The struggling American motor company Ford is cutting its car and truck production by more than a fifth as high fuel prices have led to a slump in demand for trucks and sports utility vehicles.
Ford said yesterday it would make partial shutdowns at more than nine factories in the US and Canada. In the fourth quarter of the year, it will cut output by 21% to 625,000 vehicles with sports utility vehicles and light trucks bearing the brunt. Ford’s move is the latest sign that persistently high fuel prices have slowed consumer demand for gas-guzzling vehicles.
Ford is the world’s fourth-largest motor manufacturer in sales terms and has more than 300,000 employees. But in common with its larger rival General Motors, it has been losing market share to Japanese competitors. The Michigan-based company’s historic strength in pick-up trucks and sports utility vehicles such as the Ford Explorer has left it particularly vulnerable to a shift towards smaller cars by American consumers concerned about paying more than $3 a gallon for petrol.
The same questions return:
Why not lose some of the brass who keep making wrong forecasts?
Why not work at moving forward to profitable business opportunities instead of falling into semi-collapse when market forces change?
Why not lose some of the brass who keep making wrong forecasts?
Which is kind of funny, considering those same brass were milking the SUV craze for years… making a ton of money on the high margins, instead of fighting in the tight-margin compact catagory.
It was so profitable, everyone got in on it – except SAAB? [oops, just checked: “9-7X SUV”]
http://www.saabusa.com/?seo=goo_home
They forecast “our” desire for SUVs correctly, their crystal ball on oil prices was full of soot, though. 🙂
I don’t think Ford could respond to the current market faster. We’re dealing with the corporate culture of the American auto industry. They’ve been trying to delivery what the public was asking for. The problem is the public can no longer afford what they want. Trying to get the average American consumer in a 40 mpg vehicle is like trying to give a cat a bath. This is a slow evolution. Even a $5 per gallon it would take years. Remember that so much is financed on a $30K+ vehicle, the average buyer couldn’t afford to trade until the fourth year. Can you imagine what the resell market on a Lincoln Navigator would be if gas was $5 a gallon? Hell dealers would be buying them for scrap just to make a trade.
When Henry Ford introduced the affordable car to America, he noted that cars could run on vegetable oil. So did Rudolph Diesel when he unveiled his engine to the world. He suggested peanut oil.
I hope the executives eventually pay attention.
Ford is an American success story on so many levels. I hope they emerge strong and vibrant for the next 100 years.
Once again the American Auto industry is clueless and now its workers will suffer. The worst part is I can bet the VPs of the company will still get their obscene bonuses this year. I have only owned one American car and I will never own another one.
I leased the venerablle F-150 (1998-2000). After a 2 year least the thing was falling apart. The seat cushions were coming appart at the seams. The windshield wipers stopped working, and i had to have the dealer replace them. The driver side automatic window broke, again had to have dealer fix it. Various buttons on the console would break and stop working, for no aparent reason. I had those awful firestone tires. I was recalled at one point because the bolts holding on the tires were to weak and some wheels broke off. On and on with that truck. Last I checked the F-150 is WHY ford is still afloat. If they cant do better on their flagship product, then they deserve to slide into history.
Since then I have leased a Mazda MPV, a Nissan X-Terra and a Nissan Murano. I really loved the X-Terra. I had a problem with the Murano, the funky no shift transmission developed a leak of a fluid after about two months. When I took it to dealer for fixing, they gave me a car to drive around while it was in shop! That never happened the numerous times the Ford was in the shop. I even had trouble convincing the dealership that there was a problem with the transmission on the Murano, they said they almost never see Nissans for warranty work.
My wifes Toyota is at 250,000 miles. Aside from general wear, it still starts and drives like a new car. I have offered to get her a new car, she says “NO! there is a chance it will have a problem, and cause hassle” Aside from the breaks a couple of times, and the exhaust once (it was fixed with some gasket and cost like $80 to fix), we have had no problems with that car at all.
When I compare my experience with the Toyota with the various beaters (chevy cavalier, chevey celebrity, then an Nissan Maxima for a bunch of years, then another Nissan Maxima for a bunch more years) I drove prior to my adult income(F150 was first new car) , it is really easy calculus. No more American cars EVER.
Seeing that the economic wealth of post-WW2 america was largley due to switching to a car economy, what will our future wealth be based on?
When I was a kid GM was america’s largest employer – now I understand it’s Walmart. Not a very good sign.
#7, well the economy won’t be based on bio-tech either. But that’s a dead-end industry anyway.
I went to a local FORD dealer to look at the Fusion… Not bad(for a Mazda engined car) , but the dealer/salespeople were the worst experience I have ever had at a car dealer. I feel they’ll get everthing they deserve. It was like going to the beach in Mexico and trying to avoid the chicklet sales kids.
Why can’t they bring in one of the Australian Fords to the states? Probably the EPA/NTSB idots won’t let them. Can you say ‘rear wheel drive?’ Too bad I think, I really like their special performance cars.
Henry Ford in 1923 showed how to run a car company in his book “My life and Work”. It’s been out of print for 70 years in the US. It has never been out of print in Japanese and every Toyota engineer can almost recite it from memory.
I’ve read hundreds of books on manufacturing management as well as taught it for 22 years. This is so far above the rest it is pitiful.
It is so good, I have written the intro for a brand new edition that will be available in 2 weeks two. First 3 copies will go to the heads of Ford, GM and Chrysler.
Or you can download for free at Gutenberg.org
And, following the Dvorak tradition, visit my website at http://www.changeover.com
John Henry,
Changeover Wizard