Valuable Lessons For Ford In 2009

Ford emerged from 2009 as the strongest American carmaker

, and the only one that has not accepted aid from the U.S. government. The last decade has been a difficult one for Ford and the U.S. auto industry. Throughout the last decade, Ford and its U.S. rivals have been hit with higher health costs of their aging workforces, increasing dependence on declining SUV sales, and continuing erosion of market share to Asian rivals.

In 2005, Ford's debt was downgraded to junk status by Moody's and other corporate rating agencies. When the world financial crisis hit in 2008, Ford and most other automakers were hit with massive losses as consumers stopped buying vehicles. Both of Ford's U.S. rivals were pushed into bankruptcy, and forced to accespt aid from the U.S and Canadian governments in order to survive. Ford was not forced to take this path because of a move its management made in 2006; the company mortgaged the majority of its corporate assets in order to secure a $25 billion line of credit. This line of credit, along with cost-cutting measures and better products, allowed Ford to weather the financial crisis and return to profitability in 2009. Under the leadership of CEO Alan Mullally, who was brought in from Boeing in 2006, Ford has shed non-core assets, focused on better fuel-efficiency in its vehicles, and reduced costs. Ford now produces the Ford Fusion Hybrid and the Ford Escape Hybrid, two vehicles that return the best fuel efficiency ratings in their respective classes. While the Ford F150 truck is still the best-selling vehicle in the United States, Ford has reduced its dependence on trucks and SUVs as a source of sales and profits. Ford is the only American automaker that made a profit in 2009. Ford also was the only American automaker which gained market share in 2009, and is expected to continue on that pace in 2010 with the introduction of the new Ford Fiesta and the redesigned Ford Focus.

by: RW Tanner

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