Ford Motor Company (US)

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The Ford Motor Company remains one of the world's major carmakers, but a series of challenges in the 2000s pushed it steadily down the rankings. By 2016, it was the global #6. As well as the main Ford brand, the company also owns luxury marque Lincoln, sold mainly in North America. A sizeable collection of other brands have been sold or discontinued. A trio of British automobiles - Aston Martin, Jaguar and Land Rover - were relinquished between 2006 and 2008 and the group also surrendered its effective control of Japan's Mazda, though the two companies maintain a strategic alliance. The Volvo passenger car business in Sweden was sold in 2010 to Geely of China, and the struggling North American Mercury brand was shuttered at that year's end. Those disposals were originally prompted by a series of escalating problems during the 2000s ranging from over-capacity and management turmoil to a massive recall of faulty Firestone tires. In fact, these multiple hurdles were ultimately to prove modestly beneficial, allowing the group to begin its restructuring well before the sudden and near-catastrophic slowdown which occurred during 2007 and 2008, and which temporarily bankrupted rivals General Motors and Chrysler. See also Ford Motors of Great Britain.

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Who handles Ford's advertising? Click here for agency account assignments for Ford from adbrands.net. Including unmeasured media, the company declared its own advertising costs in 2016 to be $4.3bn. In the US, Advertising Age/Kantar reported measured media expenditure of $1.25bn in 2016, out of an estimated total of $2.34bn. Biggest spending brands were Ford (measured spend $892m) and Lincoln ($304m).

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Contact

Ford Motor Company
One American Road
Dearborn, MI 48126
United States
Tel: 1 313 322 3000

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 26th Apr 2018: More worries for WPP. The departure of Martin Sorrell seems to have nudged Ford into upgrading a previously announced "reorganisation" of its relationship with WPP into a full review. Ford is WPP's single biggest global client: dedicated agency GTB handles all creative, media, digital and promotional marketing for the brand worldwide, with a spend in excess of $2bn. "We value the talented and creative women and men at WPP," said a Ford spokesperson. "They are trusted partners and curators of the Ford brand..." But Ford will now "place some portions of our advertising business up for bid with other agencies, including WPP, beginning in the coming weeks." GTB told its own employees "WPP will have an opportunity to compete with other firms to retain these portions of the business, and will remain Ford’s agency of record in some other key areas."

Adbrands Weekly Update 22nd Mar 2018: Ford's attempts to reach beyond the auto industry to revitalise its strategy don't appear to be paying off. Musa Tariq was hired just over a year ago as the company's first chief brand officer, following a series of high profile marketing roles at Apple retail, Nike and Burberry. He is leaving Ford this week, with his duties reassigned to chief marketing officer Joy Falotico.

Adbrands Weekly Update 22nd Feb 2018: The misconduct wave claimed another major scalp yesterday evening. Raj Nair, president of Ford Motors in North America and a 30-year veteran of the company, has been dismissed following allegations of "inappropriate behaviour" brought to the company's attention by a whistleblower. The precise nature of the allegations wasn't divulged. In a statement, Nair said "I sincerely regret that there have been instances where I have not exhibited leadership behaviours consistent with the principles that the company and I have always espoused." Nair's departure comes at a bad time for Ford. Group CEO Mark Fields was replaced a year ago, but his successor Jim Hackett is still struggling to lift the group's profit margins, which are the weakest of America's major auto firms. Nair's departure prompted yet another reshuffle of senior managers. That prompted another promotion for rising star Kumar Galhotra, only revcently appointed as CMO. He now becomes North America president, with Stuart Rowley as COO, North America. Galhotra's role as group CMO and president, Lincoln was assumed by Joy Falotico, previously CEO of Ford Credit. She was herself replaced in that role by David McClelland.

Adbrands Weekly Update 25th Jan 2018: Ford's final quarter was disappointing. Despite better than expected topline growth, profit margins slumped as a result of higher steel and aluminium prices, dragging down operating income. Annual performance was satisfactory, with revenues up 3% to $156.8bn, while net income jumped 65% to $7.6bn. However, the previous year included a number of one-off charges, making for an easier comparison. On an adjusted basis excluding special items, pretax profits were down by almost 20% year-on-year. “Our business structure is out of sync with our outlook on revenue," said global markets chief Jim Farley last week, "out of sync with our competitive set. We're taking urgent action to increase our profitability." Main rival GM, which reports in two weeks, is expected to deliver much stronger results.

