing Development Co.; Ford Motor Land Development Corp.; First Nationwide Financial Corp.; First Nationwide Savings; Ford Motor Company Ltd. (England); Ford Motor Credit Company Ltd. (England); Henry Ford & Son (Finance) Ltd. (England); Ford-Werke A.G. (West Germany); Ford Credit Bank A.G. (West Germany); Ford Motor Company of Canada Ltd.; Ensite Ltd. (Canada); Ford Glass Ltd. (Canada); Ford Motor Company of Australia Ltd.; Ford Motor Company of New Zealand Ltd.; Ford Brasil S.A. (Brazil); Ford Motor de Venezuela; Ford France S.A.; Ford Motor Company (Belgium) N.V.; Ford Credit N.V. (Belgium); Ford Italiana S.p.A. (Italy); Ford Credit S.p.A. (Italy); Ford Leasing S.p.A. (Italy); Ford Motor Argentina S.A.; Ford Motor Company A/S (Denmark); Ford Motor Company S.A. (Mexico); Ford Nederland B.V. (Netherlands); Ford Espana S.A. (Spain); Ford Credit S.A. (Spain); Ford Leasing S.A. (Spain); Ford Credit A.B. (Sweden); Ford Credit S.A. (Switzerland); Transcon Insurance Ltd. (Bermuda); Mazda Motor Corporation (Japan); Ford Motor Company (Japan) Ltd.; Ford Lio Ho Motor Company Ltd. (Taiwan). Ford also has 262 American and 81 foreign vehicle dealerships and 162 other American and foreign subsidiaries.

Further Reading

The Public Image of Henry Ford: An American Folk Hero and His Company by David L. Lewis, Detroit, Wayne State University Press, 1976; Henry Ford, Ignorant Idealist by David E. Nye, Port Washington, New York, Kennikat Press, 1979; Henry Ford, the Wayward Capitalist by Barbara Gelderman, New York, Dial Press, 1981; The Five Dollar Day: Labor Management and Social Control in the Ford Motor Company 1908-1921 by Stephen Meyer, Albany, State University of New York Press, 1981; Working for Ford by Huw Beynon, London, Penguin, 1984.

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Ford Motor Company

Ford Motor Company

1 American Road
Dearborn, Ml 48126

(313) 845-8540
www.ford.com

Thinking of the Ford Motor Company conjures up many imagesdurable trucks that are "built Ford tough"; fancy coupes like the Thunderbird; fast cars, such as the Mustang; and sport utility vehicles (SUVs) like Explorers. Ford cars are part of American culture, and have been since company founder, Henry Ford, designed and built his first Model T in 1908. In the twenty-first century, Ford Motor continues to expand its empire, which includes not only Ford, but Lincoln, Mercury, Aston Martin, Jaguar, Land Rover, Mazda, and Volvo.

The Birth of the Automobile

In the last decades of the nineteenth century, the world was rapidly changing. Many modern conveniences were invented, including the typewriter and telephone, electric lights, and the first automobiles. Inventors had been experimenting with steam-powered vehicles since the late 1700s, but these early cars were noisy, hard to operate, and sometimes dangerous since they had the potential to explode. In 1885, German engineer Karl Benz (1844-1929) is credited with building the first automobile of modern design.

Benz's three-wheeled vehicle was very primitive and could only travel about eight miles per hour. Every passing year, however, inventors and engineers from all over the world continued to make advancements. In Germany, Gottlieb Daimler (1834-1900) and William Maybach (1846-1929) together were inspired to build motor-powered vehicles to replace the slow, bumpy rides of horse-drawn carriages. And, in the United States, Henry Ford built his first car, called the "Quadricycle," in 1896.

While Ford, Benz, Daimler, and a host of others were building these early automobiles, the buying public was not terribly interested. Ford entered several of his early cars in races just to gain attention for his increasingly sophisticated vehicles. The strategy worked and over the next few years he was involved in the start-up of three new companies. The first was the Detroit Automobile Company, a partnership Ford formed in 1899 with the city's mayor and a local lumber baron. It was the first official auto manufacturer in Detroit, Michigan. The company lasted only a year, but was reorganized in 1901 as the Henry Ford Company.

Ford Motor at a Glance

  • Employees: 350,000
  • CEO: William Clay Ford Jr.
  • Subsidiaries: Ford Motor Credit Company; Mazda Motor Corporation; Premier Automotive Group (Aston Martin, Jaguar, Lincoln, Land Rover, Volvo); QualityCare Service; Kwik-Fit; Hertz
  • Major Competitors: General Motors Corporation; DaimlerChrysler AG; Toyota Motor Corporation
  • Notable Products: F-Series trucks; Mustang; Thunderbird; Explorer; Lincoln Towncar and Navigator; Land Rover Discover, Freelander, and Range Rover; Mazda Miata and MPV; Jaguar X-and S-Series cars; Volvo S-and V-Series cars, Aston Martin Vantage and Vanquish

Ford and his investors disagreed about the kinds of cars their company should build. In 1902, Ford resigned to design and build his own race cars, including the "Arrow" and the "999." The "999" won a local competition and set a new record by racing five miles in five minutes and twenty-eight seconds. This exposure led to financial backing, and soon Ford and Alexander Malcomson, a local coal merchant, formed the Ford Motor Company on June 16, 1903. It was the very same year that brothers Orville (1871-1948) and Wilbur Wright

Timeline

1903:
Ford Motor Company is founded.
1906:
Henry Ford takes over presidency of the company.
1908:
Model T is introduced.
191 3:
The assembly line is introduced.
1919:
Henry's son, Edsel, takes over as president.
1922:
Ford acquires Lincoln Motor Company.
1925:
Company builds first airplane, the 199 Ford TriMotor.
1927:
Last Model T is produced.
1932:
First V-8 (eight-cylinder) engine is produced.
1939:
Edsel's Lincoln Continental causes a sensation.
1943:
Edsel dies and Henry retakes the presidency.
1945:
Henry steps down again; grandson Henry II replaces him.
1947:
Henry Ford dies at age eighty-three.
1948:
First F-Series pickup trucks produced.
1955:
Ford Thunderbird sports car introduced.
1964:
Ford Mustang launched at World's Fair.
1968:
Jacques Nasser joins company.
1979:
Company buys stake in Toyo Kogyo (later Mazda).
1980:
Henry Ford II resigns as chairman.
1985:
Ford Taurus introduced.
1986:
Company buys stake in Kia Motors of Korea.
1989:
Buys British luxury carmaker jaguar.
1999:
William "Bill" Clay Ford Jr., great-grandson of Henry Ford, becomes chairman.
2001:
Bill Ford becomes CEO and president after Nasser leaves.
2003:
Ford celebrates its one-hundredth anniversary.

(1867-1912) flew their first airplane at Kitty Hawk, North Carolina.

A New Era of Car Making

Ford Motor was a company with a simple goal: to produce and sell well-built cars at a competitive price. Using an old wagon shop on Mack Avenue in Detroit, Michigan, Ford designed the company's first vehicle called the "Model A." He sold his first car about a month later to a local doctor. As chief engineer, Ford improved on his design and developed new cars. He named the cars by following the alphabet. For example, the Model A was followed by Models B, C, E, and F. By 1904, the Ford Motor Company had done so well that the partners were able to finance their first manufacturing plant outside the United States in Ontario, Canada. The company also moved from the converted wagon shop to larger quarters at the intersection of Piquette Avenue and Beaubien Street in Detroit.

With success, however, also came failure. Although the Model A and its successors had been quite popular, the new Model K brought out in 1906 was not. This caused trouble between Ford and his business partners, who quarreled with the direction Henry seemed to be taking the company. Ford insisted that the company make less expensive vehicles so average people could afford to own a car. The result was a major shift in management, with Ford taking over as president and buying out many of his original investors and their shares of the business.

In 1906, the Model N was introduced. It was a four-cylinder car that sold for just $700, as opposed to the alarming price tag of the Model K, which was $2,800. The Model N brought Ford into a new era, with profits reaching $1 million for the first time. Having outgrown its plant in Detroit, the company began construction on a huge new facility in Highland Park, north of the Detroit city limits. As builders broke ground on the new plant, Ford used the Model N as a base for his next new automobilewhich was destined to change the Ford Motor Company forever.

The Model T was introduced in 1908 as Henry Ford's idea of a "universal" cara stylish, sturdy automobile that was affordable to all Americans who wanted to drive. Solid, dependable, and popular with buyers, the Model T became the sole car built by Ford. The company produced around eight thousand Model T's in 1908. That number more than doubled over the next year, and by 1912, Ford was manufacturing approximately seventy-eight thousand cars.

Celebrating Success

The reason why Ford could sell his cars cheaper was that he had developed a way to make cars faster. In 1913, he introduced the assembly line method of production, which revolutionized the automotive industry. In an assembly line, the framework of a car rests on a moving surface called a conveyor belt. The belt passes by different workers, each of whom is responsible for a single task. With the assembly line, the time required to build a new car was reduced from over twelve hours to an hour and a half. This means that a manufacturer could produce many cars in a single day instead of just one or two. Because he could "mass produce," Ford was soon selling about half of all the cars sold in the United States. At the same time, more assembly plants were built to keep up with consumer demands and dealerships popped up across the country to sell Ford cars.

Ford not only streamlined the work in his companies, he also paid his employees well. In 1914, hoping to build loyalty and worker pride, he doubled wages to $5 per day. The work day was also cut to eight hours. This change made Ford a famous man; his face and business policies were soon written about in countless newspapers and magazines. With the assembly line method in full use by thousands of well-paid workers, Ford production soared over the next few years, reaching nearly half a million cars in 1916.

During this time Ford also began designing farm equipment, beginning with tractors and small trucks. Yet as World War I (1914-18) raged in Europe, it became apparent America would soon join the war effort. When the United States officially declared war on Germany in April 1917, Ford turned the use of his factories over to the government and the company began building trucks, ambulances, small tanks, airplane motors, and even helmets.

A Son Takes the Helm

After the war ended in November 1918, Henry Ford announced his retirement. In 1919, his son Edsel (1893-1943) took over the company. That same year, Ford Motor broke ground for an immense plant on the Rouge River in Dearborn, Michigan. In 1922, Ford purchased rival automaker Lincoln Motor Company, which had introduced the first V-8, or eight-cyclinder, engine the year before.

The first automobiles were very expensive to manufacture and only the very rich could afford to buy them. In 1900, an average worker earned less than $500 a year. When the Model T was introduced, it sold for around $900, which was almost twice as much as an individual's yearly salary. By the 1920s, the price of a Model T was less than $300, which made it affordable for the average middle class worker.

Ford Motor also shifted into the aircraft industry. Convinced that airplanes were the transportation of the future, Edsel Ford bought the Stout Metal Airplane Company in 1925. Ford's first plane, the 199 TriMotor, was produced the same year.

In 1927, after nineteen years of production, Ford decided to discontinue the Model T. Although it had been extremely popular, the Model T was facing stiff competition, most notably from Chevrolet, which had come out with faster, more luxurious cars. After the last Model T rolled off the assembly line in May, Ford closed down its plants while engineers went to work on a new vehicle. After several months of sitting idle, the factories began work on the Model A, an updated version of the original. The new and improved car had a more powerful engine, more space, and a "safety glass" windshield that resisted shattering.

The new Model A was introduced in December 1927 and was a favorite with buyers until the Great Depression hit in 1929. Although the Depression financially devastated much of the United States and its citizens, Ford survived. The company did, however, suffer losses since most people had no money to buy cars.

The United States was drawn into World War II (1939-45) and Ford supported the war effort by manufacturing airplane motors and parts for a bomber called the "Liberator." Two years into the war, tragedy hit the Ford family when Edsel died of cancer at the age of forty-nine. Henry, whose own health had been declining, came back to run the company as president, then turned the reins over to grandson

Henry II (1917-1987) in 1945. In 1947, Henry died and his legacy was carried on by Henry II, whose guidance helped turn the family company into a huge international corporation. Two other Ford grandsons, Benson and William Clay, also joined the business and lent a hand.

A New Era

Over the next years, Ford had its ups and downs: the rugged F-Series trucks were launched in 1948 to much acclaim; a fancy two-seater called the Thunderbird excited the industry with its power and luxury in 1955; the Edsel sedan flopped in 1958; and the speedy Mustang, introduced in 1964, was an extremely hot seller, especially with young people. Ford then entered the mostly ignored off-road category of vehicles with four-wheel or all-wheel drive. To compete with Jeep and Land Rover, which had been in business since the 1940s, Ford introduced the Bronco in 1965.

At the end of the 1960s a young man named Jacques Nasser joined Ford's training program while a college student in Australia. During the 1970s, Nasser moved around the world, working at various Ford divisions and earning a reputation as a sharp businessman with leadership qualities. As Ford opened new assembly plants and expanded operations in Asia and Europe, Nasser steadily climbed the corporate ladder.

Legend has it that while vacationing in Florida in 1939, Edsel Ford was seen driving a flashy new car called a Lincoln Continental. He caused quite a commotion, and hundreds of hopeful buyers called Ford Motor Company to ask about the car. The Lincoln Continental was soon a major hit in the automotive industry.

In 1979, Ford bought part of the Japanese firm Toyo Kogyo, which later became known as Mazda. The next year, 1980, Henry II stepped down as president. In 1985, in order to compete in the family market, Ford launched two mid-sized sedansthe Ford Taurus and Mercury Sable. The company also pushed into the ultra luxury market when it purchased two British automakers, Aston Martin and Jaguar, in 1989.

In the 1990s, Ford started to produce minivans and SUVs, and by 1992 the Ford Explorer ruled the sport utility market. Ford bought into the rental car industry in 1992, acquiring Hertz and then rival Budget in 1996, supplying these firms with thousands of Ford-made cars, trucks, and sport utility vehicles. Budget was sold in 1997, but Ford held on to Hertz, the nation's number-one rental car company.

Hit by Scandal

In 1999, William "Bill" Clay Ford Jr., great-grandson of founder Henry, was named chairman and Jacques Nasser became chief executive officer (CEO) and president. That same year, Ford faced perhaps the biggest crisis in the company's history. Ford Explorers, the country's top SUV, were involved in rollover accidents injuring and sometimes killing occupants. After intense investigation, the problems were attributed to the Firestone Wilderness AT tires, which were installed on all Explorers at Ford factories. Forced to recall and replace thirteen million tires, both Ford and Bridgestone/Firestone were faced with scores of lawsuits and lost billions.

The Explorer and Firestone tire crisis, as well as other problems, brought an end to Jacques Nasser's long career at Ford. He left the company in late 2001 and Bill Ford assumed his responsibilities as CEO. Bill Ford was determined to get back to business as usual, yet this required several immediate measures, including the discontinuation of the Lincoln Continental, the Mercury Cougar and Villager, and the Ford Escort compact car. The model cutbacks were just the beginning of a major rehaul for the company, which included layoffs and the closing of three assembly plants in the United States and Canada.

