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The downsizing of Ford Motor Company

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Simon

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Posted 25 January 2006 - 08:58 PM

Contrary to popular wisdom, size does not matter. As big as you are, the rules and risks are the same. Large size does not guarantee survival. Another example of that fact was confirmed on Monday, 23rd January, 2006, Ford Motor Company announced its long awaited restructuring plan. Some 30000 jobs will go and about 14 plants will be shuttered. One of them is the Wixom facility, home of the Lincoln, a few miles from my home.

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The downsizing of Ford Motor Company


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Charles Chew

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Posted 26 January 2006 - 05:32 AM

It will survive :whistle: but talking about "people as your asset".......I think in this case, its more like the company is a liability.


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Wallace Tait

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Posted 27 January 2006 - 04:42 AM

Unsure what you're trying to say Charles :dunno:

Great article Allan, and again you strike at the core problems of business.
I firmly believe Ford and the rest of the three are getting what they deserve. Deming would be rolling in his grave over the shenanigans of Ford. Deming at one point worked with Ford executives at corporate to assist them in seeing the validity of his business wisdom, they didn't listen (Well they did actually for a season).

People are the most important part of a process I have read in an excellent authors work. Yes indeed they are, but Ford have willingly decided to operate business according to the old school ways of Henry Ford. Just as the begining of the Ford empire, Henry employed bullying and intimidation tactics to restrict and impune his employees. It's all down to Ford and the big three getting a dose of "What goes around comes around".
Ford employees feeling disenfranchised? Yes you better believe it, employees saw the writting on the wall 10 years ago, when they decided to over produce units and forget all about quality systems.

Of course quality systems only provide organisational stability when the process owners have access to the continual improvement functions of the task elements associated with system. Sadly for Ford, they have'nt practiced what they preached for the past few years. Sick sigma, Kaizen, FPS (and well what's next) they have all failed to spark the innovation that's needed in the auto sector in North America.
The process owners who perform the mundane line jobs at the plants have been treated like a throw away tool that has it'self been overproduced and has lost its sharp edge. Pride has become a laughing point for auto sector workers.
Toyota, Honda and the fastest growing auto manufacturer KIA, have given the big three the reality check they have been needing for many years. The big three, who are they now? They're certainly not GM, Ford and Chrysler.
The solution isn't to challenge current wage indicators. The reality of the problem is that, Ford have over produced units that the customers never asked for in the first place. SUV's and minivans are out now and, we're bing told that CUV's are the new thing (say's who). I recall a thing called the Voice of the customer, what ever happened to that.
Wallace.


Edited by Wallace Tait, 27 January 2006 - 04:46 AM.


Simon

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Posted 27 January 2006 - 11:14 AM

I'm just about old enough to remember the "Buy British" government awareness campaign that ran in the 1970's. It didn't work.

The early Japanese cars that came over here were rubbish. I remember the Datsun (Nissan) Sunny, which had shall we say a slight propensity to rust; they quite literally fell apart within a couple of years. The cars were ridiculed and so were their owners. At the time people used to scoff at products Made in China, Taiwan, and Japan etc. It didn't last.

Because of its successful industrial heritage British industry had a superiority complex; we had the knowledge, power, money and very little serious competition and so we rested on our laurels (as is the natural tendency). This laziness made British Industry fat and unhealthy.

We had high wages, high employment costs, big taxes, rolls and rolls of red tape, strong union power, many strikes, low technology, low innovation, poor quality expensive products with no driver for change. The driver was there but we just didn't see it.

The fact is the closure of a factory and the resultant job losses do not enter into the calculations of consumers when they make a purchasing decision. It's too nebulous. They simply want something that is fit for purpose and value for money.

It is very sad; many families and communities will be badly affected by the Ford closures, but there's no point in crying over spilt milk.

If you don't get better every day, every week, every year; maybe someone else will and eventually you could be left in their wake with dust and perhaps a little egg on your face.

The main thing I take away from Allan's article is one should NEVER rest on ones laurels. And that means me.

