FORD MOTOR COMPANY
Ford Motor Company is
a multinational automaker
that has its main headquarter in Dearborn, Michigan,
a suburb of Detroit. It was founded by Henry Ford and incorporated on June 16,
1903. The company sells automobiles and commercial vehicles under the Ford brand
and most luxury cars under the Lincoln brand.
Ford also owns Brazilian SUVmanufacturer Troller, an 8% stake in Aston Martin of the United Kingdom and a
32% stake in Jiangling Motors. It
also has joint-ventures in China (Changan Ford), Taiwan (Ford Lio Ho), Thailand (AutoAlliance Thailand),
Turkey (Ford Otosan), and Russia (Ford Sollers). The company is listed on
the New York Stock
Exchange and is controlled by the Ford family; they have minority ownership but
the majority of the voting power.
Ford introduced methods
for large-scale manufacturing of cars and large-scale management of an
industrial workforce using elaborately engineered manufacturing sequences
typified by moving assembly lines; by
1914, these methods were known around the world as Fordism. Ford's former UK subsidiaries Jaguar and Land Rover, acquired in 1989 and 2000
respectively, were sold to Tata Motors in March 2008. Ford owned the
Swedish automaker Volvo from 1999
to 2010. In 2011, Ford discontinued the Mercury brand,
under which it had marketed entry-level luxury cars in the United States,
Canada, Mexico, and the Middle East since 1938.
Ford is the
second-largest U.S.-based automaker (behind General Motors) and the fifth-largest in
the world (behind Toyota, VW, Hyundai-Kia and
General Motors) based on 2015 vehicle production. At the end of 2010, Ford was
the fifth largest automaker in Europe. The company went public in 1956 but
the Ford family, through special Class B shares, still retain 40 percent voting
rights. During the financial
crisis at the beginning of the 21st century, it was close to
bankruptcy, but it has since returned to profitability. Ford was the
eleventh-ranked overall American-based company in the 2018 Fortune 500 list, based on global
revenues in 2017 of $156.7 billion. In 2008, Ford produced
5.532 million automobiles and employed about 213,000 employees at
around 90 plants and facilities worldwide.
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Ford Motor Company
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Ford Motors Logo
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The Ford World
Headquarters in Dearborn, Michigan, also known as the Glass
House
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Type
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Public
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Industry
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Automotive
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Founded
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June 16, 1903; 115 years ago
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Founder
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Henry Ford
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Headquarters
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Dearborn, Michigan
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U.S.
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Area served
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Worldwide
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Key people
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William Clay Ford Jr.
(Executive Chairman)
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Jim Hackett
(President & CEO) |
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Products
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Automobiles
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Luxury Vehicles
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Commercial Vehicles
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Automotive parts
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Pickup trucks
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SUVs
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Production output
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6.6 million vehicles (2017)
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Services
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Automotive finance
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Vehicle leasing
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Vehicle service
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Revenue
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US$156.776
billion(2017)
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Operating
income
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US$4.813 billion (2017)
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Net income
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US$7.602 billion (2017)
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Total assets
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US$257.808 billion(2017)
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Total equity
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US$34.918 billion (2017)
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Owner
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The Vanguard Group(5.82%)
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Evercore Wealth
Management (5.58%)
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Ford family
(2% equity; 40% voting power) |
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Number of employees
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~202,000 (December 2017)
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Divisions
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Ford
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Lincoln
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Motorcraft
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HISTORY
20th century
Henry Ford's first attempt at a car company under his own name
was the Henry Ford Company on
November 3, 1901, which became the Cadillac Motor Company on
August 22, 1902, after Ford left with the rights to his name. The Ford
Motor Company was launched in a converted factory in 1903 with $28,000 in cash
from twelve investors, most notably John and Horace Dodge (who
would later found their own car
company). The first president was not Ford, but local banker John S. Gray,
who was chosen to assuage investors' fears that Ford would leave the new
company the way he had left its predecessor. During its early years, the
company produced just a few cars a day at its factory on Mack Avenue and
later its factory on Piquette
Avenue in Detroit, Michigan. Groups of two or three men worked on each car,
assembling it from parts made mostly by supplier companies contracting for
Ford. Within a decade, the company would lead the world in the expansion and
refinement of the assembly line concept,
and Ford soon brought much of the part production in-house in a vertical integration that
seemed a better path for the era.
