Running head: THE EVOLUTION OF FORD 1

The Evolution of The Ford Automobile Industry

Joshua Bedford

Emily Kerzka

Krystal French

Rufina Moody

University of Michigan-Flint

Communication in Business

Professor Benard
THE EVOLUTION OF FORD 2

MEMORANDUM

TO: Professor Keller, Communications 338

FROM: Group 10: Josh, Emily, Krystal, Rufina
DATE: March 18, 2017
SUBJECT: Ford Motor Company Final Report

The following is our analytical report as requested on Ford Motor Company, our Fortune 500
Company of choice.

We researched the history of Ford and its impact on Detroit, how the company successfully made
it through the recession and more recent designs and technological advances.

Through writing this report, each of us has a better understanding and respect for Ford Motor
Company. After learning more about Fords drive through economically tough times, we have no
doubt that they will remain one of the nations top automotive companies. We look forward to
watching them grow and what new advanced products and designs they will reveal in the future.

Our group has worked very well together and each of us actively participated in this assignment.
We had a detailed outline of what was necessary for each member to contribute, and we did so in
a timely manner.

We would like to thank you for giving us an enjoyable topic to write this report on and helping us
grow in a group setting. This report put our communication abilities to the test and refreshed our
writing skills as well. This has been a wonderful opportunity and if you have any questions for
us, please feel free to contact us via email.
THE EVOLUTION OF FORD 3

Table of Contents
Page

Introduction4

A Brief History of Henry Ford...4

How Henry Ford Revolutionized the Car Industry5

What Has Ford Done for the City of Detroit? ...............................................................................5

How the collapse of the Auto Industry in 2008 affected Ford...6

How Ford has moved forward after 2008 to remain successful.7

Technological Advances Made by Ford.9

References..11

List of Illustrations
Page

Figures

1.The Ford Car Divisions U.S. Market Share 2005-20147

2. From Recession to Recovery to Record Sales..8

3. Ford Motor Company U.S. Sales By Nameplate 2016s First Six Months...9
THE EVOLUTION OF FORD 4

The Evolution of the Ford Automobile Industry

Introduction
Ford Motor Company or Ford, as it is commonly referred to, is synonymous with Detroit to
many. The company is almost 115 years old and has seen as many twists and turns as it has
years. It has grown as the city declined and there are many parts to Fords history and its impact.
There is the history of the company and its founder. There is also the link that existed and
still exists between the well-being of a company and the city it is headquartered in. The health of
the company directly impacted the health of the city and its people.
Another part of Ford Motor Companys story is its long string of technological
innovations (with its fair share of missteps along the way). Some innovations are well known and
others have never made it to mass production. The new wave of technology being developed
now is also a part of Fords story.
The auto industry meltdown brought the major automotive companies to the forefront of
daily conversation and news. To many, Fords fall and rise has been one of the marks of a turn in
the economic tide.
The analysis of Ford Motor Company presented here focuses on a few key questions and
includes a little back story. The questions raised, and answered, here are; how did Ford Motor
Company handle the automotive industry breakdown and bailout? How did their technological
innovation help with their quick recovery in comparison to other auto companies? How was the
city of Detroit affected during these watershed moments?
A Brief History of Henry Ford
Ford Motor Companys history must begin with its founder, Henry Ford. Henry Ford was
born in 1863 on a farm in Greenfield, MI. His dream, however was not to be a farmer. He headed
to Detroit and had various positions with different companies. He founded Detroit Automobile
Company in 1899 but the quality was not to his standard and with high prices the company failed
within a few years.
Henry Ford, along with other investors, incorporated the Ford Motor Company in 1903.
Five years later the Model T was introduced and quickly became popular. The easy to drive and
cheap to purchase and repair vehicle resulted in skyrocketing sales. There were not the options
and choices we see today however as put best by Ford himself Any customer can have a car
painted any color as long as it is black (Ford &Crowther, 1922).
During the rise of the company, Ford used the assembly line to boost mass production of
his automobiles. He also introduced his $5 a day wage and became a homing beacon for workers
looking for a good wage. He not only raised wages for his own workers but in doing so forced
his competition to raise wages to remain competitive (Watts, 1914).
THE EVOLUTION OF FORD 5

He was not a fan of unions initially and did what he could to discourage unions from
forming in his company. Eventually he conceded and Ford signed an agreement with the United
Auto Workers in 1941.
Henry Ford set it up so the Ford family would remain in control. He remained involved
with the company even into his elderly years and saw the legacy he would leave behind. He died
in 1947 at his estate in Dearborn, MI.