Gearing Up for the Future

As Ford Motor prepared to hit its one-hundredth anniversary in 2003, the company was ranked as the world's largest truck manufacturer and the second-largest producer of cars with operations in thirty countries around the globe. With annual sales of more than $160 billion, today's Ford Motor Company is a giant of the automotive industry. After one hundred years, Ford has changed a great deal but remains in the familyfounded by Henry Ford in 1903 and run by Bill Ford in 2003.

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Ford Motor Company

Ford Motor Company

BIBLIOGRAPHY

The Ford Motor Company established a system of modern mass production, labor relations, and wage policies that made it one of the most influential corporations of the twentieth century.

While the Ford Motor Company is the enterprise most closely associated with its namesake, Henry Ford, its incorporation in 1903 marked Fords third attempt to build an automobile company. Ford began his automotive career with the short-lived Detroit Automobile Company (18981900), which was followed by the Henry Ford Company (19011902).

Ford manufactured for both domestic and foreign markets. In its first year of operation, it contracted with an overseas distributor to sell cars in Canada and Europe. In 1905 a Canadian plant began producing Ford vehicles for the British Empire.

Ford, unlike its chief rival General Motors, did not adopt a multidivisional structure. Ford and Lincoln (later Lincoln-Mercury), purchased in 1922, remain the only divisions within the auto company. A similarly atavistic quality characterizes Fords ownership and management. The Ford family has consistently played a dominant role in ownership or direct managerial control throughout the companys history. This structure of centralized control is at odds with the historical trajectory toward managerial capitalism typical of most large-scale twentieth-century American corporations.

Ford engineers did not invent the modern assembly line. The basic concept was adapted from the meatpacking industry, in which animals were transported along a system of overhead pulleys and systematically butchered. Over the years 1910 to 1914 the assembly line evolved from the system of conveyors and gravity slides on which the Model T car was assembled in tightly sequenced stages. Production at the Highland Park plant relied on work rhythms that matched the pace of machines. Rather than using generalpurpose tools and machinery, Ford manufactured machines to achieve specific tasks. Individual parts were made to be interchangeable, in order to speed production and reduce the need for skilled craftsmen. Investment in expensive, specialized machinery allowed for the introduction of economies of scale whereby unit costs fall as output rises. Ford produced half a million cars in 1915 and two million cars and trucks in 1923. It diversified into shipbuilding during World War I and aircraft manufacture in 1926. In addition to Europe and the British Empire, the newly industrializing Soviet Union was an important market; by 1927 the majority of tractors in the Soviet Union were Ford-built Fordsons. That same year Ford announced plans to acquire a 3,900-square-mile tract of land in Brazil to use as a rubber plantation to be named Fordlandia.

Integrated mass production was taken even further with the construction of the sprawling Rouge River plant in Dearborn, Michigan, during the 1920s. The Rouge plant inspired the photographer Charles Sheeler, whose pictures of it appeared in the pages of Vanity Fair magazine, and the painter Diego Rivera, who included it in the Detroit Industry murals; both depicted the factory as an icon of modern capitalism.

Along with time studies, Ford used various other strategies to organize work to meet the efficiency standards of plant machinery. In this sense the Ford system represents a refinement and extension of F. W. Taylors scientific management approach. The resulting work environment was fast-paced and continuous, and workers were hard-pressed to keep up. Turnover rates reached 370 percent in 1913. In 1914, to overcome workers resistance to machine-paced industrial work, the company inaugurated a radical plan to double hourly wages to five dollars a day. The extra money took the form of profit-sharing. To qualify for the higher wage, workers needed to demonstrate proper behavior at work and at home. Ford Sociological Department investigators inquired about workers drinking habits, marital strife, criminal records, church-going activities, and other evidence of moral character. In this way Ford Motor exerted social control over its employees off the job, as well as technical control of work efforts on the job.

Ford paid black workers the same wages as similarly qualified white workers. While blacks comprised between 10 and 20 percent of the workforce at Ford, they were overwhelmingly assigned the most dangerous, difficult, and unpleasant jobs, such as those in the foundry. Because their wages were far superior to those obtainable from any alternative sources of employment, black workers, especially young married men, were much less likely to quit these jobs and less willing to embrace unionization.

To expand sales, Ford needed to encourage new segments of the population to buy cars. Higher wages allowed workers to acquire mass-produced goods. The interdependence of mass production and mass consumption came to be characterized as Fordism. The Italian political theorist Antonio Gramsci used the term to describe the combination of social, technological, and political control over workers lives. It has since been extended to cover all institutions (factories, unions, families, and the state) that help to regulate the accumulation of profit in advanced capitalist economies.

Workers at Ford Motor unionized in 1941, four years after the United Auto Workers gained recognition at General Motors and Chrysler. Unionization at Ford was preceded by a strike at the Rouge plant that resulted in Fords recruitment of African American strikebreakers, thereby exacerbating racial divisions within the ranks of the working class at Ford. During this same year U.S. manufacturers, following directives from the governments Office of Production Management, shifted to wartime production. Ford announced plans to mass-produce bombers at a new plant in Willow Run, Michigan. The Rouge plant was turned over to the production of aircraft engines and jeeps.

After the death of Henry Ford in 1947 and, earlier, that of his son and heir apparent, Edsel, in 1943, Henrys grandson Henry II headed the company. He transformed the organization by bringing in modern management experts (nicknamed the Whiz Kids) with little or no experience at Ford. Among these new Ford executives was Robert McNamara, who later served as secretary of defense in the Kennedy and Johnson administrations during the Vietnam War.

The U.S. automobile market after World War II was marked by both consolidationleading to the dominance of the Big Three (GM, Ford, and Chrysler)and the increasing presence of foreign models. In 1955 Toyota Motors built its first modern Japanese mass-production plant, modeled on Fords Rouge factory. In 1957 foreign automobile imports to the United States exceeded exports for the first time in over half a century. Ford began to reassert control of its foreign subsidiaries in Canada and Britain. In 1957 the European Common Market was formed. This spurred Ford to try to build cars for regional rather than national markets (Europe instead of Germany, for instance). In 1967 Ford of Europe was established and in the 1970s it introduced an ultra-subcompact car. From the 1980s through the mid-1990s Ford was the leading car company in Europe. Nevertheless, more aggressive plans to build a world car that would integrate North American and European markets failed to produce success.

As part of this strategy of global integration, Ford completed a series of acquisitions in the 1980s and 1990s that included producers from Japan (Mazda), Europe (Volvo), and Britain (Jaguar, Land Rover, and Aston Martin). Ford recovered from the OPEC oil crisis of the 1970s and the product quality problems of the 1980s by designing the best-selling Taurus along with the increasingly popular Explorer sport utility vehicle. By 1995 Fords share of the U.S. automobile market stood at 25.6 percent. However, well into the first years of the twenty-first century the company continued to rely on sales of trucks and sport utility vehicles at a time when environmental concerns and dependence on foreign oil were emerging as major concerns for U.S. consumers. Ford CEO William Ford Jr. sought to reorient production toward environmentally friendly hybrid vehicles while continuing to offer traditional gas-powered cars. The Rouge plant was reengineered to incorporate green building technology. As Fords share of the U.S. market fell below 20 percent during the 2000s, the company embarked on a strategy of planned shrinkage of facilities and workforce in the United States. This mirrored the trend toward shrinking market share and falling sales for each of the Big Three U.S. auto companies.

SEE ALSO Automobile Industry

BIBLIOGRAPHY

Bonin, Hubert, Yannick Lung, and Steven Tolliday, eds. 2003. Ford, 19032003: The European History. 2 vols. Paris: P.L.A.G.E.

Brinkley, Douglas G. 2003. Wheels for the World: Henry Ford, His Company, and a Century of Progress. New York: Penguin Books.

Edwards, Richard. 1979. Contested Terrain: The Transformation of the Workplace in the Twentieth Century. New York: Basic Books.

Foote, Christopher L., Warren C. Whatley, and Gavin Wright. 2003. Arbitraging a Discriminatory Labor Market: Black Workers at the Ford Motor Company, 19181947. Journal of Labor Economics 21 (3): 493532.

Hounshell, David A. 1984. From the American System to Mass Production, 18001932: The Development of Manufacturing Technology in the United States. Baltimore, MD: Johns Hopkins University Press.

Meyer, Stephen, III. 1981. The Five Dollar Day: Labor Management and Social Control in the Ford Motor Company, 19081921. Albany: State University of New York Press.

Nevins, Allan, with Frank Ernest Hill. 19541962. Ford. Vol. 1: The Times, The Man, The Company ; vol. 2: Expansion and Challenge: 19151933 ; vol. 3: Decline and Rebirth: 19331962. New York: Scribners and Sons.

Wilkins, Mira, and Frank Ernest Hill. 1964. American Business Abroad: Ford on Six Continents. Detroit, MI: Wayne State University Press.

Bruce Pietrykowski

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Ford Motor Company

FORD MOTOR COMPANY


Ford Motor Company is the largest manufacturer of trucks in the world and the second largest manufacturer of automobiles, behind only General Motors Corporation (GM). Headquartered in Dearborn, Michigan, Ford has plants in 19 countries and facilities in more than 100 others. The company markets vehicles under the brand names of Ford, Lincoln, Mercury, Jaguar, and Aston Martin. Ford owns a controlling interest in Japanese automaker Mazda Motor Corporation and in the Hertz Corporation, the world's number one rental-car company. Ford Credit, one of the company's subsidiaries, is the world's leading provider of automotive financing.

Henry Ford (18631947) founded the Ford Motor Company on June 16, 1903. The company was launched from a small converted wagon factory in Detroit, and its assets initially consisted of tools, appliances, machinery, blueprints, patents, and a few models. Henry Ford experimented with a number of early automobile designs during the 1890s, developing a reputation as a pioneer in the area. This reputation grew with Ford's release of the Model A, a two-cylinder, eight-horse-power design that sold 1,708 models in the company's first year of operation. Over the next five years Ford engineers feverishly developed 19 different models, designating each by a letter between B and S. Some models succeeded, some failed, and some never left the plant. The most successful of the group was the Model N, a small four-cylinder car that sold for $500. The biggest failure was the Model K. At $2,500 it priced most consumers out of the market.

The Model K's failure fueled Ford's desire to design an inexpensive and reliable car that could be mass produced. The 1908 Model T was the answer. Affectionately dubbed the "Lizzy" by U.S. car buyers, Ford's Model T came to symbolize low-cost, and durable transportation. The four-cylinder vehicle, which could travel at a top speed of 45 miles per hour, sold 10,660 units in its first year. As demand climbed, Ford invented the world's first moving automobile assembly line in 1913. Henry Ford believed that automobile production would become more efficient if all employees were assigned one place to work, where they could focus on a specific task to accomplish in a diligent manner.

Within 12 months of the invention, Ford workers had reduced the time during which a chassis could be assembled from 12 hours and eight minutes to one hour and 33 minutes. Ford manufactured 308,162 cars in 1914, more than all 299 other car manufacturers combined. The Model T's success and the use of the assembly line allowed Ford Motor Company to drop its price from the original sticker of $850 to $350. It could also double its employees' minimum wage to five dollars and open new factories in the United States, Canada, Europe, Australia, South America, and Japan. It also provided Ford with revenue to purchase luxury carmaker Lincoln Motor Company in 1922.

Consumer interests gradually shifted in the 1920s. Competitors began rolling out more powerful and stylish cars. To stem dwindling profits Ford discontinued production of the Model T in 1927 and closed plants around the country so the company could retool. When Ford opened its doors six months later it unveiled a vastly improved Model A. Featuring hydraulic shock absorbers, automatic windshield wipers, a gas gauge, and a speedometer, the Model A sold more than 4.5 million units in four years. Now refusing to sit idle in face of increasing competition, Ford pushed aside the Model A in 1932, introducing the world's first V-8 engine block that was cast in a single piece. Six years later Ford introduced the Lincoln Continental and a new line of Mercury automobiles.

The 1930s and 1940s also marked a time of transition for the automaker. Ford's market share slipped behind those of GM and the Chrysler Corporation. An avowed opponent of labor unions, Ford was forced to recognize the United Automobile Workers of America (UAW) as the collective bargaining representative for all of the company's workers. In 1941 Ford shut down its civilian automobile production to manufacture B-24 bombers, aircraft engines, tanks, jeeps, trucks, munitions, and equipment for the Allies during the balance of World War II (19391945). When the war ended, most of Ford's contracts with the government terminated, and the car company soon started suffering losses of $10 million per month. In 1947 founder Henry Ford died, four years after the premature death of his 49-year-old son Edsel, who had succeeded his father as the company's president in 1918.

Henry Ford II, Edsel's eldest son, took over as president in 1945. For the next three decades he helped modernize Ford and return it to profitability. In 1955 Ford introduced the Thunderbird. The sleek and sporty two-seat roadster sold more than 16,000 units in its first year, while Chevrolet sold comparatively meager 657 Corvettes. In 1956 Ford Motor Company went public. In the largest stock sale ever at the time, Ford sold 10.2 million shares to 250,000 investors for $657 million, or 20 percent of the family's business. In 1956 Ford created an aerospace division, and two years later the company announced its entry into the heavy and extra-heavy truck market. In 1963 Ford debuted the highly successful Mustang sports coupe, which remains one of the company's most popular muscle cars.

The reign of Henry Ford II as president was not one of uninterrupted success. In 1958 the company released the Edsel, a 410-horsepower, 17-foot sedan that generated losses of $250 million in just two years. During the 1960s Ford's management fought bitterly over the company's direction, changing executives throughout the decade. In the 1970s Ford Motor Co. was named as a defendant in a series of wrongful death lawsuits stemming from numerous incidents when the gas tanks on its subcompact Bobcat and Pinto models exploded during rear-collisions. The OPEC oil embargo of the 1970s also made Ford's bigger, gas-guzzling vehicles a liability, and many U.S. citizens started turning to smaller, more fuel-efficient Japanese vehicles.

The 1980s brought downsizing to Ford. After losing $3.2 billion from 1980 to 1982, the company reduced its workforce by one-third and closed 15 plants. Ford diversified during this period as well. Its 1986 purchase of the Sperry Corporation's New Holland tractor division helped Ford become the world's third largest maker of agricultural equipment. Ford also purchased First Nationwide Financial Corporation and U.S. Leasing in the mid-1980s. On December 26, 1985, Ford introduced the Taurus, an affordable mid-size vehicle that was named car of the year in 1986. By 1987 the Taurus was outselling every other car in the United States. The Ford F-Series pickup truck and subcompact Escort were also gaining in popularity as the decade ended, when Ford was reporting record profits.