Henry Ford was 39 years old when he founded the Ford Motor
Company, which would go on to become one of the world's largest and most
profitable companies. It has been in continuous family control for over 100
years and is one of the largest family-controlled companies in the world.
The first gasoline powered automobile had been created in 1885 by the German inventor Carl Benz (Benz Patent-Motorwagen).
More efficient production methods were needed to make automobiles affordable
for the middle class, to which Ford contributed by, for instance, introducing
the first moving assembly line in 1913
at the Ford factory in Highland
Park.
Between 1903 and 1908, Ford produced the Models A, B, C, F,
K, N, R, and S. Hundreds or a few thousand of most of these were sold per year.
In 1908, Ford introduced the mass-produced Model T, which totalled millions sold over nearly 20 years. In
1927, Ford replaced the T with the Model A, the
first car with safety glass in the windshield. Ford launched the first low-priced car with a V8 engine in 1932.
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In an attempt to compete with General Motors' mid-priced
Pontiac, Oldsmobile, and Buick, Ford created the Mercury in 1939 as a
higher-priced companion car to Ford. Henry Ford purchased the Lincoln Motor
Company in 1922, in order to compete with such brands as Cadillac and Packard
for the luxury segment of the automobile market.
In 1929, Ford was contracted by the government of the Soviet
Union to set up the Gorky Automobile Plant in Russia initially producing Ford
Model A and AAs thereby playing an important role in the industrialisation of
that country.
The creation of a scientific laboratory in Dearborn, Michigan in
1951, doing unfettered basic research, led to Ford's unlikely involvement
in superconductivity research.
In 1964, Ford Research
Labs made a key breakthrough with the invention of a
superconducting quantum interference device or SQUID.
Ford offered the Lifeguard safety package from 1956, which
included such innovations as a standard deep-dish steering wheel, optional
front, and, for the first time in a car, rear seatbelts, and an optional padded
dash. Ford introduced child-proof door locks into its products in 1957,
and, in the same year, offered the first retractable hardtop on a mass-produced
six-seater car.
In late 1955, Ford established the Continental division as a
separate luxury car division. This division was responsible for the manufacture
and sale of the famous Continental Mark II. At the same time, the Edsel
division was created to design and market that car starting with the 1958 model
year. Due to limited sales of the Continental and the Edsel disaster, Ford
merged Lincoln, Mercury, and Edsel into "M-E-L," which reverted to
"Lincoln-Mercury" after Edsel's November 1959 demise.
The Ford Mustang was introduced in April 17, 1964 during New
York World's Fair. In 1965, Ford introduced the seat belt reminder light.
With the 1980s, Ford introduced several highly successful
vehicles around the world. During the 1980s, Ford began using the advertising
slogan, "Have you driven a Ford, lately?" to introduce new customers
to their brand and make their vehicles appear more modern. In 1990 and 1994
respectively, Ford also acquired Jaguar Cars and Aston Martin. During the mid- to late 1990s, Ford
continued to sell large numbers of vehicles, in a booming American economy with a soaring stock market and low fuel
prices.
With the dawn of the new century, legacy health care
costs, higher fuel prices, and a faltering economy led to falling
market shares, declining sales, and diminished profit margins. Most of the
corporate profits came from financing consumer automobile loans through Ford Motor Credit
Company.
21st century
By 2005, both Ford and GM's corporate bonds had been downgraded to junk status, as
a result of high U.S. health care costs for an aging workforce,
soaring gasoline prices, eroding market share, and an over dependence on
declining SUV sales.
Profit margins decreased on large vehicles due to increased
"incentives" (in the form of rebates or low interest financing) to
offset declining demand. In the latter half of 2005, Chairman Bill Ford
asked newly appointed Ford Americas Division President Mark Fields to
develop a plan to return the company to profitability. Fields previewed the
Plan, named The Way Forward, at
the December 7, 2005, board meeting of the company and it was unveiled to the
public on January 23, 2006. "The Way Forward" included resizing the
company to match market realities, dropping some unprofitable and inefficient
models, consolidating production lines, closing 14 factories and cutting 30,000
jobs.