Adbrands Weekly Update 4th Jan 2018: Early estimates suggest that global car sales surpassed a record 90m in 2017 as a result of the continuing recovery in Western Europe and a rebound in emerging markets like Brazil and Russia. However US sales slipped back for the first time since 2009, down almost 2% to 17.2m vehicles. That still represented an unprecedented three-year run of over 17m per year, but market watcher Edmunds predicts an even steeper decline this year to 16.8m. The biggest growth factor in US sales has been the surge in sales of light trucks over traditional passenger cars. For the year, SUVs and pickups accounted for almost two-thirds of total sales, rising to 69% of total sales for the final month. GM led the market with just over 3m units for the year, down a little over 1% on 2016. Cadillac and Buick were both down, 8% and 4.5% respectively; so was Chevrolet, slipping 1.5% to 2.06m units. However, those declines were offset by GMC's 2.6% increase. Ford held second place with a total of 2.59m deliveries, also down 1%. The Ford brand's 2.51m units were led by the F-series pickup, which marked its 36th year as America's best-selling model. Toyota group sales slipped 0.6% to 2.4m units, but volumes of 2.13m for the main Toyota brand lifted it above Chevrolet to become the #2 seller in the US. The Camry was surpassed as Toyota's top-selling model for the first time in 28 years by the RAV4 compact SUV. FCA sales fell 8% to 2.04m, as a 2% increase for Ram was offset by near-20% declines for Fiat and Chrysler, and 10% and 12% slides for Jeep and Dodge. Honda and Nissan both claimed best-ever sales in the US at 1.64m and 1.59m respectively, but Hyundai and Kia were down for the year by 13% and 9% respectively. That allowed Suburu to overtake Kia for the #9 position among US autos with a 6% increase to a best-ever 648k units. Mercedes-Benz retained its crown as the top-selling luxury brand at 375k.

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The US automobile industry was brought to its knees in the 2000s by two main factors. During 2007, the sharp spike in oil prices persuaded American buyers to abandon the sort of fuel-hungry trucks in which Detroit had long specialised in favour of low-consumption runabouts, mainly offered by Asian competitors. Then, although oil prices began to fall, the worsening effects of the US credit squeeze led to a wave of home repossessions and job cuts, causing consumers to stop buying automobiles altogether. The result was an almost unprecedented slowdown in sales, with volumes falling by a third or more during the latter months of 2008.

Ford was no less affected by this seismic change than rivals General Motors and Chrysler. However, by that point, it was already in the later stages of an advanced restructuring initiated as a result of an earlier set of problems. This left Ford, or at least Ford's shareholders, in a much safer position than the two main competitors. The company did not need to call upon the US government for financial assistance, or seek protection in bankruptcy. Although that established it as the "strongest" of Detroit's three giants at the time, it ultimately also left the company at something of a disadvantage. Unlike GM and Chrysler, which were able to wash away most of their financial burden in a Chapter 11 spring clean, Ford still labours under the burden of a huge amount of debt.

Ford sold a total of 6,607,000 vehicles worldwide at wholesale in 2017, down marginally on the previous year. Formerly the global #3 behind GM and Toyota, it was overtaken in unit sales by Volkswagen Group in 2008, and then by Hyundai Kia Automotive Group in 2010, and also by the combined Renault-Nissan Alliance. That left it as the #6 worldwide. An important development since the mid-1990s has been the gradual decline of Ford's passenger car business in favour of trucks and SUVs. Across the entire brand range, the group's trucks and utilities have outsold its cars in the US every year since 1994, and total truck sales increased by two-thirds in the ten years until 2004. Despite rising gas prices, that gap has continued to widen and the company now sells almost twice as many trucks & utility SUV vehicles as passenger cars. Even so, it's worth noting that Ford was quicker than its two Detroit rivals to develop fuel-efficient vehicles to compete with Toyota's Prius and similar cars. It offers hybrid versions of several models including the Fusion passenger car and Escape SUV, and introduced an all-electric Focus in 2012.

For several years, the main Ford brand was accompanied by a sizeable collection of other vehicles. The Premier Automotive Group (PAG) was formed in 1999 to house four newly acquired high-end European marques: Aston Martin, Land Rover, Jaguar and Volvo. However this division's performance was rarely anything other than disappointing. PAG struggled to make profit in the harsher economic environment which prevailed throughout the early 2000s, bouncing into steep losses in 2002 and 2004. Ford finally acknowledged in 2006 that this diversification into the luxury market had been a misstep, and began talks with several different potential buyers regarding the sale of individual brands. Aston Martin was sold in 2007, Jaguar and Land Rover in 2008. Volvo too was put up for sale in 2009, and a deal was eventually agreed with Geely of China. (See separate profile). The group also sold most of its 34% investment in Japanese manufacturer Mazda, a part-subsidiary since the late 1970s. That holding had reduced to 3.5% by the end of 2010, and ownership of the AutoAlliance factory in Michigan, previously a joint venture between the two, was assumed by Ford in 2012. Nevertheless, a loose strategic partnership continues.