How Henry Ford Revolutionized the Car Industry

American industrialist Henry Ford was known throughout the world but more so the
precious car industry. Henry Ford started what would go on to become a great success for many
years to come. From inspiring the development of the much-needed assembly line, to his master
minded ways of revolutionizing the car industry. Henry Ford defied the odds and eventually
changed the world for the better. Henry Fords greatest gift at this early stage of his career was
that of an analyst (Chaney, Ian, para. 7). He studied every aspect of vehicles, how they work,
how the parts worked and were created and so on. Ford did all of this which eventually helped
him on his journey of revolutionizing the car industry. After studying recent industrial trends of
these vehicles Ford, by 1908, had revolutionized the car industry in more ways than he could
ever imagine. He used the recent industrial trends of an assembly line and interchangeable parts
to assemble a car more quickly than anyone had done before (Chaney, Ian, para. 7). In just 45
steps Fords great thinking his workers could now build an automobile in just over an hour and a
half. This was a major cut down as it would take as much as 13 hours to build a vehicle before
then.
With great inventions, theres most likely a hefty price to come alongside it. Ford could
make low cost efficient cars and not lose a beat, all while still making a profit that was very
pleasing. Years into the Ford company investors pushed ford to appeal the cars to rich customers
to up the companys profit. However, Ford had other plans. Not to say that wasnt a good idea, he
just didnt think that was the right move at the time. He felt that the way to maximize profit
wasnt to appeal to the tiny American upper class of the early 1900s; it was by appealing to the
millions of workers that kept the upper class afloat (Chaney, Ian, para. 10). Ford wanted to
make sure that his car would be affordable by every working family. Whether it meant lower
class, middle class or upper class. With that mindset, Ford, would go on to become one of the
worlds most successful industrialist. Henry Ford revolutionized the car industry in many ways
that some could only imagine about. Because of Mr. Henry Ford the Ford automobile has gone
on to receive great recognition for their work as Ford Dominated the 2015 North American Car
and Truck of the Year Finalists' List (Lienert, Anita, para 1, 2014).
What has Ford done for the city of Detroit?
When it comes to the history of the automobile, the first notch in the timeline starts with
Henry Ford. From becoming one of the biggest automotive industries in the world, to offering
many jobs to people of the Detroit area. In fact, Henry Ford was the first to start the assembly
line to build these infamous Ford cars, which opened jobs for many people. Since the Ford
innovation in 1902, Detroit has been on the uphill with the creation and steady progress of cars in
THE EVOLUTION OF FORD 6

the making. With the recent problems going in Detroit its important to try and focus on the
positive energy that is flowing throughout the city.
While Ford has had some of its biggest success in Detroit, MI they have also had some
problems like any great company would. However, success and resilience of the Ford company
is what got them to where they are now. Ford is the final Detroit automaker to negotiate a new
four-year agreement with the UAW. With the new agreement held in place GM, Ford and Fiat
Chrysler Automobiles can look forward to four productive years of labor, peace and prosperity.
The industrys will seek to record U.S. sales and healthy profits margins with consumers buying
more expensive trucks and crossovers. Without the contracts of UAW members expiring this
allows for workers to continue their work and continue to provide efficient and sustainable
automobiles to the city of Detroit.
The new contract and partnership between the companies was one that the workers could
all for the most part agree on as they all voted on the situation. It was a pretty good contract,"
said Charles Harvey, 62, who has worked for Ford for 43 years. The new contract provides many
benefits for the Detroit workers. Charles Harvey states that under the new contract, "workers
would get 3% raises in the first and third years and 4% payments in the other years.
The Ford automobile industry has furthermore given the city of Detroit a sense of hope
and excitement for the future. Ford has been the innovator of things such as the assembly line
which is now used worldwide to make automobiles of all sorts, by all companies. Ford has been
a blessing in disguise to the city of Detroit for many reasons as stated above. Because of Ford the
city of Detroit will forever be known as the Motor city.
How the collapse of the Auto Industry in 2008 affected Ford
Over the past 30-40 years, the United States auto industry has faced multiple negative
situations and circumstances that not only cost the industry millions of dollars, but also affects
the global economy. There are daily challenges and obstacles that many industries face on a
regular basis, but the decline and crash of the auto industry in 2008 was historically influential
and traumatizing to our local communities and global economy. The crash sent ripples through
the national and global economy. Detroit was facing a devastating, uncertain future where many
people were left without stability.