Ford continued restructuring in 1990s. It gradually dropped out of the heavy-truck business during this period and consolidated its operations in North America and Europe. In 1994 Ford introduced its year 2000 initiative, under which the entire Ford family of enterprises would be organized into a single operation by the beginning of the next millennium. Ford also announced a plan to make all of its vehicles more environmentally safe before the twenty-first century. Emissions for sport utility vehicles (SUVs) would be reduced to levels required for new cars, while new car emissions would be decreased by 70 percent. In 1999 Ford teamed with DaimlerChrysler AG and the state of California to test zero emission cars powered by fuel cells that produce electricity through the chemical reaction of hydrogen and oxygen. At the same time Ford announced its plan to purchase auto junkyards over the Internet and to recycle undamaged car parts to mechanics.

These announcements, however, were tempered by Ford's plans to roll out the industry's biggest SUV to date. A 3.5-ton, six-door, 19-foot long colossus was scheduled to go on sale for about $50,000 in the fall of 2000. The environmental group, the Sierra Club, described the SUV as a "tanker" that will "guzzle enough gas to make Saddam Hussein smile." Such criticism has concerned the Ford family, which still owns a controlling interest in the company. But the family also recognize that the company's success has always been linked to meeting consumer demands.

See also: Assembly Line, Automobile Industry, Automobile (origin of), Henry Ford, Model T


FURTHER READING

Collier, Peter. The Fords: An American Epic. New York: Summit Books, 1987.

"Ford Motor Company," [cited May 25, 1999] available from the World Wide Web @ www.hoovers.com/.

"Ford Motor Company,"[cited May 25, 1999] available from the World Wide Web @ www2.ford.com/.

"Ford Takes Control of Mazda." St. Petersburg Times, April 13,1996.

"GM, Ford Still Top Fortune 500 List." The Detroit News, April 7, 1999.

Langworth, Richard, M. The Complete History of Ford Motor Company. New York: Beekman House, 1987.

ford motor company is the largest manufacturer of trucks in the world and the second largest manufacturer of automobiles.

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Ford Motor Company

FORD MOTOR COMPANY

FORD MOTOR COMPANY. Founded in 1903 by Henry Ford, and based in the Detroit suburb of Dearborn, Michigan, the Ford Motor Company quickly revolutionized the market for cars. After several years of making a range of autos, in 1908 Ford decided to concentrate on producing only one car, the Model T. His goal was to compete on the basis of price not product variety. Crucial to this strategy was his adroit use of the moving assembly line, where workers specialized in one minor part of the car-assembly process. As prices fell, sales of the Model T rose from 10,607 in 1909 to 472,350 in 1916. By 1921 Ford accounted for 62 percent of all car sales. As the 1920s wore on, however, many consumers demanded greater product variety in addition to low prices. As sales of the Model T fell, Ford Motor replaced it with the Model A, which sold 4.5 million units from 1927 to 1931.

During World War II, Ford Motor Company played an active role in the war effort. It produced a wide range of military hardware, including tanks, trucks, jeeps, engines, and airplanes. Edsel Ford, who had assumed the presidency of the company from his father in 1918, died in 1943. Henry Ford reassumed formal control of the company after his son's death, and helped position his grandson Henry Ford II to become president in 1945. Henry Ford died in 1947.

Ford Motor Company regained its place as America's number two car producer in 1950, overtaking Chrysler, which had supplanted it in the early 1930s. In 1963 Ford unveiled one of its most popular cars, the Mustang, which registered more than 500,000 sales in its first eighteen months. In 1971 Ford introduced another model, the Pinto, which was designed to compete in the sub-compact market. Despite the Pinto's potential, it generated a good deal of negative publicity for the company after the gas tanks in several cars exploded in rear-end collisions.

In 1979 Philip Caldwell replaced Henry Ford II as CEO, and within five years had helped Ford register record sales and profits. Donald Petersen succeeded Caldwell as CEO in 1985, and under his direction Ford acquired the British luxury car producer Jaguar and introduced the Taurus, a model that proved very popular with consumers. As the twentieth century drew to a close, Ford was comfortably positioned as America's second largest car producer, trailing only General Motors.

BIBLIOGRAPHY

McGraw, Thomas. American Business, 19202000: How It Worked. Wheeling, Ill.: Harlan Davidson, 2000.

Nevins, Allan. Ford. New York: Scribners, 1954.

Scherer, F. M. Industry Structure, Strategy, and Public Policy. New York: HarperCollins, 1996.

Martin H. Stack

See also Assembly Line ; Automobile ; and vol. 9: Ford Men Beat and Rout Lewis .

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Ford Motor Company

Ford Motor Company

By 1920, the immense scale Henry Ford's international fame could be matched only by the size of his financial assets and the magnitude of his ego. Though Henry would not wrest sole control of Ford Motor Company—the automobile manufacturer he founded with twelve investors in 1903—until the 1920s, the wild success of the car maker was attributed entirely to his individual genius. During Ford's early years, the company was virtually indistinguishable from its founder. "Fordism," as it came to be known—a system of mass production which combined the principles of "scientific management" with new manufacturing techniques, such as the assembly line—created more than fantastic profits for his company: it literally revolutionized industry on a global scale within twenty years of its implementation at Ford's factory in Highland Park, Michigan. Away from the factory, the Model T, produced between 1908 and 1927, defined the mass consumer market of the 1920s, and in the process helped make the automobile an essential component of American culture. After Henry's resignation in 1945 and series of problems throughout the 1950s, the remarkable success of the Mustang in the 1960s re-established the prominence of Ford Motor Company in the postwar era.

The rapid growth of Ford Motor Company during the first twenty years of this century was due to the astounding sales record of the Model T, or "Tin Lizzie" as it came to be known. Because the cost of early automobiles was prohibitive for most Americans, cars were essentially luxury items and few manufacturers saw the potential for mass appeal of the motorized vehicle. With a debut price of only $850, significantly less expensive than its competitors, the Model T was within the budget of many potential consumers. Because Ford's ingenious labor-saving techniques were not yet available—the assembly line, for instance, would later quadruple productive capacities and reduce labor expenses—Ford kept costs for the Model T low by producing only one type of car (other companies tried to build several different models simultaneously) but assembling it with interchangeable body styles. Due to its functional simplicity, the car was often ridiculed for its aesthetic shortcomings, and Ford himself boasted that consumers could purchase the Model T "in any color they want so long as it's black."

Despite its competitive price, the Model T did not sell particularly well during its initial release. It was aggressive marketing that turned the Model T into the best selling car in history. Henry Ford had originally won financial backing for Ford Motor Company by racing cars and he turned to racing once again in an effort to sell his new product. This competition, however, was a much-publicized transcontinental race. Though the winning Ford car was later disqualified for irregularities, the Model T gained enormous notoriety for its victory and Ford turned that success into massive sales. Later, Ford would market the Model T by appealing to his own person: purchasers could buy a piece of Henry Ford's genius as well as a part of America itself.

To a large extent, we can trace the evolution of America's "car culture" to Ford and the Model T. It was the first car marketed to a large consumer audience, and this alone redefined the role of the automobile industry in the United States. In their famous sociological study Middletown, Robert and Helen Lynd conclude that the automobile, by 1925, was already an accepted and indispensable part of American life. It is no exaggeration to suggest that the Model T permanently changed the geography of this country: the popularity of the car made the huge suburban building booms of the 1920s possible, while millions of miles of paved roads were built in response to the demands of new motorists. In addition to the changes brought by the automobile, Ford's production of tractors and other internal combustion farming equipment had a lasting effect on the rural landscape and the agricultural business. Though Henry himself came from a farming community and had nostalgic sympathies for the family farm, his products made life difficult for many small farmers who could not afford (or make profitable) the new harvesting machines. As much as Henry may have loved the farmer, he hated the inefficiency of small operations and imagined an agriculture of mass scale.

By 1911, the popularity of the Model T began to present fresh challenges to Ford and its management team. The young company had already moved its base of operations to Highland Park after reaching productive capacity at its Detroit shop and was rapidly approaching its limit once again. The appetite of consumers was far from sated, but labor shortages and productivity ceilings were arresting further plans for expansion. Over the next five years or so, Henry Ford began to develop the concept of "Fordism," an industrial regime which would shortly revolutionize factory production on a global scale. In its early years, the philosophy of Fordism rested on two simple strategies: the invention of the assembly line and the increase of wages. Before the introduction of linework at Ford, the bodies of cars remained stationary while teams of workers moved from station to station. By simply putting the unfinished body on rails and attaching it to a drive train, Ford could move the car from point to point while groups of laborers remained at their assigned posts. This new method allowed for greater specialization of tasks among the workers and permitted management to monitor the efficiency of laborers. And though Henry Ford did not "invent" the assembly line, he has been credited with the development and refinement of this manufacturing technique.

One of the earliest and most persistent critiques of the assembly line came from craftsmen who complained that the division of labor reduced the level of skill required for employment. The assembly line created a distinct division of labor, and the standardization of tasks it required led to a more general deskilling of workers. In order to induce workers to accept this new industrial regime, Ford decided to raise wages. Although this contradicted the logic of supply and demand (with the assembly line, fewer workers could produce more), Ford reasoned that workers would only accept more mundane work in return for better compensation. With the introduction of the eight-hour, five-dollar day (more than doubling the average daily pay) in 1914, Ford single-handedly revolutionized wage structures. Thousands of job-seekers flooded employment offices across the Detroit area looking for positions at Ford, and Henry himself later said that the five-dollar day was the best idea he ever had.

Ironically, the concept of higher wages also permitted the company to discriminate in the workplace. Employees of eastern European and middle-eastern descent were given the most dangerous and physically taxing jobs, while African-Americans were not hired until World War I and women were a rarity before World War II. Meant to bring stability to the organization, the five-dollar day was introduced as part of a larger profit-sharing scheme: workers were only eligible after six months at the company and had to pass a battery of "tests" in order to qualify.

To this end, Ford recruited an army of "social workers," whose ranks included physicians, nurses, and sociologists, to inspect the habits and living arrangements of its employees. To his credit, Henry seemed genuinely concerned with the safety of his employees and built a hospital where they could receive treatment at any time of day. Ford's paternalistic attitude towards his employees, however, had more questionable results in other areas. The company produced a series of "instructional manuals" through the 1910s and 1920s, encouraging its employees to practice thrifty lifestyles and conform to "American" ways of living. Employees who were unmarried or did not live in "sanitary" homes were consistently denied a share of profits. To assist its many immigrant employees, Ford established an official program of "Americanization" that included English language training, courses on household thrift, and moral instruction. Not surprisingly, employees of "British" descent often qualified for profit-sharing with little scrutiny; most other immigrants had to pass the course of "Americanization" before they could hope to realize the five-dollar wage.

The glory years of Ford ended during the 1930s, and the next thirty years were a very tumultuous time for the company. In keeping with his philosophy, Ford actually raised wages after the stock market crash of 1929 in an effort to stimulate demand. Unwilling to find other supporters in industry, Ford was compelled to reverse his policy shortly thereafter. Labor unrest and unionization during the 1930s forced Ford to reassess his authoritarian discipline and recognize the power of organized labor. Henry stepped down as President in 1945, and though profits had been maintained during the war, Ford's arcane organizational structure was limiting profitability, and the ensuing power struggle eventually led to Ford's public stock offering. The Edsel, Ford's economy model of the late 1950s, named after Henry's son, was the most spectacular failure in the history of American automobile production and symbolized the mood in the company and its public reputation. Although Ford kept its position as an industrial giant (it has consistently been the third largest American manufacturer during the postwar era), General Motors established itself as a much larger and more profitable rival.

On the road, Ford maintained its visibility during the 1950s with the Thunderbird. Its eight cylinder engine was one of the most powerful in its time, but its size necessitated a fairly large body. Because it was priced in the range of other luxury cars (the Chevrolet Corvette was the only true sportscar made in the United States), the Thunderbird faced stiff competition from sleek foreign models though it always achieved high sales figures. New technology of the early 1960s allowed for more streamlined vehicles, and Ford responded by releasing the Mustang in 1963 (under the direction of a young Lee Iaccoca). Smaller and more affordable than the Thunderbird, the Mustang became all things to all people: at once a sports coupe and a touring sedan, it offered a unique combination of practicality and flair. Its remarkable success helped invent the genre of the sports-sedan and reinvigorated Ford's lagging profits. Although the 1970s and early 1980s were a difficult time for Ford and the other American auto manufacturers—the oil crisis of 1973 and competition from Japanese firms sapped profits, while the well-publicized safety problems of the Pinto did little to enhance the company's image—Ford re-emerged during the 1980s with the Escort, a functional, economy car designed for the growing legions of suburban Americans. The Escort was the best-selling car in the world for a number of years during that decade and it helped catapult Ford into a period of renewed profitability. With the Escort, Ford returned to its roots, using the principles of functionality and reliability to once again capture a mass consumer audience.

—Peter Kalliney

Further Reading:

Flink, James J. The Automobile Age. Cambridge, Massachusetts, and London, MIT Press, 1988.

Miller, Ray. Mustang Does It: An Illustrated History. Oceanside, California, Evergreen Press, 1978.

Nevins, Allan. Ford: Expansion and Challenge, 1915-1933. Vol. 2. New York, Charles Scribner's Sons, 1957.

——. Ford: The Times, the Man, the Company. Vol. 1. New York, Charles Scribner's Sons, 1954.

——. Ford: Decline and Rebirth, 1933-1962. Vol. 3. New York, Charles Scribner's Sons, 1963.

Raushenbush, Carl. Fordism, Ford, and the Community. New York, League for Industrial Democracy, 1937.

Stern, Philip Van Doren. Tin Lizzie: The Story of the Fabulous Model T Ford. New York, Simon & Schuster, 1955.

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Ford Motor Company

Ford Motor Company

FOUNDED: 1903



Contact Information:

HEADQUARTERS: The American Rd.
Dearborn, MI 48121
PHONE: (313)322-3000
FAX: (313)323-2959
URL: http://www.ford.com

OVERVIEW

One of the "big three" car companies in the United States, Ford has a rich history and heritage. Ford has been responsible for some of the largest contributions to the U.S. economy and its growth. Aside from its status as a car company, Ford also had considerable stakes in the financial services area. The company manufactures car parts and accessories in various divisions like the Body and Assembly Operations, Casting Division, Climate Control Operations, Glass Division, Parts and Services Division, Plastics Products Division, and Transmission and Chassis Operations.

Ford held the number two position among U.S. car companies with 1997 sales of $153.6 billion. Ford also ranked second on the Fortune 500 list of the largest U.S. industrial corporations based on sales, and it was the leading exporter of cars and trucks from the United States and Canada.




COMPANY FINANCES

Ford's 1997 worldwide net income was $6.9 billion, a 56 percent increase from 1996. Of that, $4.0 billion was generated in the United States, and $2.9 billion was generated internationally. Total revenues for the company were $153.6 billion, $122.9 billion of which was generated by automotive sales, while $30.6 billion was derived from the company's financial services.