In the US, the group had also produced Mercury, a mid-range passenger car and light truck marque. In fact, when it was launched in the 1930s, the Mercury brand was specifically designed to fill the gap between the company's two existing brands of Ford and Lincoln. However Mercury's sales had been falling steadily since 2005, and it was the poorest performer of the group's three American-made brands in 2009, with sales falling below 100,000 for the first time to 92,300. Sales continued to decline steadily during the first half of 2010. As a result, Ford took the decision mid-year to shutter the brand at the end of the year.

As a result of these divestments, Ford now produces just two brands: Ford and Lincoln. Ford is the mass-market product, sold worldwide, with global registrations of around 6.17m vehicles in 2017. That placed the brand as the worldwide #3 behind Toyoya and VW. The Ford F-Series truck is the world's #2 selling model (behind Toyota's Corolla), with 1.07m units sold in 2017. The Focus is the global #8, with the Fiesta some way behind at #30.

Despite a worldwide footprint, the US, inevitably is the key market. Ford overtook Chevrolet as the country's best-selling automotive brand in 1986, and held onto that position for almost 20 years until 2004, when it was beaten once again by Chevrolet. For 2006, Ford was back on top again, but lost that position for the second time in three years in 2007. Total US unit sales shrank during the recession, hitting a low of 1.4m in 2009, but there has been a strong recovery since then, with sales back over 2m vehicles in 2011.

In 2015, domestic Ford brand sales surged to 2.51m, the best performance for a decade. There has been steady slippage since then to 2,476k units in 2017, but it remained the top-selling brand in the US for the 8th consecutive year. The combined total including Lincoln was 2,587k vehicles, a surge in truck and SUV didn't quite offset the continuing decline in traditional passenger cars. Indeed, much of the Ford marque's strength since the early 1990s has been the growth of its truck and SUV business. The company now sells almost four times as many light trucks and SUVs than passenger cars.

Ford's F-Series pickup remains America's single best-selling vehicle, car or truck, a position it has now held for over 35 years. (It has been the best-selling pick-up for 41 years). Sales for 2017 were over 897k units, accounting for well over a third of Ford's total US volumes. The company is also traditionally strong in the SUV segment, although sales in this segment have fallen considerably as buyers shift from older full-size models to crossovers. The Ford Explorer was among the most successful vehicles of the 1990s, more or less responsible for establishing the popularity of the SUV concept. Sales peaked in 1999 at 445k units before a massive recall to fix faulty Firestone tires. Sales fell sharply after that, hitting a low of less than 56k in 2009 before rebounding steadily (238k for 2017). The Explorer and another fullsize model, the Expedition, have been supplanted in the group's portfolio by smaller crossover models, notably the Escape, now the country's best-selling small SUV at 308k units in 2017. It is supported by the Edge midsize crossover model (142k). Another crossover SUV model, the Ford Flex, launched mid-2008 but sales have been lacklustre, slipping back below 25,000 units since 2015. The Ford Transit van is a steady seller, at 127k units for 2017.

For many years, the group's best-selling passenger car was the old Taurus model. This was overtaken for the first time as the group's best-selling car in 2006 by the Focus (same name but different design from the model sold elsewhere in the world). In a clear sign of the changing nature of the US marketplace, the Focus was the group's biggest success of 2008, and the only Ford model to report an increase in sales that year. However it is now outsold by another small car, the Fusion, sales of which have soared following the launch of a hybrid version in 2009. That entered the US Top Ten in 2014, overtaking the Escape to become Ford's #2 model. However, sales have slipped back a little since then to 209k in 2017, placing it 4th behind the F-Series, Escape and Explorer. Indeed sales of all Ford's traditional passenger cars have fallen in recent years as a result of the huge success of crossovers. The Focus comes next at 158k units. The Fiesta small car, a huge hit for the group in Europe, launched in the US during 2010, but sales are still small, falling below 50k units since 2016. The revamped Mustang sports model suffered in the recession but was relaunched in 2015. Sales for 2017 fell sharply to 82k.

Ford's sole brand partner in the group portfolio is now Lincoln, sold almost exclusively in North America (though there is also a small presence in China). It is positioned as a luxury brand to compete with GM's Cadillac or top-of-the-range imported German or Japanese cars. Historically, its reputation was sealed by the legendary Continental sedan, designed to offer "indulgence at its finest". That model was later discontinued, and the brand's overall sales were hit hard by the surge of interest in imported brands such as BMW, Mercedes and Lexus during the 1990s. Ironically they held up comparatively well in the subsequent economic turmoil of the 2000s. In fact, Lincoln was one of the group's best performers in 2007, although sales slid during 2008 and especially in 2009 as a result of the general market decline. However it remained flat after that until an aggressive relaunch campaign launched in 2012. Volumes finally topped 100k in 2015, reaching a multi-year high of 111.7k units in 2016, before slipping back slightly to 111.1k for 2017. The Continental model was reintroduced in 2016, though sales remain small. The top-selling Lincoln models are the MKX SUV (31k units in 2017) and MKZ sedan (27k).