The reasons behind the crash of the automotive industry ranged from decreasing sales,
costs of health care for past and current employees, changes in the global economy. Ford was not
immune to this recession and began to suffer right along with Chrysler and General Motors. The
financial losses from the Big 3 were astronomical and Ford alone posted a $129 million loss in
the third quarter, (NBC News, 2008). Plant shut downs, where certain locations would shut
down production for a specific period of time in an attempt to save money, were becoming more
regular for the Ford staff. Ford also began to focus their production to smaller vehicles, instead
of larger SUVs due to customer interest.

Along with the financial losses, Ford also faced stock value deterioration and loss of
customers. Though Ford was experiencing losses from all angles, they remained positive and
THE EVOLUTION OF FORD 7

ambitious that they would indeed succeed through this recession. Moving forward was the only
option for Ford.

How Ford has moved forward after 2008 to remain successful

Ford needed to make some important decisions and those decisions would immediately
affect their success. While Chrysler and General Motors were receiving emergency government
loans and eventually filing for bankruptcy protection, Ford was powering through the recession
and did not look back. Ford had to create an effective plan and take immediate action. According
to Mr. Allan Mulally, Fords chief executive, I knew that if we were to be successful with our
plan, we had to break through that culture, where there was little sharing and where people were
afraid to share how things really were, (BBC, 2014). Communication needed to improve not
only within Ford itself, but also with the UAW.

The United Automobile Workers union (UAW), represented the Big 3, especially through
this recession. The UAW has played quite a constructive role in ensuring the financial viability of
the Big 3, (EPI, 2015). From concessions made on the part of the UAW and the domestic auto
industrys commitment to their employees, Ford was not required to make one single involuntary
layoff. Instead, all 50,000 workers who lost their jobs did so through voluntary separation
packages, (EPI, 2015). Ford offered early retirement packages, buy-out packages, as well as
educational opportunity packages to employees who agreed to the voluntary layoff. By
eliminating salaries and various other facility expenses, Ford was able to continue to stay in the
positive, as well as maintain positive relationships with employees.
THE EVOLUTION OF FORD 8

Smart financial actions were one another main reason why Ford was able to sustain their
company through the recession. One specific action ensured Fords success, Ford president and
CEO Alan Mulally lined up $24 billion worth of financing, mortgaging the companys name to
build a war chest bigger than anyone thought would be needed, just in case, (NBC News, 2008).
According to Tom Libby, director of industry analysis, In hindsight that was a very smart move
by Mr. Mulally it gives Ford an advantage financially, (NBC News, 2008).

Production is key for any automotive industry, so inevitably, remaking and remodeling
Fords product line was another major factor in their sustainability. Ford focused on customer
interests and what would strengthen the Ford product line. Ford began to build a smaller line of
vehicles, until fuel costs and more innovative technology began to make its mark. Changes were
occurring at a fast pace and Ford was not only willing, but capable to move forward with those
changes.
Ford successfully managed to succeed through the recession with poise and through
knowledgeable processes. From working together with Ford employees, the UAW, smart
financial actions, and product line improvement, Ford showed how an innovative and persistent
leadership can make a difference when faced with something as penetrating as a recession. The
strength of the auto industry was tested in 2008, and continues to be tested even to this day,
However the main lesson to be learned through this situation is success is not given, it is earned.

Technological Advances Made by Ford

With their successful history in the automotive industry, its no surprise that Ford has
continued to introduce innovative designs and technologies throughout the years. More recently,
THE EVOLUTION OF FORD 9

they launched their line of Ecoboost engines, aluminum alloy design on the F-150 and F-Series
Lineup, and Ford Pass technology. Even with all these new features offered on their lineup, Ford
has continued to maintain consumer affordability and growth in sales.
Although Ford has been the top in the nation for truck sales, they recently took it to the
next level. In 2015, Ford released their new line of aluminum alloy F-150s. Sales on F-150s
skyrocketed and consumers were drawn to them not only for their appearance, but their gas
mileage and resistance to corrosion and dents. According to Michael Martinez from Automotive
News, U.S. sales of the F series rose 5.2 percent to 820,799 last year, making it the nations top-
selling truck for 40 consecutive years and most-popular light vehicle for 35 straight years
(Martinez, 2017). As with any new change of design, Ford had backlash from competitors.
Chevy put out an ad in which they dropped bricks from a high distance into the beds of a Chevy
and a Ford pickup. This created some tension between the two as Ford was very susceptible for
critique at the time with their new light-weight truck, 700 pounds lighter than their previous
model. Though rival General Motors has tried to portray aluminum as flimsy and expensive to
repair, Ford says F-150 customers have reacted positively to the change., Richard Truett says
from Auto News (Truett, 2016). With sales continuing to climb, Ford next introduced the
aluminum alloy body to their F-Series line up, or their line of heavy-duty trucks including F-250
and F-350. This is the first time the F-series lineup has seen a major design change since the
early 2000s. Whats made the F-Series so successful is the Ford truck teams ability to
anticipate the needs of our customers better than anyone else how those needs change, whats
most important, and what they need to move forward, said Todd Eckert, Ford truck group
marketing manager (Ford, 2017).
THE EVOLUTION OF FORD 10