Ford's total earnings per share (EPS) for 1997 were $5.62, up 54 percent from 1996's EPS of $3.64. The company's stock price rose from $32 1/4 at year-end 1996 to $48 9/16 at year-end 1997. As of mid-1998, stock was trading at around $58.00 per share. Ford stock's 52-week high was $59.13, and its 52-week low was $26.15 per share.

Ford continued to show improvement during the first quarter of 1998, earning $1.7 billion, or $1.36 per share. The 1998 results compare with earnings of $1.5 billion, or $1.20 per share during the same period in 1997 and beat the company's record for highest first quarter earnings of $1.6 billion, set in 1989.

ANALYSTS' OPINIONS

Ford's Atlanta Assembly Plant, maker of the Ford Taurus and Mercury Sable, was rated by J.D. Power and Associates as the highest quality automobile factory in the world serving the North American market. According to Alex Taylor in the June 22, 1998 issue of Fortune magazine, "Ford, the 95-year-old family business that has traditionally been a solid but never dazzling performer, has remade itself into the global powerhouse the rest of Motown would love to be." In 1997, Ford earned $6.9 billion in profits, more than any car company in history. The article also reports that while many doubted Trot-man's Ford 2000 initiative, the company was making significant progress toward its goal of merging the Ford's engineering and manufacturing operations in the United States and Europe. The company has gone further than the other big three auto makers toward changing its "old ways." The company had a record first quarter in 1998 and announced that second-quarter results would exceed analyst estimates and beat the previous year's earnings. During May and June of 1998, Ford stock rose 21 percent.




HISTORY

Henry Ford founded the Ford Motor Company in 1903. Born on a farm near Dearborn, Michigan, he made his first rudimentary car, the Quadricycle, in a shed behind his home. With $28,000 and a lot of faith and courage, Henry Ford and 12 associates incorporated the Ford Motor Company in 1903 in Lansing, Michigan. Between 1903 and 1908, Henry Ford and his engineers used the first 19 letters of the alphabet to designate their creations, although many of these cars were experimental and never reached the public.

The first production Ford car, the Model A, was sold a month after its incorporation to a Chicago dentist named Pfennig. By this time, the company's bank balance had dwindled to $223.65. During the next five years Henry Ford graduated from being chief engineer to president, acquired a majority of the stock, and directed a development and production program that began in a converted wagon factory. In the first 15 months, 1,700 Model A cars chugged out of the old wagon factory.

By the year 1913, Ford had established the world's first moving automobile assembly line production operation and began sales operations in Argentina, China, Indonesia, Siam, and Brazil. By 1915, Ford had built 1 million cars, and by 1922 that number had reached 10 million. Ford production reached 20 million, and the company built its first V-8 automobile in 1931. A new line, Mercury, was introduced in 1938, and the Lincoln Continental was introduced the same year. However, at the start of World War II, Ford was forced to halt civilian production and shift to total military production. By the time the second World War ended, Henry Ford died at the age of 83, in 1947.

Henry Ford II, the oldest grandson of Henry Ford assumed presidency of the company in 1945. As he drove the first post-war car off the assembly line, Henry Ford II made plans to reorganize and decentralize the company. At the time, Ford Motor Company was losing several million dollars a month and was in a critical condition to resume its pre-World War II position as a major force in the now fiercely competitive auto industry.

Henry Ford II turned out to be the ideal individual to tackle the job of leading the family business to becoming a modern, publicly owned corporation. His genius was in his ability to find the most talented people and bring them into leadership positions in this rapidly growing organization. Those hired by Henry Ford II brought quantitative analysis and the science of modern management to the company.

In 1956, the Ford Motor Company took a major step and went public. In the largest stock issue of all time, 10,200,000 shares of the Ford Motor Company were put up for sale and 250,000 investors rushed to pay $657 million for 20 percent of what, until then, had been a family business. In 1958, Ford announced its entry into the heavy and extra-heavy truck market (it had entered the light truck market in 1917), and by 1959, Ford had produced 50 million vehicles.

STRATEGY

Ford started as a domestic company and capitalized on domestic demand. However, this did not detract from the company's focus on globalization. Henry Ford's policy was to become a contributing citizen in every country where Ford sold cars. His slogan was, "Build them where you sell them." In the same vein, Ford believed in equal employment opportunity throughout his company.

Henry Ford II continued his grandfather's equal employment policies, predating federal civil rights legislation. In the late 1970s, when American workers were criticized for producing poor quality, Henry Ford II said, "there is no such thing as a bad employee, only bad managers." Company leadership accepted responsibility, and Ford was the first American auto company to make quality "Ford's number one operating priority."

Ford continued to believe in improving quality via its employees, as opposed to the rest of the industry, which was moving on to the use of high-tech robots. "Teamwork" became the norm from in-plant participa-tory groups to a new way of developing cars based on cross-functional teams. The idea was to bring in representatives from all engineering and management specialties together into each vehicle development team, then give them the authority to make as many decisions as possible. The first team effort was on a bold new car—the Taurus. The immensely successful effort encouraged management to give the teams more authority and independence.

In efforts to increase profitability, Ford continued restructuring its business and reducing process costs. The company discontinued low-volume, low-profit vehicles such as the Aerostar, Aspire, Thunderbird, Cougar, and Probe; sold its heavy truck operations; reduced excess car capacity; and added capacity for its best-selling light trucks. In 1997, Ford announced financial goals for its automotive business, including targeting a return on sales of 4 percent in North America; in Europe, they hoped to break even; in South America, the company sought reduction in losses compared with 1996. Overall, Ford hoped to reduce total costs by $1 billion and reduce capital spending. The company was able to exceed all of those goals, as stated in its 1997 Annual Report.

The company's latest strategy was its "new edge." The company defined this as an inclusive concept that meant a commitment at Ford to focus on improved quality, cost, and speed; great new products; new design styles with "smooth, sculpted surfaces" and "clear, crisp intersections;" and sharp focus on shareholder value.

INFLUENCES

Ever since its beginning, world events have shaped the Ford Motor company. World War II played a major role in the company's prominence and growth. Also important were the influence of Henry Ford in the pre-World War II period and his oldest grandson, Henry Ford II in the post-war period. The success of the Ford Motor Company was in the fact that Ford grew and adapted to the changing times, while at the same time anticipating industry events and setting trends and milestones of its own.

In the 1960s, for instance, Ford leaders anticipated a weakening of trade barriers and moved to regional trading way ahead of the pack. Ford of Europe was established in 1967, 20 years ahead of the European Economic Community's arrival. Similarly, Ford established the North American Automotive Operations (NAAO) consolidating the United States, Canada, and Mexico in 1972, more than a decade ahead of the North American Free Trade Agreement (NAFTA).



CURRENT TRENDS

In 1994, with the consolidation of Ford's North American and European operations, Ford 2000 was initiated. The Ford 2000 commitment was to bring the entire Ford global organization into a single operation by the year 2000. Ford 2000 created a single global management team to allow the company to eliminate duplication, initiate best practices, use common components and designs for the advantage of scale, and allocate resources to wherever they are needed to best serve market needs.

Ford expected to save billions with the Ford 2000 initiative, but Ford's profit margins fell 60 percent during the 1994-1996 phase because of tough competition. With heavy competition from foreign and other domestic auto makers in the mid-1990s, Ford was going through a difficult period trying to remain profitable. New product introductions and aggressive marketing were results of this effort. In February of 1997, Ford announced its decision to quit the heavy truck business after launching the much publicized HN80 model introduced in fall 1996; this move reflected the importance that Ford company executives placed in a company wide strategic review. "Industry analysts said that Ford's decision to drop out of the heavy truck business recognizes it wouldn't easily have caught the market leaders," according to the Knight Ridder/Tribune Business News.

FAST FACTS: About Ford Motor Company


Ownership: The Ford Motor Company is a publicly held company traded on the New York Stock Exchange.

Ticker symbol: F

Officers: Alex Trotman, Chmn., Pres., & CEO, 64; W. Wayne Booker, Vice-Chmn., 63; Edward E. Hagenlocker, Vice-Chmn., 58; John M. Devine, VP & CFO, 53

Employees: 363,892

Principal Subsidiary Companies: Ford Motor Company has many subsidiaries. Some of the better known include: Ford Motor Credit Co., Hertz Corp., Lincoln Mercury Division, and Jaguar Ltd.

Chief Competitors: As a major automobile manufacturer, Ford's competitors include: Chrysler; General Motors; Toyota; Honda; Daimler-Benz; BMW; Mitsubishi; Nissan; Hyundai; Kia; and Volkswagon.




In another move expected to improve performance, Ford planned its launch of its new 1999 Cougar sports coupe. Sold by Mercury, the company utilized the first North American application of Ford's "New Edge" design and side air-bag technology. The car will also be sold in Europe and arrived at dealer showrooms in May 1998. Mercury was hoping to lure new buyers to the brand, in part by moving its headquarters to Irvine, California, in 1998. Ford hoped that southern California's "innovative, trendsetting culture and strong automotive market will foster development of unique vehicles and creative new looks for both brands."



PRODUCTS

Ford has always been a trend setter with its new products. In 1904, Henry Ford set the first speed record driving his "999" race car 91.37 miles per hour on frozen Lake St. Clair, near Detroit, Michigan. Ford introduced the first V-8 engine. In the fall of 1954, the Thunderbird, an American classic, joined the Ford car family as a 1955 two-seater sports car. The original Thunderbird was offered with a 160-horsepower V-8 engine with a three-speed manual transmission and had a new and unique feature—a convertible canvas roof for fair and sunny weather and a detachable plastic hardtop for foul weather.

Ford changed the direction of the American auto industry forever on April 17, 1964, when it unveiled the Mustang at the world's Fair in New York. The Ford Mus-tang caused a sensation that confirmed the theories of Ford product planners who thought a car with a youthful touch would appeal to World War II baby boomers. Dealers were swamped with some 22,000 orders on the car's first day.

In 1980, Ford introduced the 1981 Escort in its first attempt at a world car. CDW27 was Ford's genuine global car. Named Mondeo in Europe, Taiwan, and the Middle East, slightly modified versions went on sale in North America with the names Ford Contour and Mercury Mystique. Ford's CDW27 became a new way of thinking about product development for the Ford Motor Company. It proved that true globalization was possible and that customer focused teams were the way of the competitive future. Runaway successes during the 1990s included the company's sports utility vehicles and F-series pick-ups. The F-series pick-ups outsold any other car in the world during the 1980s and 1990s. In the late 1990s, Ford sold cars under the brands Ford, Lincoln, Mercury, Aston Martin, and Jaguar.



CORPORATE CITIZENSHIP

Ford announced that beginning with 1999 model year cars, all of its sport utility vehicles (SUVs) will be low-emission vehicles, as clean as new cars. And, along with the other major automakers, Ford planned to produce cars with 70 percent lower emissions nationally by 2001. The company also made sure that its production facilities had a minimal impact on the environment. Ford was the first large company in the world to commit globally to ISO 14001 certification, the international environmental management system standard covering all of a factory's environmental efforts, such as energy use, water treatment, waste disposal, and air quality. In the United Kingdom, Ford's Bridgend Engine Plant just began operating the largest solar power installation at any manufacturing site in Europe. Over a 30-year period its solar panels were expected to reduce the amount of carbon dioxide emitted at the plant by more than 4,000 tons.

CHRONOLOGY: Key Dates for Ford Motor Co.


1903:

Henry Ford establishes the Ford Motor Company

1908:

Ford introduces the Model T

1909:

Henry Ford applies his assembly line concept to Model T production

1918:

Henry Ford retires naming his son, Edsel Ford, as president

1919:

Edsel and Henry Ford buy out the other stockholders and incorporate

1922:

Acquires the Lincoln Motor Company

1937:

Ford produces its 25 millionth automobile

1943:

Edsel Ford dies

1945:

Henry Ford II is named president

1949:

Henry Ford I dies

1956:

Ford Motor Company goes public

1958:

The Ford Edsel debuts and flops horribly

1962:

The Mustang makes its debut and sells 500,000 in 18 months

1979:

Henry Ford II relinquishes his position to Philip Caldwell

1986:

Ford's income passes General Motors' for the first time since 1924

1993:

Ford products are five of the top eight bestselling vehicles in the United States

1999:

All Ford sport utility vehicles are manufactured as low-emission vehicles




GLOBAL PRESENCE

While Ford was growing domestically, parallel growth was occurring as part of a foreign expansion program that began in 1904, a year after the company was formed. On August 17, 1904, Ford Motor Company of Canada was formed in the small town of Walkerville, Ontario. From this small beginning grew a large overseas organization of manufacturing plants, assembly plants, parts depots, and dealers. Ford is represented in some 200 countries and territories around the world, and over 60,000 companies worldwide supply Ford with goods and services.

METHOD ACTING FOR PICK-UP TRUCKS

As Batman would tell you, you can't fight crime unless you have a cool set of wheels. That's the concept behind the syndicated television show Team Knight Rider, which debuted in the fall of 1997. The stars of the show are Ford vehicles: a Ford Expedition (which goes by the name Dante), a Mustang (Domino), and a F-150 pick-up truck (Attack Beast). If you're wondering why the vehicles have names, it's because the vehicles are really the stars of the show, and all of the vehicles can talk.

The show is a spin-off of the 1980s television series Knight Rider, which ran for four seasons and starred David Hasselhoff and his talking car "KITT." Hasselhoff was soon off for the sunnier climes and the beach crowd of Baywatch, but the concept of talking vehicles had caught hold of the public imagination. After all, when conventional law enforcement and national security agencies have failed, that's exactly when you need a talking car to hammer out justice. Thus far, episodes have included "The Blonde Woman," "Angels in Chains," and "Spy Girls."

Usually, manufacturers have to settle for what is called "product placement" when it comes to getting their cars, beer, or soda into films and television. The product is used as a prop and is incidental to the plot or story. Ford has scored a real hit with Team Knight Rider, in that their product isn't merely a part of the show, it is the show. The actors and even the stories are incidental to what is largely an advertisement for Ford products.




Markets Ford targeted during the late 1990s included Asia, where the company saw great long-term growth opportunities despite the area's economic turmoil. They aimed for 10 percent market share by 2007. Also as part of its Asian expansion, Ford began manufacturing the Ford Transit in Belarus, China, Malaysia, and Vietnam. The company was also expanding manufacturing opportunities and investing in areas like central and eastern Europe and South America. In Brazil, where Ford planned a new plant, the company's market share increased from 10.7 to 14.5 percent between 1996 and 1997.



EMPLOYMENT

Ford values diversity in its employees and states that "Our global workforce is a competitive strength." The company believes diversity in its workforce helps it better understand and serve customers. Once hired, the company strives to educate and develop its employees. The company's overall goal was for each employee to receive at least 40 hours of training each year.



SOURCES OF INFORMATION

Bibliography

evanoff, ted. "ford to exit heavy truck business." knight-ridder/tribune business news, 20 february 1997.