In 2017, Ford carved out a separate division, under the name Argo, that is developing self-driving cars. Though controlled and owned by Ford, it operates as a semi-independent entity. Ford has set itself a target of launching mass-produced self-driving cars by 2021. In 2017, it forged a partnership with ride-hailing service Lyft to support that initiative.

Although North America is by far its biggest market, Ford has an extensive global footprint. Its presence is especially strong in Europe, although a surprise slump in 2010 lost the group its long-held #2 slot across the region. Europe's continuing economic weakness has significantly depressed sales, with wholesale units falling steadily to below 1.3m vehicles by 2012. However there has been a modest but steady recovery since 2013, with volumes returning to just over 1.58m for 2017.

The biggest contributor to sales by far is the UK, the company's second biggest market after the US, where it is long-established as the #1 car brand. The company had already endured years of heavy losses in this region even before its difficulties in the US. Ford UK may have stayed #1, but the company consistently lost market share during the 1990s, and racked up huge losses, profitable for only two years out of ten during the decade. As a result, the group effectively ended full-scale car manufacturing in the UK in 2000, a move which led to a further $1bn restructuring charge relating to the downsizing of the Dagenham plant. By 2004, it was clear that Ford Europe was back on the right track, back in profit after a $1.1bn loss the year before. There were similar improvements during the year in both Latin America and the Asia-Pacific region. However, Europe as a whole has suffered a more prolonged slump from the more recent recession. Europe finally returned to profit again in 2015.

Ford's model range varies widely from territory to territory. Few of the US model names names mean anything in Europe and the Focus model available in the US is different from the one marketed elsewhere around the world. In Europe, the company has been busy renovating its portfolio of models in recent years with the launch of the Galaxy MPV, the Ka and Puma small cars, and the long-awaited Focus, replacement for the tired Escort model. Other regions tend to feature a mix of different models from North America or Europe. The group successfully launched the Ka as a small city-car brand to rival DaimlerChrysler's Smart, and later diversified with spinoff models SportsKa, CityKa and a diesel version.

The group has a significant but small presence in Latin America (primarily Brazil, Argentina and Venezuela), but sales have been under intense pressure from the post-2014 slowdown. Regional wholesale volumes slumped to 325k vehicles in 2016, before rebounding in 2017 to 373k. That has been offset by a growing footprint across Asia. Sales there topped 1m units in 2012, rising to a high of almost 1.61m in 2016 before slipping back in 2017 to 1.57m. China accounted for the bulk of that total, 1.1m vehicles. The group has joint ventures there with local manufacturer Changan to manufacture passenger cars, and with Jiangling Motors to make light commercial vehicles. Ford commenced operations in India in 1999, marketing a specially produced small car, the Ikon. Other models have followed. A joint venture was agreed in 2011 with Sollers of Russia to begin producing and distributing Ford passenger and light commercial vehicles.

The Automotive Consumer Services Group is the umbrella for Ford's various services businesses. In the US, this is principally represented by the Genuine Service brand (previously Quality Care), operating through Ford, Lincoln and Mercury dealers. (Another extended service arm, APCO's EasyCare, was sold to private equity owners and management in 2007). Motorcraft is the group's parts and supplies distributor, available through Ford, Lincoln and Mercury franchised dealers worldwide. A partnership with Microsoft led to the development of Ford Sync, a voice-activated in-car entertainment and navigation system which the group now offers in every new Ford and Lincoln model in the US, and which launched in Europe in 2011. Car parts manufacturer Visteon was spun off to shareholders in 1999, but Ford is still by far its biggest customer, accounting for around a third of sales. (Hyundai contributes a further 30%). The business struggled as a standalone company and in 2005, Ford agreed to buy back almost 20 Visteon factories in North America for around $1.1bn. These were grouped under the umbrella of Automotive Component Holdings, and most have been sold off or shut down. Despite this assistance, the remaining Visteon business was forced to file for bankruptcy in 2009. It emerged from Chapter 11 at the end of 2010.

Total automotive revenues for 2017 were $145.7bn, up 3%.