Ford moved to introduce a range of new vehicles, including
"Crossover SUVs" built
on unibody car platforms, rather than more body-on-frame chassis. In developing the hybrid electric
powertrain technologies for the Ford Escape Hybrid SUV,
Ford licensed similar Toyota hybrid technologies to avoid patent
infringements. Ford announced that it will team up with electricity supply
company Southern California
Edison (SCE) to examine the future of plug-in hybrids in terms of how home and vehicle energy
systems will work with the electrical grid. Under the multimillion-dollar,
multi-year project, Ford will convert a demonstration fleet of Ford Escape Hybrids into
plug-in hybrids, and SCE will evaluate how the vehicles might interact with the
home and the utility's electrical grid. Some of the vehicles will be evaluated
"in typical customer settings", according to Ford.
William Clay Ford Jr.,
great-grandson of Henry Ford (and better known by his nickname
"Bill"), was appointed executive chairman in 1998, and also became
chief executive officer of the company in 2001, with the departure of Jacques Nasser, becoming the first member of the Ford family
to head the company since the retirement of his uncle, Henry Ford II, in 1982. Ford sold motorsport engineering
company Cosworth to Gerald Forsythe and Kevin Kalkhoven in 2004, the start of a decrease in
Ford's motorsport involvement. Upon the retirement of president and chief
operations officer Jim Padilla in April 2006, Bill Ford assumed his roles as
well. Five months later, in September, Ford named Alan Mulally as president and CEO, with Ford continuing
as executive chairman. In December 2006, the company raised its borrowing
capacity to about $25 billion, placing substantially all corporate assets
as collateral. Chairman Bill Ford has stated that "bankruptcy is not
an option". Ford and
the United Auto Workers,
representing approximately 46,000 hourly workers in North America, agreed to a
historic contract settlement in November 2007 giving the company a substantial
break in terms of its ongoing retiree health care costs and other economic
issues. The agreement included the establishment of a company-funded,
independently run Voluntary
Employee Beneficiary Association (VEBA) trust to shift the
burden of retiree health care from the company's books, thereby improving its
balance sheet. This arrangement took effect on January 1, 2010. As a sign of
its currently strong cash position, Ford contributed its entire current
liability (estimated at approximately US$5.5 billion as of
December 31, 2009) to the VEBA in cash, and also
pre-paid US$500 million of its future liabilities to the fund.
The agreement also gives hourly workers the job security they were seeking by
having the company commit to substantial investments in most of its factories.
The automaker reported the largest annual loss in company
history in 2006 of $12.7 billion, and estimated that it would not
return to profitability until 2009. However, Ford surprised Wall Street in the second quarter of 2007 by posting a $750 million
profit. Despite the gains, the company finished the year with a
$2.7 billion loss, largely attributed to finance restructuring at Volvo.
On June 2, 2008, Ford sold its Jaguar and Land Rover operations
to Tata Motors for $2.3 billion.
During congressional hearings held in November 2008 at
Washington D.C., and in a show of support, Ford's Alan Mulally stated that
"We at Ford are hopeful that we have enough liquidity. But we also must
prepare ourselves for the prospect of further deteriorating economic
conditions". Mulally went on to state that "The collapse of one of
our competitors would have a severe impact on Ford" and that Ford Motor
Company's supports both Chrysler and General Motors in their search for
government bridge loans in the face of conditions caused by the 2008 financial crisis. Together,
the three companies presented action plans for the sustainability of the
industry. Mulally stated that "In addition to our plan, we are also here
today to request support for the industry. In the near-term, Ford does not
require access to a government bridge loan. However, we request a credit line
of $9 billion as a critical backstop or safeguard against worsening conditions
as we drive transformational change in our company" GM and Chrysler
received government loans and financing through T.A.R.P. legislation funding provisions.