"ford motor company." hoovers online, 1997. available at http://www.hoovers.com.

ford motor company annual report 1997. ford motor company, 1998.

ford motor company web site, 30 june 1998. available at http://www.ford.com.

"improving automotive operations drive ford to record first quarter earnings of $1.7 billion, up 15%." ford motor company press release, 16 april 1998.


international directory of company histories. vol. 11. detroit, mi: st. james press, 1995.


moody's company data report. moody's investor service, 1996.


taylor, alex. "the gentlemen at ford are kicking butt." fortune, 22 june 1998.


For an annual report:

on the internet at: http://www.ford.com/finaninvest/stockholder/stock97/index.htmor write: ford motor company, shareholder relations, the american road, po box 1899, dearborn, mi 48121-1899


For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. ford's primary sics are:

3711 motor vehicles and car bodies

3714 motor vehicle parts and accessories

6035 savings institutions federal chartered

6141 personal credit institutions

6159 miscellaneous business credit institutions

6331 fire, marine and casualty insurance

7515 passenger car leasing

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Ford Motor Company

Ford Motor Company

founded: 1903



Contact Information:

headquarters: the american rd.
dearborn, mi 48121 phone: (313)322-3000 fax: (313)323-2959 toll free: 800) 392-3673; (800) 232-5952 (tdd for the hearing impaired)

url: http://www.ford.com

OVERVIEW

One of the "big three" car companies in the United States, Ford has a rich history and heritage. Ford has been responsible for some of the largest contributions to the U.S. economy and its growth. Aside from its status as a car company, Ford also had considerable stakes in the financial services area. The company manufactures car parts and accessories in various divisions such as the Body and Assembly Operations, Casting Division, Climate Control Operations, Glass Division, Parts and Services Division, Plastics Products Division, and Transmission and Chassis Operations.

As late as 1997, Ford had impressive sales of $153.6 billion; it also ranked second on the Fortune 500 list of the largest U.S. industrial corporations based on sales, and it was the leading exporter of cars and trucks from the United States and Canada. But by 2002, company executives admitted that the company somehow had lost sight of its mission and goals with disastrous consequences. Somehow the company would find a way to return to years of profitability and to take itself from a $2 billion loss in 2001 to be again profitable by 2005, William Clay (Bill) Ford Jr., the company's newest CE0, promised stockholders. To help right the company, in 2002 he persuaded the retired and highly respected Allan Gilmour to return as chief financial officer. The company also showed it was serious about cutting losses when it not only unloaded several plants and cut loose 35,000 workers, but also axed such well-known but lately unprofitable models as the Lincoln Continental, Mercury Cougar and Ford Escort, replacing them with models aimed at younger buyers with expendable cash.

COMPANY FINANCES

As late as 1997, Ford's worldwide net income was $6.9 billion, a 56 percent increase from 1996. All that market share was soon gone, however, as were those in charge of the company as it declined. By 2001 Ford stock had dropped like a fallen chassis—some 33 percent from 2000. Burdened with heavy debt service, the company suffered Standard & Poor's "BBB+" rating—lowest since another dismal sales period in 1984. Among other disasters, four-door Ford Explorers equipped with Firestone tires were shown to have a problematic safety record with regard to rollovers, and even worse, the Insurance Institute for Highway Safety told the St. Petersburg Times in 2001 that 231 deaths occur in every 1-million two-door, two-wheel-drive Explorer Scouts. No turnaround was in sight by the first quarter of 2002 as Ford posted a disappointing loss of $800 million. While General Motors and Chrysler were showing small signs of recovery in 2002, Ford just couldn't seem to buy a better idea to reverse its ghastly tailspin. "We absolutely must make money on everything we sell," Bill Ford told the Bloomberg News. "We just have to hit a lot of singles and hope they turn into home runs." In 2002 Bill Ford literally stepped to the plate, filming a series of commercials that emphasized Ford tradition and his family's insistence on giving good value to car owners. Analysts warned that putting CEOs on television was risky business, capable of winning viewers hearts as Wendy's Dave Thomas did before his death, or performing miserably.



ANALYSTS' OPINIONS

Ford executives in the 2000s seem to delight in giving their critics the ammunition required to shoot them. In 2000 Ford announced that it was going to develop a gas-saving SUV, but by 2002, analysts pointed out that Ford SUVs were delivering way below the 23 mpg performances the company had promised. In 2002 chairman Bill Ford admitted that the company's goals had not been met, but that technology was on the way for an environmentally friendlier Ford SUV. Nonetheless, analysts expressed far higher expectations for the company's forthcoming (2003) gasoline-electric Escape HEV—marketed to hip, environmentally conscious buyers—and engineered to deliver 40 mpg in combined city/highway road performance. Can the company extricate itself from the reef where it has run aground? Michael Bruynesteyn, a Prudential Securities Inc. analyst, told the Bloomberg News that it can. "I believe Ford can improve its earnings by cutting costs and getting more flexible, but this isn't something that happens over-night," says Bruynesteyn. "It will take years." Many analysts are predicting that Ford will need to sell assets such as Hertz, the rental car company, to get operating capital and to shrink killing debt service.



HISTORY

Born July 30, 1863, on a farm near Dearborn, Michigan, Henry Ford made his first rudimentary car, the Quadricycle, in a shed behind his home. Ford formed one company that folded, and for a time his main interest was racing cars, including one driven by Barney Oldfield that set a then-speed record. With $28,000 and a lot of faith and courage, Henry Ford and 12 associates incorporated the Ford Motor Company in 1903 in Lansing, Michigan. Between 1903 and 1908, Henry Ford and his engineers used the first 19 letters of the alphabet to designate their creations, although many of these cars were experimental and never reached the public. Ironically, Ford had very little school learning and was only marginally literate.

FAST FACTS: About Ford Motor Company


Ownership: The Ford Motor Company is a publicly held company traded on the New York Stock Exchange.

Ticker symbol: F

Officers: William Clay (Bill) Ford Jr., CEO, 45; Carl Reichardt, VChmn., 69; Allan Gilmour, CFO, 67

Employees: 345,000

Principal Subsidiary Companies: Ford Motor Company has many subsidiaries—some of the better known are Ford Motor Credit Co., Hertz Corp., Lincoln Mercury Division, and Jaguar Ltd.

Chief Competitors: As a major automobile manufacturer, Ford's competitors include DaimlerChrysler, General Motors, Toyota, Honda, BMW, Mitsubishi, Nissan, Hyundai, Kia, and Volkswagen.


The first production Ford car, the Model A, was sold a month after its incorporation to a Chicago dentist named Pfennig. By this time, the company's bank balance had dwindled to $223.65. During the next five years, Henry Ford graduated from being chief engineer to president, acquired a majority of the stock, and directed a development and production program that began in a converted wagon factory. In the first 15 months, 1,700 Model A cars chugged out of the old wagon factory.

By the year 1913, Ford had embarked on establishing the world's first moving automobile assembly line production operation (it was fully operational by 1917) and began sales operations in Argentina, China, Indonesia, Siam (now called Thailand), and Brazil. By 1915 Ford had built 1 million cars, and by 1922 that number had reached 10 million. Ford production reached 20 million, and the company built its first V-8 automobile in 1931. A new line, Mercury, was introduced in 1938, and the Lincoln Continental was introduced the same year. However, at the start of WWII, Ford was forced to halt civilian production and shift to total military production. By the time the WWII ended, Henry Ford died at the age of 83, in 1947. However, his mental health had been destroyed by a stroke many years before his end came, and at the end, suffering hallucinations and allowing thugs to beat union organizers, he was removed from control before he could destroy his own company with bad management.

Henry Ford II, the oldest grandson of Henry Ford assumed presidency of the company in 1945. As he drove the first post-war car off the assembly line, Henry Ford II made plans to reorganize and decentralize the company. At the time, Ford Motor Company was losing several million dollars a month, in large part because the obdurate Henry Ford had lost touch with the car-buying public, and the company was in a critical condition to resume its pre-position as a major force in the now fiercely competitive auto industry.

Henry Ford II turned out to be the ideal individual to tackle the job of leading the family business to becoming a modern, publicly owned corporation. His genius was in his ability to find talented people such as Lee Iacocca and Robert McNamara, and put them into leadership positions. Those hired by Henry Ford II brought quantitative analysis and the science of modern management to the company, something that had been absolutely lacking under Ford who, the last 30 years of his life, had turned into an autocratic, uncompromising, bully.

CHRONOLOGY:

1903:

Henry Ford establishes the Ford Motor Company

1908:

Ford introduces the Model T

1909:

Henry Ford applies his assembly line concept to Model T production

1918:

Henry Ford retires, naming his son, Edsel Ford, as president

1919:

Edsel and Henry Ford buy out the other stockholders and incorporate

1922:

Acquires the Lincoln Motor Company

1937:

Ford produces its 25-millionth automobile

1943:

Edsel Ford dies

1945:

Henry Ford II is named president

1949:

Henry Ford I dies

1956:

Ford Motor Company goes public

1958:

The Ford Edsel debuts with a prominent grille and flops horribly

1962:

The Mustang debuts and sells 500,000 in 18 months

1979:

Henry Ford II relinquishes his position to Philip Caldwell

1986:

Ford's income passes General Motors' for the first time since 1924

1993:

Ford products are five of the top eight bestselling vehicles in the United States

1999:

All Ford sport utility vehicles are manufactured as low-emission vehicles

2000:

With adverse publicity from deaths from SUV rollovers, and severe management problems, Ford stock value begins to plunge

2001:

Company begins extensive shakeup at the top with Bill Ford taking control of the company, restoring Ford to management by a descendent of the founder; numerous other executives are replaced and 35,000 employees were scheduled for layoffs; Bill Ford makes it clear that members of the Ford family are going to have a huge say in company policy as he names cousin Elena Ford, granddaughter of Henry Ford II, group manager of the Lincoln Mercury division

2002:

Struggling Ford axes 22,000 employees in attempt to turnaround struggling company; 13,000 more employees will lose jobs eventually; Ford announced that it is ending some of its best-known but lately poorest-selling models: the Ford Escort sedan, Mercury Cougar, Mercury Villager, and Lincoln Continental

2003:

Ford celebrates its centennial year


In 1956 the Ford Motor Company took a major step and went public. In the largest stock issue of all time, 10,200,000 shares of the Ford Motor Company were put up for sale and 250,000 investors rushed to pay $657 million for 20 percent of what, until then, had been a family business. In 1958 Ford announced its entry into the heavy and extra-heavy truck market (it had entered the light truck market in 1917), and by 1959, Ford had produced 50 million vehicles.



STRATEGY

Ford started as a domestic company and capitalized on domestic demand. However, this did not detract from the company's focus on globalization. Henry Ford's policy was to become a contributing citizen in every country where Ford sold cars. His slogan was, "Build them where you sell them." In the same vein, Ford believed in equal employment opportunity throughout his company. However, unable or unwilling to accept change, Henry Ford's reluctance to upgrade the Model T, and to add improvements desired by customers, allowed Chevrolet and other brands to outdistance Ford models in the late 1920s and 1930s.

Henry Ford II, by many accounts a wise and prudent company head, continued his grandfather's equal employment policies, predating federal civil rights legislation. In the late 1970s, when American workers were criticized for producing poor quality, Henry Ford II said, "there is no such thing as a bad employee, only bad managers." Company leadership accepted responsibility, and Ford was the first American auto company to make quality "Ford's number one operating priority."

Ford continued to believe in improving quality via its employees, as opposed to the rest of the industry, which was moving on to the use of high-tech robots. "Teamwork" became the norm from in-plant participa-tory groups to a new way of developing cars based on cross-functional teams. The idea was to bring in representatives from all engineering and management specialties together into each vehicle development team, then give them the authority to make as many decisions as possible. The first team effort was on a bold new car—the Taurus—off the assembly line in 1986. The immensely successful effort encouraged management to give the teams more authority and independence. "Have you driven a Ford—lately?" became the advertising battle cry of the 1980s for the company.

In efforts to increase profitability, Ford continued restructuring its business and reducing process costs. The company discontinued low-volume, low-profit vehicles such as the Aerostar, Aspire, and Probe; sold its heavy truck operations; reduced excess car capacity; and added capacity for its best-selling light trucks. In 1997 Ford announced financial goals for its automotive business, including targeting a return on sales of 4 percent in North America; in Europe, they hoped to break even; in South America, the company sought reduction in losses compared with 1996. Overall, Ford hoped to reduce total costs by $1 billion and reduce capital spending. The company was able to exceed all of those goals, as stated in its 1997 Annual Report.

All that success was gone and forgotten in just five years. By 2002 the company's latest strategy was clearly to survive first and then to find ways to prosper. The company used the approaching centennial to remind American automobile buyers that Henry Ford, from the early 1900s to the 1920s, was regarded as an American inventive genius, and that the Ford automobile was inextricably linked to America's past. In addition to advertising campaigns that were a mixture of history and sentiment, the company reaffirmed its commitment to providing quality and value. Dead last in new-owner satisfaction in 2001, according to J.D. Power & Associates' annual poll, Ford Motor Company improved greatly in 2002 under new management, which aggressively worked to meet concerns of new car buyers. The result has been that Ford customer satisfaction in 2002 increased dramatically, according to the latest Power & Associates ranking, although the company still was well behind frontrunner Toyota.

For all the hype on television and Internet ads about Ford's American traditions, the company clearly was becoming, or had already become, a truly international maker of cars. Bumper stickers on Ford automobiles in the company's manufacturing plants in Ohio and Michigan still urge readers to "Buy American," but the Ford products Americans now bought increasingly were becoming about as American as chopsticks and curry. The company long has owned a one-third interest in the Japanese car corporation Mazda, and production plans for the Taurus are to incorporate some of the Mazda features buyers seem to prefer, according to Forbes magazine. With Ford brands such as the Focus almost 100 percent a European-featured car, it likely is only a matter of time before wholly-American engineered cars such as the Mustang, Crown Victoria, and Lincoln Town Car either succumb to European influences and market preferences or go out of production.



INFLUENCES

Since its beginning, world events have shaped Ford Motor Company and played a role in the company's prominence and growth. Also important was the influence of Henry Ford in the pre-1930s period, and the influence of his oldest grandson, Henry Ford II in the post-World War II war period. The success of the Ford Motor Company post-World War II was in the fact that Ford grew and adapted to the changing times, while at the same time anticipating industry events and setting trends and milestones of its own.

In the 1960s, for instance, Ford leaders anticipated a weakening of trade barriers and moved to regional trading way ahead of the pack. Ford of Europe was established in 1967, some 20 years ahead of the European Economic Community's arrival. Similarly, Ford established the North American Automotive Operations (NAAO) consolidating the United States, Canada, and Mexico in 1972, more than a decade ahead of the North American Free Trade Agreement (NAFTA).


