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Refusing Bailout Money, Ford Proves to be Tough in Troubled Times
Times have been tough for the automotive industry over the past few years. While some have resorted to taking government bailouts to stay afloat, there has been one company, in particular, that has changed their business strategy and relied on innovation to push ahead. Ford Motor Company did not take any money from the government, and they have profited from this move by placing more of an emphasis on innovation and marketing. One marketing approach has been their ads, which focus on real Ford owners saying why they have purchased from the company. The below ad features a new F-150 owner, Chris, who purchased his truck for the fact that the company was not bailed out by the government.
His name is Chris. After he sits down the “reporters” bark “Chris, Chris.” One asks him to explain why “was buying American important to you.”
Sitting and looking sincere and serious, Chris says: “I wasn’t going to buy another car that was bailed out by our government. I was going to buy from a manufacturer that’s standing on their own: win, lose, or draw. That’s what America is about is taking the chance to succeed and understanding when you fail that you gotta’ pick yourself up and go back to work. Ford is that company for me.” [
Source]
Now, why would I focus on Ford so heavily? Maybe, it is because I am biased. My father was a former Ford mechanic and I drive a Ford, which I love due to obvious reasons. Another reason is that taxpayers will be losing money to the government bailout of GM and Chrysler at the tune of $14 billion, and this is not chunk change by any means. It is not the government’s role to bail businesses or industries out when they are failing, rather it is up to the CEOs of the organizations to refresh their business strategies and focus on new ideas that will appeal to their consumer base.
Cross posted at Bearing Drift
Auto Bailouts and Ford Motor Company
Ford Motor Company has not been directly impacted by the auto bailouts given to those at Chrysler and GM, and in fact, it has turned a profit recently. According to U.S. News and World Report, the auto manufacturer has cut costs, experiencing the gains from purchases on the new Taurus sedan and the Fusion hybrid, as well as reaping the benefits from the cash for clunkers program.
ABC News also speculated on Ford’s management style as being one of the reasons that the auto maker has turned a profit.
Three years ago, Ford was considered in the worst shape of the Detroit Three after posting what was at the time the worst annual loss in its history. The big quarterly profit is the fruit of changes Ford has been making for several years.
At the end of 2005, then-CEO Bill Ford Jr. and two other Ford executives developed a plan to shut down factories, slash the work force and speed the development of cars and trucks.
A year later, Bill Ford left the CEO job and installed Alan Mulally, a former Boeing executive, who further honed the plan and made a key decision — mortgaging assets like its blue oval logo to raise $23.4 billion.
When the economy faltered last year and took auto sales down with it, Ford had the cash to weather the storm.
“GM and Chrysler still have quite a bit of restructuring to do and simply don’t have the product competitiveness across their lineup that Ford does,” said Mark Oline, auto industry analyst for Fitch Ratings.
Perhaps, it is the innovation that is causing Ford to turn a profit. The new vehicles coming off the manufacturing line are fuel efficient and modern looking. In fact, the new Festiva will be on dealer lots soon, and it offers not only good fuel mileage, but the look is also sharp and sporty.
Overall, it might be too soon to tell what impact the auto bailouts will have on Ford Motor Company in the end. In fact, many UAW executives are worried about the impact Ford’s continued economic growth will have on Chrysler. Many of the UAW retirees have their health care and pension plans through Chrysler. Right now, it will be a wait and see moment for Detroit.