On December 19, the cost of credit default swaps to
insure the debt of Ford was 68 percent the sum insured for five years in
addition to annual payments of 5 percent. That meant $6.8 million paid
upfront to insure $10 million in debt, in addition to payments of $500,000
per year. In January 2009, Ford reported a $14.6 billion loss in the
preceding year, a record for the company. The company retained sufficient
liquidity to fund its operations. Through April 2009, Ford's strategy of debt
for equity exchanges erased $9.9 billion in liabilities (28% of its total) in order
to leverage its cash position. These actions yielded Ford a
$2.7 billion profit in fiscal year 2009, the company's first full-year
profit in four years. In 2012, Ford's corporate bonds were upgraded from
junk to investment grade again, citing sustainable, lasting improvements.
On October 29, 2012, Ford announced the sale of its climate
control components business, its last remaining automotive components
operation, to Detroit Thermal Systems LLC for an undisclosed price.
On November 1, 2012, Ford announced that CEO Alan Mulally will stay with the company until 2014. Ford
also named Mark Fields,
the president of operations in Americas, as its new chief operating officer Ford's
CEO Mulally was paid a compensation of over $174 million in his previous seven
years at Ford since 2006. The generous amount has been a sore point for some
workers of the company.
In April 2016, Ford announced a plan to modernize its Dearborn
engineering and headquarters campuses through a ten-year building project. The
end result would see the number of Ford employees working in these areas
doubling, to 24,000. During construction, some 2000 of the employees were
relocated out of the campus to a temporary location in a disused section of the
local shopping mall. Facilities would also be altered to allow
ride-sharing and electric and self-driving vehicles. Estimates of the
construction cost were $1.2 billion.
On January 3, 2017, Ford CEO Mark Fields announced
that in a "vote of confidence" because of the pro-business climate
being fostered in part by President-elect Donald Trump, Ford has cancelled plans to invest $1.6 billion
in a new plant in Mexico to manufacture the Ford Focus. The Ford Focus will now be manufactured in the existing plant
in Mexico. Instead, Fields announced that Ford will be investing $700 million
in Michigan, which it plans to use to create 700 new jobs.
In February 2017, Ford Motor Co. acquired majority ownership of
Argo AI, an self-driving car startup.
In May 2017, Ford announced cuts to its global workforce amid
efforts to address the company's declining share price and to improve profits.
The company is targeting $3 billion in cost reduction and a nearly 10%
reduction in the salaried workforce in Asia and North America to enhance
earnings in 2018. Jim Hackett was announced to replace Mark Fields as CEO
of Ford Motor. Mr. Hackett most recently oversaw the formation of Ford Smart
Mobility, a unit responsible for experimenting with car-sharing programs,
self-driving ventures and other programs aimed at helping the 114-year-old auto
maker better compete with Uber Technologies Inc., Alphabet Inc. and other tech giants looking to edge in on
the auto industry.
On April 25, 2018, Ford announced that it will discontinue passenger
cars in the North American market in the next four years, except for the
Mustang and the Focus Active, due to declining demand and profitability. But
on August 31, 2018, Ford announced that the Focus Active will not go on sale in
North America because of the tariffs that would be placed on vehicles built
overseas, as the Focus Active is being built in China and later announced in a
statement on September 10, 2018 that they have no plans to build it in the
United States.
Ford began development on an urban campus in the Corktown neighborhood of Detroit in 2017 with its
purchase, renovation and occupation of The Factory building at Michigan and
Rosa Parks. Ford later began buying up other parcels of land in Corktown
including a very high-profile purchase of Michigan Central
Station which is planned to become the hub of their Corktown
campus, and the adjacent Roosevelt Warehouse. Plans
for the Corktown campus include 1.2 million square feet of mixed-use
development spread over multiple parcels. The focus of the campus will be
on autonomous vehicles and electric vehicles which Ford plans to move aggressively
into the development of. Ford expects to move 2,500 of its employees, roughly 5
percent of its southeast Michigan workforce, to the campus with space for an
additional 2,500 entrepreneurs, technology companies and partners related to
Ford's expansion into Autos 2.0. Bill
Ford said he envisions the first-floor concourse of the train station to be a
gathering place, open to the public, filled with restaurants and retail.
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