Thanks for a great article Allan.

Regards,
Simon


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Posted 27 January 2006 - 02:48 PM

My thanks to you all for the kind comments about the article, especially from Wallace who has especially relevant knowledge, experience and insight about the situation described in this particular Autoptic.

I think I understand what it is Charles is trying to say. The Ford family holds a substantial proportion of the equity in Ford. That in itself should show Mr. William Clay Ford III, currently running the company and his family won't go down without a fight and one wishes him well. However, Ford's credit rating is at or below junk and its stock price, though rallying slightly since the restructuring announcement remains low. And Mr. Ford did intimate in his address on Jan 23 when he unveiled his plan that this is a last attempt at pulling the company around. The company, like GM, is drinking at the Last Chance Saloon.

Do not be surprised if the company goes into Chapter 11 bankruptcy protection. It also has the forthcoming burden of the failing Visteon business to deal with (Visteon was spun off from Ford a few years ago but it seems whatever were the terms, there was a protection clause whereby Visteon could dump its problems back onto Ford: and it is doing so as some 25 problem plants will be returned to the Ford fold soon.)

So, Charles, I am not so sure you are right. Yes, it is sometimes the case that large companies can come back - and everyone must be pleased for all stakeholders benefit when that happens. Of course, you might be tempted to buy some Ford stock in the belief that a resurrection similar to that of Proctor and Gamble may occur. In Ford's case, I think it will be more a gamble.

And Simon, the "I'm Backing Britain" campaign that preceded the "buy British" one, started with a few office girls, back in the late '60s. They were willing to work an extra half hour per day to help their employer reduce costs and get better productivity. It rapidly spread but was stamped out by - the unions. After that, we went inexorably downhill as the unions became more unrealistic, culiminating in the infamous "Winter of Discontent", at which point the entire nation said "Enough" and voted in Margaret Thatcher's government. The rest is history but the current British prosperity owes much to her tackling fundamental issues. Some of them are described in my address to the ASQ Detroit section, which Simon has kindly posted in the "Business Articles" section of this site.

Mr Ford needs to be a Mrs. T in dealing with his product line, his management team, the unions, the dealerships et al. I suspect the suppliers have been beaten up enough.


Edited by allanj, 27 January 2006 - 02:52 PM.


Simon

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Posted 27 January 2006 - 03:20 PM

Mr Ford needs to be a Mrs. T in dealing with his product line, his management team, the unions, the dealerships et al. I suspect the suppliers have been beaten up enough.


As we know suppliers are an easy touch and the rest tougher.

But a Mrs T? :o

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Posted 30 January 2006 - 06:50 AM

Hi Allan,

Its not often I throw in my point of view with regards to management issues and you are right about the possibility of Ford going into Chapter 11 Bankruptcy Protection. It would be a sad day if that happens but there is just too much history for Ford to just disappear and I believe it will not.

IMO. there is a huge need to review the corporate direction. It needs to redefine the automobile industry. It was a leader in every field of the auto industry. It got complacent and went deep into believing what "it thought" was what the buyers wanted. In short, it did not response enough to engage the changing market terrain and demand circumstances of the global auto industry.

Again, in my opinion, the Top Management of Ford today needs to give the senior management a good shake-up which I am sure William Ford III is doing exactly that right now. Its not about engaging the workers. I believe the common Americans have a job to do and will deliver what its asked to do. Its about leadership on the top and whether the leaders are driven to lead or simply to take leads.

The auto industry terrain have changed from the previous. Its no longer a case of some Japanese management styles that work wonders. Its about so many issues. The prices of oil, end product cost, car styling, the V-6s and the V-8s, global alliances, concept cars etc

I remember the "Ford Ranger Truck" was a far better twin cab than any others in the market some only 5 years ago. Today, its no match to the Japanese - why!

I thought the Japanese had up the competition and gave the consumers more than just traction control and turbo chargers...........while Ford stood still.

Its a huge situation and obviously we are all hitting the surfaces of the issue. Allan, thanks for listening.


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Charles Chew
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