The US is still the group's biggest market by far. China comes next (1.27k units in 2016), followed by the UK (318k), Canada (296k), Germany (where Ford is the top-selling non-German brand at 240k units) and Brazil (though sales have almost halved in five years to 180k in 2016). All other markets are under 150k units.

The group's financial services arm operates as a separate division. Ford Credit (or FCE in Europe) is the world's largest dedicated automotive finance company in the world, serving more than 11m customers in 36 countries. The business also operates as Ford Bank or Ford Leasing. During the first half of the 2000s, the financial services arm proved an invaluable cash-generating resource, off-setting the difficulties within the manufacturing businesses. Those benefits were quickly eroded in 2007 and 2008 by the credit squeeze, as levels of default rose sharply. Ford Credit contributed revenues of $11.1bn in 2017, and operating profits of $2.31bn.

Financials

Ford's finances have been mercurial to say the least in recent years. Strong performance in the late 1990s was followed by steep losses in 2001 and 2002 totalling $6.5bn. However, Ford demonstrated improving performance in 2003 and 2004. Group revenues for 2004 were $171.6bn, while net income increased seven-fold from $495m in 2002 to $3.5bn. (The bottom line was generated almost entirely by the group's financial services arm, while automobile operations reported a small operating loss of $177m). The following year brought with it numerous additional challenges. Ford issued a warning in April 2005 that its earnings for the year would fall well below forecasts, and so it was to prove, although the group still managed to stay in the black. Group revenues for 2005 were $178.1bn, up almost 4%. Net income was $2bn, down 43%.

The results for 2006, exacerbated from a concerted shift by buyers away from gas-hungry vehicles, were much worse. The group reported a net loss of $12.7bn, including almost $10bn of restructuring charges and asset impairments. Sales fell by almost 10% to $160.1bn. Once again, the worst damage came from North America where, after 2004's profit of $1.4bn, operating losses rose from $1.5bn in 2005 to $6.1bn. For 2007, the group reported a net loss of $2.7bn. This was at least an improvement on the year before, with an operating profit of $126m undercut by substantial impairment and restructuring charges totalling $3.9bn. Revenues were up by 9% to $173.9bn.

For 2008, reported group revenues fell by 15% to $146.3bn. Net loss for the year, including a substantial $7.6bn charge for restructuring and asset impairment, soared to $14.7bn. That figure was the worst in the company's 106-year history. The main culprit was Ford North America automotive, which reported a loss of $10.2bn on sales which plunged 24% to $53.4bn. Ford South America reported a $1.2bn profit on sales of $8.6bn, and Ford Europe a surplus of $970m on sales of $39bn. There was genuinely good news to report - finally - for 2009. The group scraped net income of $2.7bn for the year, its first profit since 2005. However, the still-difficult automobile environment was plain to see in revenues which slid by almost 20% to $118.3bn. The group's automotive operations were still in the red by $1.4bn, but that loss was offset by a profit in financial services as well as various accounting adjustments. The following year brought a much stronger recovery, with net income more than doubling to $6.6bn - its best result for more than a decade - on sales of $120.9bn.

However that performance was dwarfed by 2011's results. Revenues rose by a further 13% to $136.3bn, while net income soared to a spectacular $20.2bn. However, the largest chunk of that profit was generated by the release of a $12.4bn provision against deferred tax assets. Excluding that adjustment, operating profit rose by 6% to $8.8bn. For 2012, group revenues slipped back to $134.3bn while net income plunged to $5.67bn as a result of a new tax provision. Excluding special items, operating profit was just under $8.0bn. In 2013, the group championed one of its best results in years, with total revenues rising 13% to $146.9bn, while net income jumped 26% to $7.16bn. However, there was a backward step in 2014 as North America revenues slipped. Despite sales gains in the long-troubled European market and also Asia Pacific, group revenues declined 2% to $144.1bn. Net profit more than halved to $3.19bn.

There was a strong improvement in 2015, with group revenues up 4% to $149.56bn. Pretax profits hit a record high of $10.8bn, but a large tax charge and other one-off items resulted in net income of $7.37bn. For 2016, revenues edged up to $151.8bn but without those one-off gains from 2015 net income slipped back to $4.60bn.

Annual performance for 2017 was satisfactory, with revenues up 3% to $156.8bn, while net income jumped 65% to $7.6bn. However, the previous year included a number of one-off charges, making for an easier comparison. On an adjusted basis excluding special items, pretax profits were down by almost 20% year-on-year. There was also a continuing decline in profit margin, especially in the final quarter, which the group blamed on higher steel and aluminium prices.