As the years go by, the government has increased regulations on fuel economy and
emissions standards. Companies have been feeling the pressure to meet these regulations while
still maintaining consumer excitement to drive their vehicles. Ford revealed their first Ecoboost
engine in 2011, starting in the F-150. These turbocharged engines give drivers the maximum
amount of horsepower without sacrificing fuel economy. After the successful release of the eco-
boost engines in the F-150, Ford started incorporating these engines into every vehicle in their
line-up.
Ford has had no problem keeping up with technology advances over time, but late last
year, they revealed their new innovative Sync Connect and Ford Pass technology. With Sync
Connect, Ford owners may now use Apple Car Pay and Android Auto in their vehicles. Their
Ford Pass app allows owners of Sync Connect vehicles to schedule remote starts, lock and
unlock their vehicle, find parking, and pay their bill all from the ease of their mobile device. This
has been a work in progress for many years, and as Executive Director, Don Butler, says, It was
designed with the customer as the focus everything the technology does is intended to improve
the vehicle-owning experience. (Ford, 2017). With incorporating this technology to help owners
connect more to their vehicle, Ford hopes to build a better relationship with their clients as well.
There is no doubt that Ford will continue their success and conquer whatever challenges the
economy presents them with. This is the reason we chose number nine on the Fortune 500 list,
Ford Motor Company.
THE EVOLUTION OF FORD 11

References

Carney, D. (2008, November 17). Ford better positioned to ride out recession. Retrieved March
19, 2017, from http://www.nbcnews.com/id/27723139/ns/business-autos/t/ford-better-positioned-
ride-out-recession/#.WMnnQP-rN9A

Cheney, I. (n.d.). How Henry Ford Revolutionized the Car Industry. Retrieved March 2, 2017.

Cutcher-Gershenfeld, J., Brooks, D., & Mulloy, M. (2015, May 06). The Decline and Resurgence
of the U.S. Auto Industry. Retrieved March 19, 2017, from http://www.epi.org/publication/the-
decline-and-resurgence-of-the-u-s-auto-industry/
http://archive.fortune.com/2011/01/12/autos/Bill-Ford-Alan-Mulally-carmaker.fortune/index.htm

FordPass with SYNC Connect Debuts on New Ford Escape Arriving at Dealers in May. (2016,
April 13). Retrieved March 19, 2017, from FordPass with SYNC Connect Debuts on New Ford
Escape Arriving at Dealers in May

Ford & Crowther. My Life and Work. (1922) p 72

Leggett, T. (2014, July 01). How Ford's Alan Mulally turned around its fortunes. Retrieved
March 19, 2017, from http://www.bbc.com/news/business-28087325 Uncertainty in U.S. auto
industry puts pressure on suppliers. International Herald Tribune. September 19, 2008.

Lienert, A. (2014, December 09). Ford Dominates 2015 North American Car and Truck of the
Year Finalists' List. Retrieved March 3, 2017.

Martinez, M. (2017, January 08). Ford adds diesel, new V-6 to enhance F-150 mpg for '18.
Retrieved March 19, 2017, from
http://www.autonews.com/article/20170108/OEM04/301089995/ford-adds-diesel-new-v-6-to-
enhance-f-150-mpg-for-18

Snavely, A. P. (2015, November 21). UAW-Ford deal passes, and new era begins for Detroit 3.
Retrieved March 1, 2017.

Truett, R. (2016, June 14). What's really behind Chevy's attacks: GM thinks the Ford F-150 is
vulnerable. Retrieved March 19, 2017, from
http://www.autonews.com/article/20160614/BLOG06/160619952/whats-really-behind-chevys-
attacks%3A-gm-thinks-the-ford-f-150-is

Unprecedented: Ford F-Series Achieves 40 Consecutive Years as America's Best Selling Truck.
(2017, January 04). Retrieved March 19, 2017, from
https://media.ford.com/content/fordmedia/fna/us/en/news/2017/01/04/ford-f-series-40-years-
best-selling-truck.pdf

Watts, S. The People's Tycoon (2005) p193-194