CURRENT TRENDS

In 1994, with the consolidation of Ford's North American and European operations, Ford 2000 was initiated. The Ford 2000 commitment was to bring the entire Ford global organization into a single operation by the year 2000. Ford 2000 created a single global management team to allow the company to eliminate duplication, initiate best practices, use common components and designs for the advantage of scale, and allocate resources to wherever they are needed to best serve market needs.

Ford expected to save billions with the Ford 2000 initiative, but Ford's profit margins fell 60 percent during the 1994-1996 phase because of tough competition, a failure to standardize enough parts, and design flaws in vehicles such as the Explorer. With heavy competition from foreign and other domestic auto makers in the mid-1990s, Ford went through a difficult period trying to remain profitable. New product introductions and aggressive marketing were results of this effort. In February 1997, Ford announced its decision to quit the heavy truck business after launching the much-publicized HN80 model introduced in fall 1996; this move reflected the importance that Ford executives placed in a company-wide strategic review. "Industry analysts said that Ford's decision to drop out of the heavy truck business recognizes it wouldn't easily have caught the market leaders," according to the Knight Ridder/Tribune Business News.

In another move expected to improve performance, Ford moved its Lincoln-Mercury headquarters to Irvine, California, in 1998. Ford hoped that southern California's "innovative, trend-setting culture and strong automotive market will foster development of unique vehicles and creative new looks for both brands." But by 2002, as the Lincoln Continental and several Mercury models were discontinued, it became clear that Ford needed to find ways to sell the Lincoln and Mercury brands to the buying public or these two would join Oldsmobile in oblivion.


PRODUCTS

Ford has always been a trend setter with its new products. In 1904, Henry Ford, a major racing car enthusiast and early builder, set the first speed record with his "999" race car traveling 91.37 miles per hour on frozen Lake St. Clair, near Detroit, Michigan. Ford introduced the first V-8 engine. In the fall of 1954, the Thunderbird, an American classic, joined the Ford car family as a 1955 two-seater sports car. The original Thunderbird was offered with a 160-horsepower V-8 engine with a three-speed manual transmission and had a new and unique feature—a convertible canvas roof for fair and sunny weather and a detachable plastic hardtop for foul weather. In 2002 the redesigned Thunderbird went back to some of the design features that had made the car so treasured in the 1950s.

Ford changed the direction of the American auto industry forever on April 17, 1964, when it unveiled the Mustang at the World's Fair in New York. The Ford Mus-tang, a personal favorite of Lee Iacocca, caused a sensation that confirmed the theories of Ford product planners who thought a car with a youthful touch would appeal to baby boomers ready to purchase their first car. Dealers were swamped with 22,000 orders the car's first day.

In 1980 Ford introduced the 1981 Escort in its first attempt at a world car, but by 2002, that model's defects and dwindling sales had caused the company to halt production. CDW27 was Ford's genuine global car. Named "Mondeo" in Europe, Taiwan, and the Middle East, slightly modified versions went on sale in North America with the names Ford Contour and Mercury Mystique. Ford's CDW27 became a new way of thinking about product development for the Ford Motor Company. It proved that true globalization was possible and that customer focused teams were the way of the competitive future. Runaway successes during the 1990s included the company's sports utility vehicles, save for serious safety defects, and the F-series pick-ups. The F-series pick-ups outsold any other car in the world during the 1980s and 1990s. In the late 1990s and early 2000s, Ford sold cars under the brands Ford, Lincoln, Mercury, Aston Martin, and Jaguar, but it also held a third interest in Japanese Mazda.


CORPORATE CITIZENSHIP

Ford announced that beginning with 1999 model year cars, all of its sport utility vehicles (SUVs) would be low-emission vehicles, as clean as new cars, but that promise backfired as it was unable to deliver on that promise even as late as 2002. Ford was the first large company in the world to commit globally to ISO 14001 certification, the international environmental management system standard covering all of a factory's environmental efforts, such as energy use, water treatment, waste disposal, and air quality. In the United Kingdom, Ford's Bridgend Engine Plant just began operating the largest solar power installation at any manufacturing site in Europe. Over a 30-year period, its solar panels were expected to reduce the amount of carbon dioxide emitted at the plant by more than 4,000 tons. In 2002 Ford began its campaign to match Honda and other forward-looking manufacturers in the production of energy-saving hybrid cars.


GLOBAL PRESENCE

While Ford was growing domestically, parallel growth was occurring as part of a foreign expansion program that began in 1904, a year after the company was formed. On August 17, 1904, Ford Motor Company of Canada was formed in the small town of Walkerville, Ontario. From this small beginning grew a large overseas organization of manufacturing plants, assembly plants, parts depots, and dealers. In 2002, Ford was represented in some 200 countries and territories around the world.

Markets Ford targeted during in the twenty-first century included Asia, where the company saw great long-term growth opportunities despite the area's economic turmoil. They aimed for 10 percent market share by 2007. Also as part of its Asian expansion, Ford began manufacturing the Ford Transit in Belarus, China, Malaysia, and Vietnam. The company was also expanding manufacturing opportunities and investing in areas like central and eastern Europe and South America.

CAN HISTORY REPEAT ITSELF?

In 1945, Henry Ford II, with the government's blessing, left the Armed Forces to take on the unenviable job of trying to rejuvenate the company his famous namesake father had run into the ground and which had produced vehicles for the war effort much of the 1940s. In the 2000s, with the Ford Motor Company unwillingly seeming to be following Oldsmobile into industry extinction, the task of rebuilding faltering Ford is in the hands of William (Bill) Ford—a youthful, perhaps hyperactive man in his early forties with a love of the martial arts, fly fishing, and the environment. His takeover of the company was tantamount to a coup, as he replaced nearly the entire upper tier of company management with his own players. He raised eyebrows by appointing a cousin to head the Mercury brand and by convincing Allan Gilmour, a retired onetime Ford exec nicknamed the "Whiz Kid," to return as chief financial officer.

Just as his famous ancestor Henry Ford had craved the center stage, so too has Bill Ford thrust himself into international recognition seemingly overnight as his face graced Ford's 2002 print and broadcast advertisements. While proud of his family's history, Ford, according to the Bloomberg News, doesn't take the family name so seriously that he cannot make small jokes about it. Well educated, holder of an undergraduate degree in history from Princeton University and a graduate degree in business from Massachusetts Institute of Technology, he has always had the image of a strong environmentalist until 2002 when he very visibly fought attempts by activists and politicians to put fuel economy regulations into law, according to the Bloomberg News. In 2002 Bill Ford shows every indication of being as ruthless as old Henry Ford himself, cutting lose Ford executives with decades of service who offer either an opposition or threat. The idealism of his youth, manifested in pro-environmental action and statements, has been thrown alongside the road as he's come to realize Ford Motor Company is in too precarious a position in the 2000s to become a poster company for Audubon and other environmental groups. Old Henry Ford, ultimately, became nearly the ruin of his own company and was ousted by his own family. Most analysts say that Bill Ford has until about 2005 to stand and deliver the turnabout in company fortunes he has promised, or he will have the same fate.

EMPLOYMENT

Ford values diversity in its employees and states that "Our global workforce is a competitive strength." The company believes that diversity in its workforce helps it better understand and serve customers. Once hired, the company strives to educate and develop its employees. The company's overall goal was for each employee to receive at least 40 hours of training each year.


SOURCES OF INFORMATION

Bibliography

evanoff, ted. "ford to exit heavy truck business." knight-ridder/tribune business news, 20 february 1997.

fitzgerald, alison. "toyota tops quality poll; general motors, ford rise." bloomberg news, 30 may 2002.

"ford motor company." hoovers online, 2002. available at http://www.hoovers.com.

ford motor company annual report 2001. ford motor company, 2001.

ford motor company web site, 3 june 2002. available at http://www.ford.com.

"improving automotive operations drive ford to record first quarter earnings of $1.7 billion, up 15%." ford motor company press release, 16 april 1998.

international directory of company histories. vol. 11. detroit, mi: st. james press, 1995.

koenig, bill. "ford paid former ceo nasser $17.9 million in 2001." bloomberg news, 9 april 2002.

——. "ford ceo cuts workers, shuts plants to staunch losses." bloomberg news, 17 january 2002.

kumar, anita. " ford leaves 2-door suv unchanged." st. petersburg times, 29 july 2001.


lippert, john. " ford leaves 2-door suv unchanged." bloomberg news, 31 may 2002.


row, christopher, and tim burt. " new finance chief signals further ford restructuring." financial times (london), 21 may 2002.

taylor, alex. "the gentlemen at ford are kicking butt." fortune, 22 june 1998.


turrettini, john. " bye-bye, american car." forbes, 27 may 2002.


For an annual report:

write: ford motor company, shareholder relations, the american road, po box 1899, dearborn, mi 48121-1899

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. ford motor company's primary sics are:

3711 motor vehicles and car bodies

3714 motor vehicle parts and accessories

6035 savings institutions, federal chartered

6141 personal credit institutions

6159 miscellaneous business credit institutions

6331 fire, marine, and casualty insurance

7515 passenger car leasing

also investigate companies by their north american industry classification system codes, also known as naics codes. ford motor company's primary naics codes are:

327211 flat glass manufacturing

333924 industrial truck, tractor, trailer and stacker machinery manufacturing

336111 automobile manufacturing

336211 motor vehicle body manufacturing

336399 all other motor vehicle parts manufacturing

522298 all other non-depository credit intermediation

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Ford Motor Company

Ford Motor Company

DRIVING AMERICAN INNOVATION CAMPAIGN
LIFE IN DRIVE CAMPAIGN
STORYTELLING CAMPAIGN

1 American Road
Dearborn, Michigan 48126
USA
Telephone: (800) 392-3673
Web site: www.ford.com

DRIVING AMERICAN INNOVATION CAMPAIGN

OVERVIEW

Ford Motor Company, based in Dearborn, Michigan, entered 2005 in a difficult position. The automaker had sold only 3.15 million vehicles in the previous year, a million units less than what it had sold annually at the beginning of the decade. The company had been hem-orrhaging market share as well, dropping to 18.6 percent in 2004 after spending much of the 1990s with more than 25 percent. Competition was especially fierce from Toyota Motor Sales, U.S.A., whose Japanese parent company, Toyota Motor Corporation, in 2004 displaced the Ford Motor Company as the world's second-largest automobile company in terms of sales for the first time (Ford's traditional rival, General Motors, remained number one).

To improve its overall image Ford mounted a brandwide advertising initiative called "Driving American Innovation" in 2005. The company wanted to bolster its reputation for innovation and address criticism from environmentally conscious consumers that the company's vehicles were not fuel efficient. To accomplish this Ford relied on two agencies owned by the communications-services conglomerate WPP Group—Penn Schoen & Berland and Ogilvy & Mather Detroit—to develop an advertising campaign. The effort included television, print, and Internet elements. Television spots and print ads featured the company's CEO, William "Bill" Ford, Jr. The TV commercials combined archival footage of previous Ford Motor Company successes, such as the famous Model T, with images of contemporary Ford vehicles. In the spots Bill Ford discussed how the company was building on its history of innovation and touted new products such as Ford's fuel-efficient hybrid vehicles. The campaign began in October 2005 and ran through the end of the year.

Because the campaign was designed to bolster the entire Ford brand's image, its success was difficult to gauge. According to marketing-information firm J.D. Power and Associates, in 2005 Ford drivers remained loyal to the brand at higher rates than was typical in the industry. Nevertheless, the company continued to lose market share.

HISTORICAL CONTEXT

Based in Dearborn, Michigan, Ford Motor Company was the third-largest automaker in the world in 2005 in terms of units sold. The company was founded in Michigan in 1903 by Henry Ford. In 1908 the company introduced the Model T. The car quickly became one of the most successful vehicles in U.S. automotive history, selling more than 15 million units from its inception through its cancellation in 1927. The Model T helped make Ford the world's largest automaker at that time. In fact, in 1918 nearly half of all cars owned in the United States were Model Ts. While Ford was eventually overtaken by General Motors as the world's largest automobile manufacturer, the company continued to prosper throughout the twentieth century.

By 2005 Ford was employing more than 320,000 people worldwide and selling vehicles under the Ford, Lincoln, Mercury, Land Rover, Mazda, Volvo, Jaguar, and Aston Martin nameplates. The company also faced substantial challenges. In January 2004 the Toyota Motor Corporation, based in Japan, passed Ford to become the second-largest automaker in the world. Toyota was able to overtake Ford in part because the latter's sales fell sharply in the first few years of the twenty-first century.

In 2004 Ford sold 3.15 million units worldwide, more than a million fewer units than it had sold in 2000. The company had maintained a market share of 25 percent through the mid-1990s, but by 2004 that was down to 18.6 percent. More worrisome was the fact that Ford had failed to turn a profit in 2004. As a result there were a number of shakeups at Ford in 2005, as the company introduced a slate of new top executives in September in the hopes of turning around its sales decline. In October 2005, just before the "Driving American Innovation" campaign began, the company reported a quarterly loss of $284 million.

Because Ford sold a number of large vehicles, such as the Explorer sport-utility vehicle (SUV), that got few miles to the gallon, Ford's sales were especially sensitive to high gas prices. In 2005 gas prices rose to as high as $3 per gallon in the United States, in part as a result of market pressures caused by war in the oil-rich nation of Iraq. One way to reduce demand for gasoline was to offer hybrid vehicles. A hybrid vehicle combined two energy sources for propulsion: an internal combustion engine and an electric motor. The electric components reduced the need for gasoline, allowing the car to go further on less gas. In 2005 Ford produced about 24,000 hybrid vehicles. At the time the only Ford hybrid available was the Ford Escape Hybrid SUV, introduced earlier that year.

TARGET MARKET

Ford was interested in promoting the entire brand, not just one or two vehicle lines. This was an unusual move in the industry; most automotive campaigns tended to spotlight a particular vehicle or group of vehicles. Hence the new campaign would have to be accessible to a notably wide audience (essentially, any potential car buyer). The purpose of the campaign was to improve Ford's overall corporate image. The automaker wanted to project an image as an innovative company that was at the cutting edge in designing safer, more environmentally friendly vehicles. In addition, any Ford campaign would have to emphasize performance, because according to internal data, 52 percent of Ford drivers were also racing fans.

Ford was also interested in reaching out to environmentally conscious consumers. Although Bill Ford made environmental innovation a focus of his tenure as CEO, the company drew the ire of many environmental groups. Various organizations, including the Sierra Club, the Bluewater Network, and the Rainforest Action Network, staged protests against the automaker.

COMPETITION

The two automakers that Ford traditionally competed against were General Motors and the Chrysler Group, the U.S. affiliate of Daimler Chrysler. Commonly referred to as the "Big Three," these three major American automakers had dominated the industry for most of the twentieth century. General Motors was the largest automaker in the world, and its Chevrolet brand was the best-selling brand in the United States. Chevrolet's success stretched back for decades: 1 out of every 10 cars in the United States was a Chevrolet in 1964. By 2004 Chevrolet's TrailBlazer sport-utility vehicle was making inroads against the Ford Explorer, the most popular vehicle in the segment. The TrailBlazer moved 283, 384 units in 2004, versus 339, 333 units sold by the Ford Explorer.

