The Way Forward
- For the 2014 book by American Republican Congressman Paul Ryan, see The Way Forward: Renewing the American Idea.
Ford Motor Company's restructuring plan, made public in 2006, is known as The Way Forward.
Ford is attempting to reduce fixed capital costs while maintaining a special focus on cars and car-based crossover vehicles. Over time, it hopes to make more of its product line profitable instead of relying on a limited portion of the products for profit. Making good profits across the product line requires that the company reduce the costs of development and production, while introducing new products that connect with consumers.
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, dubbed "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 plan was revised on September 15, 2006 to accelerate plant closings.
"The Way Forward" includes resizing the company to match current market realities, dropping some unprofitable and inefficient models, consolidating production lines, and shutting down seven vehicle assembly plants and seven parts factories. Among these are St. Louis Assembly (near St. Louis), Atlanta Assembly (near Atlanta), Batavia Transmission (Batavia, Ohio), Windsor Casting (Windsor, Ontario, Canada), and Wixom Assembly (Wixom, Michigan). Up to 30,000 hourly and salaried jobs (28% of the total workforce) in North America over the next six years are expected to be eliminated, which is comparable to similar cutbacks previously announced at General Motors. These cutbacks are consistent with Ford's roughly 25% decline in U.S. automotive market share since the mid-late 1990s.
New cars were developed faster using the new Global Product Development System (GPDS). This brings Ford's cycle time closer to its Japanese rivals.
Ford's realignment also included the sale of its wholly owned subsidiary, Hertz Rent-a-Car to a private equity group for $15 billion in cash and debt acquisition. The sale was completed on December 22, 2005. A joint venture with Mahindra and Mahindra Limited of India ended with the sale of Ford's 15 percent stake in 2005.
Ford had announced a projected return to profitability sometime after 2010, but they returned earlier than expected during the year 2009.
Ford also announces that it will have every vehicle in the Ford and Lincoln line up on its 9 new global platforms cutting costs by a big amount. A new style for all Ford and Lincoln vehicles is introduced and Ford wants "An unmistakable Ford or Lincoln look".
Plant closings
Ford reportedly plans to close 14 manufacturing plants by 2012 including 7 that assemble cars. Short-term results (by 2008) will reduce Ford's assembly capacity by 26%.
The first closures were announced on January 23, 2006.[1] Ford announced on April 13, 2006 that two more plants would close as well.[2] The plan was accelerated with a mid-September announcement which accelerated the closure of the Norfolk plant and added the Essex engine and Maumee stamping plants to the list.[3]
| Date announced | Plant name | Location | Date of closing | Products | Employees |
|---|---|---|---|---|---|
| January 23, 2006 | St. Louis Assembly | Hazelwood, Missouri | 2006 | Ford Explorer Lincoln Aviator Mercury Mountaineer | 1,445 |
| Atlanta Assembly | Hapeville, Georgia | Oct. 2006 | Ford Taurus Mercury Sable | 2,028 | |
| Batavia Transmission | Batavia, Ohio | 2008 | transmissions | 1,745 | |
| Windsor Casting | Windsor, Ontario, Canada | 2008 | Engine blocks, parts | 684 | |
| Wixom Assembly | Wixom, Michigan | June 2007 | Lincoln Town Car Lincoln LS Ford GT | 1,567 | |
| April 13, 2006 | Twin Cities Assembly | St. Paul, Minnesota, USA | 2011 | Ford Ranger Mazda B-Series | 1,885 |
| Norfolk Assembly | Norfolk, Virginia, USA | 2007 | Ford F-Series | 2,433 | |
| September 14, 2006 | Essex Engine | Windsor, Ontario, Canada | 2008 | Ford Triton engine Ford Essex V6 engine | |
| Maumee Stamping | Maumee, Ohio | 2008 | body panels | ||
| Total | 11,787 | ||||
Ford has kept the Essex Engine plant open to produce the 5.0 V8.
Product replacements
The following products are currently assembled at the Wixom (Michigan) Assembly plant, which is closing. They will be replaced by future vehicles. In June 2006, Ford announced that it will not move production to St. Thomas, Ontario, Canada (where its body-on-frame platform-mates Ford Crown Victoria and Mercury Grand Marquis are produced), likely meaning that Town Car production would end permanently. Ford eventually changed its mind, and the company reversed this decision, announcing in September that it would move the Town Car after all. As of 2011, production of the Town Car has been cancelled, with the MKT crossover intended as its replacement for livery fleets.
| Date announced | Product | End of production | Replacement |
|---|---|---|---|
| January 23, 2006 | Ford GT | September 21, 2006 | Shelby Cobra GT500 |
| Lincoln LS | April 2006 | Lincoln MKZ Lincoln MKS | |
| Lincoln Town Car | June 2007 | Assembly to be moved | |
Staff reductions
Up to 30,000 factory jobs would be eliminated with the downsizing envisioned in The Way Forward. The company is also eliminating 4,000 salaried, contract, and agency jobs during the first quarter of 2006, and the company is eliminating 6 or 7 corporate officer positions out of 53 immediately.
Ford is reportedly offering severance packages of up to $100,000 for workers who are willing to give up all future benefits except their pension. The company will also pay up to $15,000 in tuition for workers returning to school. Workers over 55 can reportedly get a $35,000 bonus to retire early, provided they have 30 years of service with the company, and those with 28 years can get leave and 85% pay for two years.[4]
Divestment
Ford's plan called for divesting, selling, and closing some businesses in order to raise cash.
- Jaguar Cars and Land Rover — On 2 June 2008, Ford sold both of its British operations to Tata Motors of India for a cost of £1.7 billion.
- Aston Martin — On 12 March 2007, a British consortium led by Dave Richards of Prodrive purchased the iconic automaker for £479 million.
- Automobile Protection Corporation — Extended warranty company APCO will also be sold
- Mazda, On November 18, 2008, Ford announced that it would be selling a 20% stake in Mazda, bringing its stake to 13.4%, and surrendering control of the company.
- Mercury (automobile), On June 2, 2010, Ford officially announced the closure of Mercury by the end of Q4 of 2010.
New products
Ford, reportedly will also invest in new products and productions sites to better compete in the marketplace. The company plans to build a new low-cost manufacturing site in North America, possibly in Mexico.
Product plans reportedly call for more crossover SUVs, compact cars, and hybrid vehicles.
Ford also intends to revive the Lincoln brand.
References
- "Ford to End GT, Lincoln LS Production Runs". Ward's Auto World. Retrieved February 6, 2006.
- "LIVEBLOG: Ford's "Way Forward" Plan". Autoblog.com. Retrieved February 6, 2006.
Notes
- ↑ "Ford Fights Back". Ford press release. Retrieved April 14, 2006.
- ↑ "Ford's Twin Cities and Norfolk Assembly Plants Will Be Idled As Way Forward Plan Moves Ahead". Ford press release. Retrieved April 14, 2006.
- ↑ "Ford Overhauls Way Forward Plan". AutoWeek. Retrieved September 15, 2006.
- ↑ "Ford offers $100,000 buyouts". Detroit News. Retrieved February 7, 2006.