Management

The founder's great-grandson, William Clay Ford Jr, is executive chairman of Ford. In 2001, he took over the role of CEO as well, becoming the first family member to lead the company since his uncle Henry Ford II departed in 1980. In 2006, however, as the group struggled to turn around its business in North America, Ford stepped down as CEO, bringing in former Boeing executive Alan Mulally as president & CEO. Several other Ford family members hold roles within the group. The most significant of these is Elena Ford, great-great-granddaughter of the company's founder, and the first female Ford to work for the business. She is VP, global dealer & customer experience. The Ford family retains some 40% of the voting shares.

Mulally is widely regarded to have fixed Ford's many problems during his tenure as CEO, and steered the group back to health. However, he stepped down in July in 2014, to be succeeded by Mark Fields, previously group COO. However, Fields came under increasing pressure from investors during 2016 as a result of a slowdown in performance. He was finally dismissed in May 2017 and replaced by Jim Hackett, who had been heading up the group's "smart mobility" division.

Two of the group's top managers swapped jobs at the end of 2014. Stephen Odell, formerly group EVP & president, Ford EMEA, returned to the US to take over from Jim Farley as group EVP, global marketing, sales & service. Farley in turn took on a new role as EVP & president, global markets. Odell retired at the end of 2017 and was replaced as CMO by Kumar Galhotra, who will also retain his existing title of president, Lincoln. Yet only a few months later, Raj Nair, EVP & president, North America, was dismissed following allegations of inappropriate behaviour. That prompted yet another promotion for Galhotra to North America president, with Stuart Rowley as COO, North America. Galhotra's role as group CMO and president, Lincoln was assumed by Joy Falotico, previously CEO of Ford Credit. She was herself replaced in that role by David McClelland.

Other senior executives include Robert Shanks (EVP & CFO), Joe Hinrichs (group EVP, & president, global operations), Steven Armstrong (group VP & president, EMEA), Peter Fleet (group VP & president, Asia Pacific), John Lawler (VP, strategy) and Bennie Fowler (group VP, global quality & new model launch).

Former Apple retail marketer Tariq Musa was named as VP & chief brand officer in early 2017, but departed the company again after little more than a year. Former GM and Allstate marketer Mark LaNeve was appointed in Jan 2015 as SVP, US sales, marketing & service. Other senior marketers include Lee Jelenic (VP, marketing, Ford Credit), Andrew Frick (director, US marketing, Ford), Robert Parker (director of global Lincoln marketing, sales & service), Susan Venen Bock (US brand content manager & global agency management) and Dave Rivers (manager, US marketing communications). Roelant de Waard is VP, marketing, sales & service at Ford of Europe. Matt VanDyke moved from Lincoln US to become head of marketing for Ford Europe in 2016. Dean Stoneley is VP, marketing, Ford Asia Pacific.

Background

According to legend, Henry Ford first set out to build cars when he fell off a horse and decided there must be a more comfortable way to travel. In 1903, Ford and eleven colleagues set up the Ford Motor Company with $28,000 capital. The first Model 'A' was built in 1903, with a speed of 8 horsepower. The breakthrough came five years later. The Model 'T' changed the world. Light and hard-wearing, the car could do 20 miles to a gallon of gasoline, at a top speed of 45mph. Using an innovative moving production line assembly process, the car was also capable of fast construction - taking just an hour and a half, when most cars took 12 hours to be built.

With an eye already on the global market, Ford set up a second factory in Manchester, England in 1911. But work in the factories was low-paid, exhausting and mind-numbing, with the result that Ford struggled to keep a regular workforce. As a result, in 1914, he announced an unprecedented change to employment terms, cutting his US working day from nine to eight hours, but offering all workers a uniform $5 per day wage, more than twice the national average. By the end of 1914, Ford was building over 300,000 cars a year, more than all 299 other auto manufacturers combined. Keen to control every aspect of production, the company soon began to produce every element of its cars in-house, even the steel and glass. To streamline production further and reduce costs, Ford famously dropped optional colour schemes. The Model T was available in "any colour so long as it is black". Prices came as low as $400. By 1917, the company had turned out a million cars, and was turning its hand to trucks and tractors. By the start of the 1920s almost two-thirds of all cars on the world's roads were made by Ford.

In 1919, Henry Ford and his son Edsel bought out their partners to become sole shareholders of the company. They also acquired the rival Lincoln Motor Company for $8m. Ford's process was efficient, but it was also inflexible. By the 1920s, the Model T was almost unchanged in design since its launch, but competition was increasing as rivals sought to undercut its popularity with a host of new design features. In 1926, Ford was overtaken by General Motors, then later by Chrysler as well. In 1927, after 15 million cars, the company finally stopped making its Model T. To replace it, the new Model A was launched, followed by the V8 and the Mercury. With the start of the Second War, passenger car production ceased. Instead Ford turned its attentions to military vehicles - including the Jeep, introduced in 1941 - and aircraft. The first Ford bomber, the B-24, was completed in 1942. However Edsel Ford, who had taken over control of the business, died in 1943 aged only 49. His legendary father resumed control of the company until his own death four years later.