By the late twentieth century, however, the U.S. automotive market had changed. Toyota Motor Sales had made substantial gains in the U.S. market. In 2004 it sold 2,060,049 units in the United States alone. Sales were buoyed by vehicles such as the Toyota Camry, a midsize sedan that was the best-selling car in the United States in seven out of eight years between 1997 and 2004 (1997–2000 and 2002–04). Toyota's sales gains were helped by the automaker's reputation for innovation, safety, and quality.

MARKETING STRATEGY

Ford decided to bolster its reputation with a brandwide campaign. Two different agencies, Penn Schoen & Berland and Ogilvy & Mather of Detroit, worked in concert to create this major initiative. Both were part of the WPP Group, a media and communications services holding company. The theme of the campaign was "Driving American Innovation," a title that was intended to reflect both Ford's history of innovation and its stated commitment to developing new technologies, particularly in regard to safety and fuel efficiency. The campaign celebrated the company's enduring "spirit" of innovation. Its centerpieces were two television commercials, the 60-second "Innovation" and the 30-second "Compass." Eventually another 30-second spot, "Rebirth," also appeared, following a similar format.

FORD'S STAR EXECUTIVE

William Clay "Bill" Ford, Jr., was born in Detroit, Michigan, in 1957. He was the great-grandson of Henry Ford, the founder of Ford Motor Company. His father, William Clay Ford, Sr., also worked at Ford as chairman of the company's finance committee. After graduating from Princeton University in 1979, Bill Ford joined Ford Motor Company, working as a product-planning analyst. In 1987 he became managing director of Ford Switzerland, a Ford affiliate based in Europe, before being elevated to the company's board of directors the following year. He became chairman of that board on January 1, 1999, and was named CEO on October 21, 2001.

A professed environmentalist, Bill Ford promised to make the Ford Motor Company a "greener" automaker, speaking out about global warming and air pollution. Upon becoming CEO he directed the company to publish its first report outlining the environmental impact of its vehicles and operations. In addition, he pledged in 2001 to improve fuel efficiency by 25 percent by 2005. He withdrew that goal in 2003, however, saying that market conditions made it untenable. This attracted heavy criticism from environmental groups such as the Sierra Club, which accused him of going back on his word.

In addition to his work at the Ford Motor Company, Bill Ford was a trustee at Princeton. He also served as the vice chairman of the Detroit Lions, a National Football League franchise. His father, William, was the company's president and owner, having purchased the club in 1964.

All three spots combined archival footage from the automaker's history with scenes of the company's CEO, Bill Ford, discussing the Ford brand and its history. Ford, a descendent of the automaker's founder, had been with the company since 1979 and had taken over as CEO in 2001. He had previously starred in a 2002 television campaign. In the commercial titled "Innovation" Ford discussed how important innovation had always been to the Ford Motor Company, calling it "the compass that guides this company moving forward." The spot further illustrated the company's innovation by highlighting famed early Ford vehicles, such as the Model T. The Ford GT, which the company billed as a "supercar," was also shown. The vehicle, which had first appeared in 2003, was an expensive (costing in excess on $150,000) sports car that featured a racing-style design.

Ford, a self-described environmentalist, also discussed the company's efforts to increase the production of hybrid vehicles, which would help reduce the release of greenhouse gasses into the environment by using less gasoline to power their engines. "Innovation" helped underscore this by featuring the Ford Escape Hybrid, a sport-utility vehicle (SUV) with a hybrid engine. The spots were broadcast during hit television programs with wide audiences. These included Oprah Winfrey's syndicated talk show, ABC's prime-time adventure drama Lost, the ABC nighttime soap opera Desperate Housewives, CBS's immensely popular police drama CSI, and televised games of the National Football League.

The campaign also included print and radio components. Some print ads featured blueprint-style images of new Ford vehicles and touted the company's current innovations. One two-page spread that appeared in major dailies, including the Wall Street Journal, consisted of a photograph of Bill Ford along with text from a speech on innovation that was attributed to him.

OUTCOME

In September 2005 the Ford Motor Company announced plans to boost the production of hybrid vehicles to about 250,000 units per year by 2010. The Ford Escape Hybrid garnered the North American Truck of the Year award at the 2005 North American International Auto Show. That year Ford was especially successful with its midsize sedan the Fusion; that vehicle managed to sell more than 23,000 units during the period from its October 2005 introduction to the end of the year. This did not, however, mollify the company's detractors in the environmental movement. In November the Rainforest Action Network staged demonstrations at 12 different Ford dealerships in the Dearborn area in protest of the poor gas mileage of vehicles such as the popular Ford Explorer SUV.

The campaign also appeared to bolster Ford's customer loyalty. According to J.D. Power and Associates, a marketing-information firm, a 51 percent majority of all Ford customers who traded in vehicles in 2005 did so to get another Ford. This was about two percentage points higher than the industry average. The company's market share continued to slip, however, hitting 17.4 percent for the year.

FURTHER READING

Adubato, Steve. "Message, Messenger Must Quickly Click." Newark (NJ) Star-Ledger, February 12, 2006.

Banham, Russ. The Ford Century: Ford Motor Company and the Innovations that Shaped the World. New York: Artisan, 2002.

Carty, Sharon Silke. "Bill Ford Carries On Family Name with Grace." USA Today, February 27, 2005.

Elliott, Dorinda. "Can This Man Save the American Auto Industry?" Time, January 30, 2006.

Greenberg, Karl. "Ford Chairman Is Ready for His Close-Up." Adweek, October 20, 2005.

Krebs, Michelle. "In Detroit, the Dogs Have Their Day." New York Times, January 9, 2005.

Maynard, Micheline. "A Comeback for the Car Species." New York Times, January 5, 2006.

O'Donnell, Jayne. "Ford Touts Volvo Safety Link in Ads but Not Trials." USA Today, January 16, 2006.

Taylor, Alex, III. "Bill Ford: Market Share Bleed Stops Now." Fortune, January 8, 2006.

Wilson, Kevin. "The Way For'd: Dearborn Sets Sail on a New Tack." Auto Week, January 23, 2006.

                                   Guy Patrick Cunningham

LIFE IN DRIVE CAMPAIGN

OVERVIEW

In October 2005, Ford Motor Company introduced the new Ford Fusion. Inspired by the company's futuristic Ford 427 concept car, the Fusion was a four-door sedan aimed at young, upwardly mobile drivers. It replaced the discontinued Taurus model. The Fusion was launched into a competitive segment that featured established vehicles such as the Nissan Altima, the Honda Accord, and the best-selling car in the U.S. market, the Toyota Camry. Ford hoped that the Fusion's unique visual design, which included a distinctive three-bar front grille, would help the vehicle stand out.

The J. Walter Thompson agency, also based in Detroit, was responsible for developing a launch campaign for the Fusion. The resulting "Life in Drive" campaign kicked off in October 2005 and featured a mix of traditional and new-media advertising. Its centerpiece was a series of television commercials. There were several 15-second spots, along with two 30-second spots. The spots often ran back-to-back, with a 15-second commercial leading into one of the two longer spots. The 15-second spots all featured a contrast between "life"—illustrated by images of people performing dull, frustrating tasks, such as trying to open a CD case—and "Life in Drive," where the viewer saw the Fusion on a drive through a hip cityscape depicted via quick cuts. The campaign also featured an innovative online component, which included a "Photo Fusion" feature on the Ford website. Consumers could post pictures of themselves along with brief descriptions of what the photos contained. Posters were then given an opportunity to view other consumers' pictures based on shared keywords in their descriptions. This interactive program was meant to attract young consumers who were comfortable with seeking information online.

The campaign met with solid success. Ford sold more than 23,000 units between the Fusion's October 2005 debut and the end of the calendar year, with sales climbing every month. The vehicle sold so well that dealers reported having trouble keeping the new Fusion in stock, forcing Ford to increase production of the vehicle.

HISTORICAL CONTEXT

The Ford Motor Company was founded by Henry Ford on June 16, 1903. Based in Detroit, Michigan, the company was responsible for one of the most important innovations in automobile manufacturing, the assembly line. This 1913 innovation helped make Ford the second-largest automaker in the world (after General Motors) for much of the twentieth century. By the beginning of the twenty-first century the Ford Motor Company was selling vehicles under eight different brands: Ford, Lincoln, Mercury, Land Rover, Mazda, Volvo, Jaguar, and Aston Martin.

Ford decided to create a new four-door family sedan to replace the Taurus, an older model that consumers no longer found exciting. After considering other names, the company called the new vehicle the Ford Fusion. The design of the vehicle was inspired in part by the Ford 427, a concept vehicle that had been met with general acclaim at a number of auto shows. The Fusion featured a spacious interior, a stiff chassis for better handling, and a distinctive exterior design. The car was meant to look sleek and speedy, in contrast to other, more staid midsize sedans, such as the Taurus. Most notable was the vehicle's three-bar front grille and its unique triangular taillights.

Ford also created a racing version of the Fusion, which competed in National Association for Stock Car Auto Racing (NASCAR) events. In fact, Ford's racing division provided some input on the car's design. Internal data showed that Ford's market share was 6 percent higher among NASCAR fans than it was nationally. The Fusion would debut at the Ford Championship weekend at the Homestead-Miami Speedway, which featured the final race of the 2005 NASCAR Busch series. The event was planned for November 17 and 18, 2005.

In October 2005 Ford introduced the Fusion for model year 2006, with a base price of $17,795. Ford was already in the midst of a strong year, with sales up 12 percent from 2004 through September. It hoped to be able to establish the Fusion as a vehicle that could sell up to 160,000 units annually.

TARGET MARKET

The Fusion was designed to appeal to consumers between the ages of 25 and 35. These consumers were identified by the company as being strongly interested in music and technology. Ford wanted to connect with middle-income consumers who were both established in their careers and upwardly mobile. While some of these buyers gravitated toward sportier cars, such as the Ford Mustang, or toward large SUVs, internal data at the automaker led Ford to believe that drivers in this age group were becoming more interested in midsize sedans. In effect, the Fusion would serve as the next step for the young drivers who had previously driven smaller cars such as the Ford Focus. As a family sedan the Fusion was especially geared toward young families, people with younger children, or those considering starting a family soon.

COMPETITION

The Fusion competed most directly with other midsize vehicles. These included imports such as the Honda Accord, the Nissan Altima, and the Volkswagen Jetta and domestic models such as GM's Chevrolet Malibu. The giant of the midsize field, however, was the Toyota Camry. First introduced in 1980, the Camry had been the biggest-selling car in the United States in seven out of the eight years between 1997 and 2004. In 2004 it sold an impressive 426,990 units. It usually sold for between $19,000 and $25,000. The Camry was not a flashy car; its popularity rested primarily on its reputation for quality. It was a safe, durable vehicle and held its resale value well.

Ford hoped that by pricing the Fusion between $17,995 and $21,000, it would distinguish itself from its competitors. Prices for the other major midsize cars on the market began around $18,400 and could climb as high as $25,000 for so-called luxury versions of the vehicles. Ford believed that its aggressive pricing might help offset the fact that many established brands had built-in customer bases.

MARKETING STRATEGY

Ford designated the Detroit-based ad agency J. Walter Thompson with developing a launch strategy for the new Fusion. The resulting campaign, released in October 2005, was named "Life in Drive," and it mixed traditional television and print advertising with online efforts and live events. Print ads appeared in USA Today and in local newspapers. The campaign was preceded by a series of Fusion Flash Concerts, featuring bands such as alternative hip-hop stars the Roots, popular rapper Fat Joe, and rock bands Staind and Collective Soul. The Staind event was a particular success, drawing 12,000 people to a free concert in Boston. Organizers had only expected a showing of about 500.

The "Life in Drive" campaign began in earnest with a series of 15-second teaser spots directed by Grammy-winning director Joseph Kahn, who had previously directed music videos for rock band U2 and rapper Eminem, among others. One commercial, "Trash Day," began with a half-dressed man taking out the garbage. He was too late and missed the garbage truck, and a voice-over declared, "This is life." Suddenly, rock music blared, and a series of quick cuts showed a Fusion driving around a city. The voice-over returned to say, "This is life in drive." Another 15-second spot, "Doggie," showed a young woman cleaning up after her dog, leading to the same voice-over and quick cuts. The spot titled "CD" featured the same setup, only this time it began with someone having difficulty opening a CD case. Each commercial closed with the text tagline "Life in D," which then gave way to the Ford Fusion logo. The "D" resembled the "D" (for "drive") that appeared on the Fusion's gearshift.

Kahn also directed two 30-second spots for the campaign. These premiered on October 31, 2005. The most important, "Particle," drew attention through its prominent use of the Apple iPod as a prop. A portable music player known for its distinctive white color and sleek design, the iPod was first introduced in 2001 and quickly became the most popular digital-music player on the market. It was particularly popular among drivers in the Fusion's target demographic. Some critics felt that by trying to associate itself with a trendy new product, Ford risked allowing the Fusion to look stale and uncool by comparison. One critic noted that the Fusion did not even have an adapter that would allow the iPod to play in the vehicle.

"Particle" began with a man on a subway listening to the device. As he listened, particles that looked like bubbles began to rise out of the iPod. These bubbles then drifted up from the subway car and onto a dance floor, where they circled a young woman. The bubbles continued to circulate, moving past rollerbladers and a flat-screen television. Finally they reached a traffic intersection, where they "fused" together to become a Ford Fusion vehicle. The other 30-second spot, "Ignition," featured a similar theme. This time the Fusion itself generated the energy, which in turn revitalized a worn-out urban neighborhood. Both commercials ended with a voice-over declaring, "a car shouldn't just use energy, it should create it," before concluding that the Fusion represented "more innovation from Ford." Often Ford packaged one of the 15-second spots back-to-back with one of the longer commercials, creating a 45-second advertising block.

FUSION FLASH CONCERTS

A key part of the Ford Motor Company's introduction of the Ford Fusion in 2005 was its sponsorship of a series of free concerts in the months leading up to the vehicle's launch. The series was a joint effort between Ford and Sony Pictures Digital, a division of the Sony Corporation of America. After registering on a special Ford Fusion website, consumers were notified about the concerts via text message. These concerts were inspired by "flash mobs," outdoor gatherings created on the spur of the moment by using the text-messaging features of cell phones and other mobile communication devices. Often organizers of flash mobs would alert a small number of people about a gathering, and then word would spread organically as those people contacted others.

