Ford Success Underscores Power of Private Enterprise

Ford Success Underscores Power of Private Enterprise

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Make no mistake about it: the Ford Motor Company has been showing some very impressive results lately. Last year the automaker posted a $2.7 billion profit, a stunningly large amount considering what a stinker 2009 was saleswise. Ford figured out how to make money by selling far fewer vehicles, effectively casting to the side long held industry thinking that volume is what drives profits.

Outselling GM

Ford boss Alan Mulally stands in front of the all new Ford Taurus.

In February, Ford did the unthinkable: they sold 471 more cars in the US for the month than GM, the first time that happened since 1998 when a crippling strike shut down much of GM’s production. GM has been the annual US sales leader consistently since 1931 and although one month certainly doesn’t make for a year, Ford has served notice that they intend to build on their momentum.

Ford’s success is in stark contrast to the fortunes of its crosstown rivals. Last year, both General Motors and Chrysler were ushered through federal bankruptcy court and given billions of dollars of aid and loans to shore up their enterprises. GM’s bail out was particularly large with American and Canadian taxpayers contributing more than $50 billion to keep the company afloat. Since then GM has been concentrating on shedding brands and trying to salvage their operation.

Chrysler’s situation is much more desperate, an automaker who would have gone out of business had Italy’s Fiat not stepped in. Without investing a penny Fiat gained a 20 percent stake in Chrysler with the promise of additional shares once new Fiat derived models hit the market. Chrysler had no new models for the 2010 model year while GM had a few. Ford, on the other hand, has been overhauling its line ups by updating or releasing new models.

Toyota Woes

Granted, some of Ford’s most recent fortunes likely came as a result of Toyota’s misfortunes. Once considered a rock solid operation Toyota has been dogged by recalls and a rash of bad public relations moves which have caused once loyal customers to look at competing brands. Over the past few years Ford has made it known that its quality is on par with Toyota and Honda, with Consumer Reports supporting that notion.

How did Ford get to where it is today? Credit Alan Mulally the former head of Boeing Corp. with fixing Ford. Mulally shepherded Boeing through tough times enabling the aircraft manufacturer to fight back against Airbus, the European jet consortium. Upon leaving Boeing in 2006, Mulally was named President and CEO of the Ford Motor Company. One of his first moves was to mortgage nearly all of Ford’s assets, a move which netted the cash strapped automaker nearly $24 billion and the time it needed to introduce new products to the market.

Ford Refocused

Over the succeeding years Mulally refocused Ford, selling off three of its premium brands–Aston Martin, Jaguar and Land Rover–while working to revive Lincoln and bolster Ford. Volvo is in the process of being sold while Mercury will likely be fixed in the coming years. The automaker’s “One Ford” approach is its most significant change, as the automaker introduces models which will be sold globally instead of mostly regionally as had been the previous expensive practice.

Ford was turned down for a federal government loan in late 2008, likely the best thing that has happened to the automaker since Mulally took over.

GM Scrutinized

Every GM move is constantly being called into question with the company announcing just last week that it would re-institute the franchises of 661 dealers whose contracts had previously been terminated. Congressional pressure forced GM to reconsider, a distraction Ford doesn’t have, allowing the Blue Oval to make decisions without worrying about what someone in Washington or Ottawa thinks.

Of course, that comes without government intervention, a glaring difference between Ford and GM, pitting a privately run enterprise against a government backed entity.

Adv. — Are you considering buying a car this year? If so, you may do best by finding your own auto loan before you shop for a car. Please visit SayLending.com to explore your auto financing options.

Photo Credit: Ford Motor Company

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Comments

  1. Siegfried Oblasser
    Siegfried Oblasser 10 March, 2010, 16:15

    It’s not only the power of private enterprise. It is the combination with decisive, focused and consistent management based on a sound strategy with clear achievable goals.

  2. Matthew C. Keegan
    Matthew C. Keegan Author 10 March, 2010, 16:21

    Well said, Siegfried. And it is those types of strategies which have the best chance of succeeding in a private enterprise environment.

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