In the hands of Edsel's son, Henry II, the company was restructured, and by 1950 had regained second place above Chrysler although it still trailed GM. Ford went public in 1956, and established a new subsidiary the same year, Aeronutronics Systems, specialising in weapons and aerospace technology. In 1958, the company launched the infamously unpopular Edsel model. The company had budgeted to sell 200,000 of this "hi-tech" saloon, but the car was a disaster, selling only 30,000 units. The model was ditched at a reported cost of $350m. Ford regained its poise with the Mustang in 1964. But the group was also plagued by labour disputes during the 1960s, resulting in a series of company-wide strikes.

In 1986, Ford briefly overtook General Motors in earnings for the first time since 1926, with record profits of $4.6bn. It broadened its portfolio with the acquisition of agricultural machinery businesses New Holland and Versatile, and by the close of the decade had widened its share of the US market to almost 22%. In 1989, the company also paid $2.5bn to acquire luxury British carmaker Jaguar. In 1991, New Holland was sold to Fiat. Ford turned its hand to car rental, buying Hertz in 1994, and Budget Rent-a-Car in 1996 (sold a year later). It also built its stake in Japanese carmaker Mazda to 33% in 1997, spun off its finance division Associates First Capital, and restructured Ford Automotive Products Operations, the umbrella for the various parts and components businesses within the group. The world's second largest supplier of auto-parts (after General Motors' Delphi Automotive Systems), this business was rebranded as Visteon, and eventually spun off to shareholders in 1999. In 1998 Ford sold its Freightliner truck division to Daimler-Benz, and floated off 19% of the Hertz holding. It also acquired Cosworth racing engines from Audi, following Volkswagen's unsuccessful attempt to seize control of Rolls-Royce.

At the same time, newly appointed CEO Jac Nasser unveiled an ambitious strategy to build the group into the world's leading automotive company, covering every aspect of car service and maintenance as well as production. In the UK, it acquired a series of after-care and repair businesses in order to extend its contact with car owners. The US was ruled out for a similar approach because of the strength of auto-servicing groups like Sears (at the time) and Midas. Instead, Ford announced plans to move into the auto recycling business, buying up scrapyards around the country. The group also acquired Automobile Protection Corporation (APCO), who sell extended maintenance contracts on new and used cars under the EasyCare brand.

The group reported stunning financial results for 1999, with group sales of over $162bn and net income of $7.2bn, a world record for any carmaker. Much of this strength came from North American manufacturing, which contributed profits of $6bn. Elsewhere, the picture was different, with Europe and Latin America both under pressure. Meanwhile, the industry was undergoing a wave of global consolidation, with large companies racing to snap up successful brands. Following in the wake of the DaimlerChrysler merger, Ford beat off competition from Fiat to acquire the passenger car business of Sweden's Volvoin 1999 for $6.5bn.

Ford was also one of several major auto manufacturers who began rescue talks with debt-ridden Japanese company Nissan prior to the latter's deal with Renault. At the end of the year Ford became involved in talks with troubled Korean carmaker Daewoo Motors. Mid-2000 Ford agreed conditionally to acquire Daewoo for around $6.8bn, and began due diligence. But within two months, the American company claimed to have discovered worse then expected liabilities, and unexpectedly withdrew its offer. This led to a row with the Korean government who said Ford had broken the spirit of international business negotiations and had pulled out because of its own internal problems, which had suddenly begun to appear during late 1999.

Initially the most obvious of these were the difficulties of restructuring of the company's European operations after what was effectively break-even in 1999. But Ford was also hit by a string of allegations of employee age, race and gender discrimination in the US and UK. These didn't halt the group's continuing expansion. Ford was the surprise beneficiary in early 2000 when BMW finally lost patience with its severely troubled Rover Group subsidiary. BMW had been expected to hold onto Land Rover, perceived as the jewel in Rover's crown. Instead the German company sold the brand to Ford for €3bn (approx $2.6bn) In late 2000, Ford offered to take its Hertz subsidiary private again, giving shareholders around $700m for the publicly held 19% stake.