The first Fusion Flash Concert was held in July 2005 in New York City. It featured the alternative hip-hop act the Roots. Later concerts presented a mix of rock acts, including Collective Soul, the Wallflowers, Yellowcard, Pete Yorn, and Staind, as well as hip-hop performers Jermaine Dupri, Fat Joe, and Frankie J. Each band appeared at their own individual concerts. Registered consumers were notified about each performance at the last minute, meaning that the entire event would come together in a "flash." Each concert took place in a different urban area, including Dallas, Philadelphia, Los Angeles, and Chicago. The most successful of the Flash concerts was the hard-rock band Staind's August 9 appearance in Boston, which drew an audience of 12,000 people.

The campaign quickly branched out into new media. In November Ford began an effort at three major Web portals: Yahoo!, AOL, and MSN. The Fusion was represented via prominent ads and banners on all three sites. Ford also used an innovative "Photo Fusion" feature on its own website. The feature allowed customers to post personal pictures on the site. When they did so, consumers were also asked to describe their photos. Based on those descriptions, the Photo Fusion feature would then show other consumers' pictures to the poster, based on similar keywords in both descriptions. This interactive system was meant to appeal to young consumers who were more interested in actively navigating the Web than in watching TV commercials. The company also posted selected "Life in Drive" television spots on the company's website.

OUTCOME

The Fusion met with solid success. After its October 2005 introduction the vehicle saw sales increase every month. By November Ford had already sold 15,481 units (a number that included precampaign sales). In December the Fusion sold 7,568 units, its best monthly figures for 2005. According to internal studies, customers rated the Fusion's unique design as the number one reason for purchasing the vehicle. The car managed this without the heavy incentives, such as cash rebates, that many automakers used to help sell new vehicles. The vehicle proved so popular that Ford dealers had a difficult time keeping it in stock. As 2006 began, Ford ramped up production to meet the ever-growing demand. In an effort to expand its appeal, the company also announced that it would develop a hybrid version of the Fusion for model year 2008.

FURTHER READING

Banham, Russ. The Ford Century: Ford Motor Company and the Innovations that Shaped the World. New York: Artisan, 2002.

Bowens, Greg. "Ford Looks beyond Traditional Audience at It Tilts New Fusion Campaign toward Hip Youth." Automotive News, December 1, 2005.

Chura, Hillary. "Throwing All Cultures into the Marketing Pot." New York Times, February 21, 2006.

Cobb, James G. "Diamonds Out of the Distress of 2005." New York Times, January 1, 2006.

Krebs, Michelle. "In Detroit, the Dogs Have Their Day." New York Times, January 9, 2005.

Maynard, Micheline. "A Comeback for the Car Species." New York Times, January 5, 2006.

Rashbaum, Alyssa. "Fat Joe, Roots, Jermaine Dupri Coming Soon to a Parking Lot Near You." Vibe.com, July 11, 2005. Available from 〈http://www.vibe.com/news/news_headlines/2005/07/fatjoe_flashconcerts/〉

Stevenson, Seth. "Apple Jacking: Car Ads that Look Like iPod Ads." Slate, January 30, 2006. Available from 〈http://www.slate.com/id/2135009/?nav=navoa〉

Wilson, Amy. "Ford Dealers Can't Get Enough Fusions." Automotive News, December 16, 2005.

Wilson, Kevin. "The Way For'd: Dearborn Sets Sail on a New Tack." AutoWeek, January 23, 2006.

                                   Guy Patrick Cunningham

STORYTELLING CAMPAIGN

OVERVIEW

For 15 years Ford Motor Company, the number two automaker among Detroit's big three, had advertised its vehicles with the slogan "Have you driven a Ford lately?" In 1998 the company launched a new campaign with the tag line "Ford Cars: Built to Last." The campaign, developed by advertising agency J. Walter Thompson, used a storytelling approach and ran in print and broadcast media as well as on the Internet. It was based on the notion that people enjoyed hearing other people's stories.

The "Storytelling" campaign centered around everyday people who owned Ford vehicles, and the ads used humor and emotion to reach consumers. As its spokesperson Ford chose John Corbett, best known as the philosophical disc jockey on the television series Northern Exposure, a man with a pleasant, relatively low-key demeanor that fit well with the campaign. His role in the commercials closely resembled his work from the hit show, in which he had been something of a narrator. Corbett and country superstar Alan Jackson, another Ford spokesman, appeared together in an ad for National Ford Truck Season beginning in October 1998, and they were also featured on the company's website.

The company launched the campaign during the Winter Olympics in February 1998 with six television spots. The campaign included ads for the Mustang, Taurus, Escort ZX2, and pickup truck models. Six months later, Ford decided to expand the campaign to all of its 1999 vehicles.

HISTORICAL CONTEXT

The Ford Motor Company, founded in 1903, has experienced its share of highs and lows. Its founder, Henry Ford, was described by Ed Crews in an August 11, 1998, article in the Richmond (Virginia) Times-Dispatch as "a mythic figure in American business history. He comes down to us as a contradictory mix of inspired tinkerer, backyard mechanic, captain of industry, eccentric and capitalist oppressor. Sometimes it is impossible to see where the myth ends and the man begins."

In 1908 Ford introduced the popular Model T. Also known as the "Tin Lizzie," it was said to be the "universal car," built to be rugged, reliable, and easy to operate. When Ford incorporated the assembly line into his company's production process, he revolutionized not only the auto industry but also all industries. Increased efficiencies allowed Ford to keep prices down and expand into overseas markets. By 1915 Ford had produced its millionth car. In 1916 Ford made half of all the American cars built and accounted for 40 percent of the world's auto production.

But success may have blinded Henry Ford to the need for change. By the 1920s competing automakers were producing models with more style, comfort, and power than the Tin Lizzie. Ford dragged his feet on producing a new model, and the company continued to make the Model T into the late 1920s. Only when it became absolutely clear that the car would not sell at any price did Ford throw in the towel. He shut down production for six months in order to retool the plants for a new model. The successor Model A enjoyed good sales, but by 1932 General Motors (GM) had taken the number one spot from Ford, and GM held it for decades.

Over the years Ford introduced many successful models, including the Thunderbird, Escort, Taurus, and, perhaps most notably, Mustang. It also produced the Edsel, a spectacular flop, and from time to time the company suffered financial setbacks. Ford became known for its pickup trucks and sport utility vehicles, including the F-Series truck and the Explorer. Despite its successes, however, for the most part Ford remained an also-ran to number one General Motors. In addition, Ford and other U.S. automakers eventually had to contend with inroads made by foreign auto manufacturers, primarily the Japanese.

TARGET MARKET

The "Storytelling" campaign was developed with both male and female consumers in mind. For instance, "Hands," a commercial for the F-Series truck, showed close-ups of the hands of a hardworking but sensitive mechanic named Joe. Shots of Joe's hands working with a blowtorch and gripping the wheel of his Ford truck were interspersed with shots of him holding a small child. Jan Klug, Ford Division's marketing communications manager, said, "The 'Hands' story is the highest rated F-Series spot we have tested among men and women. It really touched a chord with consumers, who could relate to a guy and his truck balancing work and family."

Ford took care to ensure that the campaign would appeal to women even if it did not target them exclusively. Three of the six television spots used to launch the campaign featured women. One spot informed viewers of Ford's support for Race for the Cure, a national breast cancer charity. In addition, because "Built Ford Tough," the popular tag line used for trucks, tested poorly with women, Ford dropped the idea of also using it for its car ads. Instead, the tag line "Built to Last" tag was created for Ford cars.

Seven months after the campaign launch, Adweek reported that Ford intended to increase its spending on ads that targeted Hispanic and African American consumers and, for the first time, to make some of the advertising targeting African Americans part of the general market pool. Uniworld, New York, was hired to handle the African-American marketing, while Zubi Advertising of Miami handled the Hispanic advertising.

COMPETITION

Ford, General Motors, and Chrysler (which in November 1998 merged with Daimler-Benz AG to become DaimlerChrysler AG) made up Detroit's big three automakers. For years GM had enjoyed the number one spot in U.S. auto manufacturing, followed by number two Ford and number three Chrysler. In November 1997, however, Ward's Auto World reported that all three were losing market share in passenger cars to light trucks and sport utility vehicles. At the same time there was increasing pressure on the Detroit automakers to keep prices down. GM offered various financial incentives, including cut-rate financing programs and cash rebates on 1998 cars and light trucks. Ford and Chrysler offered similar incentives as well. The Wall Street Journal reported in November 1997 that, despite healthy sales and a robust economy, U.S.-based automakers were also facing increased price pressures from Japanese imports as a result of the weak yen and reduced production costs.

During 1998 General Motors reportedly lost market share, and in August 1998 the Wall Street Journal noted that "GM's total sales and market share fell below those of No. 2 automaker Ford Motor Company for the first time since a national strike against GM in 1970." Ford's market share for April 1999 was reported to have dropped by 0.9 percent from that of the previous three months, however.

MARKETING STRATEGY

The launch of a new advertising campaign in February 1998 was a major event for the company. According to Art Spinella, the automotive director for CNW Marketing Research, "Ford tends to hand on to its ad campaigns for a long time." The new campaign featured a new tag line. The slogan that Ford had used for 15 years—"Have you driven a Ford lately?"—was replaced with "Ford Cars: Built to Last." The tag line "Built Ford Tough" continued to be used in truck advertising.

The television ads told stories of everyday people with humor and emotion in order to strike a chord with consumers. In choosing a spokesperson, Ford looked for someone who was not such a megastar that he or she would overshadow the product. Corbett, known from Northern Exposure, tested well. In fact, his role in the commercials closely resembled his role in the television series, in which he served as something of a narrator.

In a written statement issued several months after the campaign had started, Ford described its approach as "down-to-earth" and "a real change in Ford's approach to advertising." According to Ford's Klug, "When we launched the campaign in 1998, we discovered that everyone has a favorite story about a car or truck. This campaign is all about communicating on an emotional level—not just price and features." According to Ford, the spots dealt with "the human spectrum of experience, from the humorous to very emotional themes." Klug noted that the campaign "is all about building mind-changing communication, and to do that we need to make an emotional connection with our customers. One of the benefits of the campaign is the ability to tell stories that capture the personality of individual vehicles, but in a consistent, unified way that conveys the values that stand behind the Ford name."

Examples included an ad in which two friends—Charlie and Ray—made a wager over the capabilities of the F-Series truck. Charlie bet that Ray's truck would not be able to tow an 8,000—ton ship, and, of course, he lost. Another example was an Escort ad in which two women in a ZX2 tried to elude a strange van that was chasing them. When the van passed them, they realized that it was Publishers Clearing House trying to give them a prize.

Ford reportedly earmarked $80 million for the campaign, double the amount spent the year before. Six 30-second television spots were introduced during the coverage of the Winter Olympics, with the models advertised including the Mustang, Taurus, Escort ZX2, and F-Series pickup truck. One of the ads focused on Ford history, and another emphasized Ford's commitment toward Race for the Cure.

OUTCOME

After six months of running the ads, Ford decided to expand the campaign to all of its vehicles—cars and trucks—with the release of the 1999 models. Corbett was enlisted to appear in 13 new commercials, which included the "Hands" spot and another called "Charlie's Parents," in which two overprotective parents took comfort in knowing that a Taurus was helping keep their son Charlie from harm. Another humorous spot showed two women talking about their boyfriends' Mustangs, only to realize that they might be talking about the same man. In addition to the 13 new spots, several old ones were carried over from the 1998 campaign.

JOHN CORBETT: FROM STEELWORKER TO SPOKESPERSON

John Corbett, an ex-steelworker from West Virginia who went into acting after being injured on his job, was probably best known for his role as small town disc jockey Chris Stevens in Northern Exposure. Corbett also served a shorter stint on the Fox sci-fi series The Visitor, in which he played a passenger on an alien spaceship that crash-landed in Utah.

The Ford campaign was not Corbett's first experience as an auto spokesperson. During his time on Northern Exposure, Corbett also provided the voice-over for Isuzu Trooper commercials. A spokesman for the Isuzu advertising agency said that Corbett was chosen because "we wanted someone who was observant, who had a compassionate voice that would present a situation and then make it relevant." Perhaps Ford observed those same qualities in Corbett when it signed him on as its storyteller.

Ford also decided to change its 1999 marketing strategy to focus on its primary brands—Ford, Lincoln, Mercury, Jaguar, and Mazda—rather than individual models. Jim Schroer, Ford's executive director of marketing strategy and brand management, believed that past marketing efforts had tended to promote specific name-plates, such as Taurus and Explorer, too heavily and did not connect with or reinforce the primary brand. "The change is to make sure each nameplate strengthens the primary brand it is under," he said.

Spinella of CNW Marketing Research predicted, "This new campaign looks like it has some legs under it and Ford should be able to use it for another 10 to 15 years." Ford's Klug thought that the storytelling approach was effective. "Storytelling is part of the human DNA," she said. "People can really relate to it. You can tell stories that revolve around the personalities of our products."

FORD TRUCK ADS COME ON STRONG

For its 1999 advertising efforts Ford decided to do more than just tell nice stories about its trucks. In fact, in a departure from precedent the company decided to come on stronger. In addition to referring to competitors by name, Ford's truck advertising took on a somewhat confrontation tone. Paul Morel, Ford Division's truck group brand manager, called the ads "very hard-hitting and confident for a very tough and competitive market." In one ad a factory foreman announced to the plant that a Ford F-Series truck in the parking lot had its lights on, and he watched in dismay as all of the workers cleared out to check on their trucks. One print ad showed a Ford F-Series truck driving through the rain with the text "You're not going to find a better truck anywhere. Not even if you look under a rock." The reference was reportedly to advertising for the General Motors C/K Series truck in which Bob Seger sang "Like a Rock."

"Ford hasn't been doing in-your-face advertising with their competitors before. So I think the strategy they're taking with their truck represents forward thinking," said Tanya Gazdik, the Detroit bureau chief for Adweek.

FURTHER READING

Berkowitz, Harry. "TV Advertisers Go for the Gold." Newsday, February 5, 1998, p. A53.

"Ford Ads to Bolster Truck Lead." Calgary Sun, October 2, 1998, p. A18.

"Ford Division Launches New Internet Website." PR Newswire, October 13, 1998.

"Ford Expands 'Storytelling' Advertising Campaign for 1999 Model Year." Ford Division Public Affairs, September 28, 1998.

"Ford Readies '99 Effort." Adweek (Midwest Edition), September 28, 1998, p. 8.

Gazdik, Tanya. "Ford Tries New Tagline, Approach." Adweek (Southeast Edition), February 9, 1998, p. 41.

Halliday, Jean. "Ford Division Expands Storytelling Ads For '99." Automotive News, August 24, 1998, p. 49.

――――――. "Ford Switches Directions to Push Primary Brands." Advertising Age, November 16, 1998, p. 6.

Ramirez, Charles E. "Ford Gets New Ad Theme." Detroit News, February 5, 1998, p. B1.

Teegardin, Carol. "Ford Ad Campaign Takes On Competition." Detroit Free Press, October 3, 1998.

Winter, Drew. "Feisty Ford." Ward's Auto World, May 1996, p. 63.

                                       Debbi Mack

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