Subject category:
Strategy and General Management
Published by:
IBS Research Center
Length: 12 pages
Data source: Published sources
Topics:
Ford Motor Company; Restructuring; Legacy costs; Premier Automotive Group (PAG); Ford Motor Credit Company; Hertz Corporation; Junk bonds; United Auto Workers (UAW) Union; Other Post Employment Benefit (OPEB); Bill Ford; Hybrid technology; Voluntary Employee Benefit Association (VEBA); Cost cutting; Jim Padilla
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Abstract
The North American operations of Ford Motor Company, the leading automobile manufacturer in the world, exhibited a sharp decline in profitability in 2005 with a decrease in production and factory usage rate. The total number of Ford models sold in the US till November 2005, was 2.7 million only, compared to 4 million in 1995. Ford models were losing market share while competing with its Japanese counterparts, like Honda, Nissan and Toyota. Its profit margins were further depleted by the huge burden of legacy costs and pension obligations, due to its contract with the United Auto Workers Union. The case highlights the restructuring initiatives undertaken by Ford, particularly the various cost-cutting measures, as a part of its revival plan to recuperate from its lost position in the automobile industry.
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Abstract
The North American operations of Ford Motor Company, the leading automobile manufacturer in the world, exhibited a sharp decline in profitability in 2005 with a decrease in production and factory usage rate. The total number of Ford models sold in the US till November 2005, was 2.7 million only, compared to 4 million in 1995. Ford models were losing market share while competing with its Japanese counterparts, like Honda, Nissan and Toyota. Its profit margins were further depleted by the huge burden of legacy costs and pension obligations, due to its contract with the United Auto Workers Union. The case highlights the restructuring initiatives undertaken by Ford, particularly the various cost-cutting measures, as a part of its revival plan to recuperate from its lost position in the automobile industry.