Yet by now, other more damaging worms had crawled out of Ford's woodwork. The group was hit by unexpected liabilities after Japanese manufacturer Bridgestone/Firestone discovered serious safety defects in its tires, fitted as standard on the Explorer sports utility vehicle in the US. (Bridgestone/Firestone finally agreed to pay $240m of compensation to Ford in 2005). Ford was also forced to recall almost 2m of its trucks and cars sold between 1983 and 1995 because of alleged defects in the ignition devices. In 1999, the group commenced what turned out to be the biggest product recall in US automotive history to fix faulty cruise control switches implicated in a series of vehicle fires. Between 1999 and 2009 some 14.3m vehicles were called back for repairs. Mid-year the company announced it would cut around 10% of its North American workforce in a bid to improve profitability. Although a series of attempts were made to limit the damage during 2001, the company reported losses for two consecutive quarters. This led to the ousting of veteran Ford CEO Jac Nasser in October, and his replacement by William Clay Ford Jr. Economic slowdown in the last quarter of 2001 only exaggerated the group's woes, as it was left sitting on unsold inventory.

The full scale of Ford's troubles was unveiled in early 2002, when the company reported a devastating $5.5bn loss for 2001. This included a $4.1bn after-tax charge for restructuring and the write-off of over-valued assets, but the company's various divisions were also revealed to be suffering at operating level. The automotive businesses alone lost almost $1bn as a result of fierce competition and marketing costs, even before restructuring. Although finance arm Ford Credit scraped an $814m profit for the year as a whole, in the last quarter its bottom line was slashed from a profit of $410m in the last quarter of 2000 to just $6m for the same period in 2001.

Unveiling a huge restructuring, the group announced it would close down five of its North American factories by 2005, and eliminate a further 17,000 jobs in addition to about 18,000 cut since January 2001. The remaining US plants were adapted so that they could more easily produce different models, a process already successfully implemented by the company's competitors, as well as by its own European operations. The company also promised to raise $1bn in cash from a sell-off of assets, including its rag-bag collection of auto repair centres and junkyards, acquired in the late 1990s.

However a further blow came with the resignation in 2002 of Wolfgang Reitzle, president of the group's Premier Automotive Group of luxury brands. Towards the end of that year, Ford COO Sir Nick Scheele appointed WPP as sole supplier of advertising and marketing services to Ford Motor Company. The car company was already WPP's biggest global client, but no formal agreement had been made regarding the relationship at board level. A few months later Ford said it would conduct an investigation into the appointment to ensure it was made in "an open and transparent" way. (By coincidence, Scheele's son worked at the time for WPP's Y&R agency in New York, though not on Ford business). WPP's sole appointment was subsequently overturned by Ford to avoid any possible controversy. Instead, a few months later in July 2003, the two companies agreed a centralised contract for 2004 to replace separate agreements with local WPP agencies around the world. Another embarrassing personnel-related situation emerged in late 2003 when former head of Ford Europe Martin Leach sued the group for, he claimed, effectively forcing him out of the business and then blocking his employment as head of Fiat Auto under the terms of a non-compete agreement. Sir Nick Scheele, group president responsible for the group's cost-cutting program in the US, retired in early 2005. Also in 2005, the group agreed to sell Hertz to a consortium of investors for around $5.6bn. The world's largest car rental company, it was actually owned by General Motors until the 1950s.

Ford faced new challenges during 2005 as brutal competition combined with soaring oil prices devastated sales of its most popular models in the US and eviscerated profits. With long-term healthcare and pension costs also soaring, the group launched emergency talks with labour unions to renegotiate its ongoing commitments in order to cut costs. In January 2006 the group launched yet another restructuring drive, with plans to close 14 more factories in North America at a cost of up to 30,000 jobs. Chairman & CEO Bill Ford finally surrendered the latter title to newly recruit Alan Mulally who was given the task of nursing the struggling group back to profit.

One key move, orchestrated by outgoing CFO Don Le Clair, was to mortgage many of the company's physical assets including its factories and real estate. This decision, regarded at the time by some executives as excessive, proved extremely beneficial in the medium-term, since it supplied Ford with $23.6bn in cash with which to turn the business around before the freeze which petrified credit markets from 2007 onwards. It also cut back staffing levels and closed 12 factories in North America, and was also able to agree improved contract terms with the main UAW labour union.

Ford also acknowledged that its diversification into the luxury market had been a misstep, and it set about dismantling the Premier Automotive Group. Ultra-prestige sports car business Aston Martin was sold in March 2007 for £480m to a UK-based consortium. The group officially began to seek buyers for Jaguar and Land Rover later the same year. Tata Motors of India was named as the preferred bidder at the end of 2007, although negotiations continued for a further three months until finally reaching a conclusion in March 2008. Tata agreed to buy Land Rover and Jaguar for a combined total of $2.4bn (around half what Ford originally paid for the businesses). In return, Ford contributed around $600m to the two units' pension plans, and will also continue to supply engines, transmissions and other components. Ford vowed at first to hold onto Volvo. However this business too was put up for sale in 2009.

Last full revision 2nd October 2017


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