Ford has increased their production capacity for the second year in a row in order to meet their production demand for their cars, trucks, and utilities. The Chicago assembly plant, one of the many plants included in the plan, will play a critical factor in the company’s production capacity who seeks to increase total production by 200,000 units. It seems like the company will for now only focus on their more popular automobiles which include the Ford Explorer, Ford Fusion, and the Ford F-Series. Ford plans on increasing the production capacity by only allowing one-week summer shutdowns which in turn will produce 40,000 new units. Currently Ford’s stock is listed at $14.49 per share, while General Motors is trading at $32.87.
General Motors is also planning on increasing their production capacity, however they are focusing on introducing 23 new cars and trucks to their automobile portfolio. Ford states that the company is planning to add 1,300 hourly jobs this year alone and it is planning to offer 12,000 hourly jobs by 2015. Ford’s revenues increased 10.5% to $35.8 billion.
The automobile industry has been considered America’s backbone for many years and we have heard of the struggles it went through especially during the recent recession with needed government aid. I understand that the industry as a whole is looking to increase capacity however Ford has not mentioned any new automobiles to be added as part of the plan. We have all heard of the phrase, “just because everyone’s jumping off a bridge does not mean you have to.” I believe that this is a risky move for Ford with what they plan on doing with their production right now and we all know the costs that run along with production and storage.
The company states that in plans to increase hourly jobs. However, adding these hourly jobs does not completely mean that hourly workers would be able to work full-time hours. The company has yet to declare whether or not these workers will be working full-time and the type of benefits they would receive. I believe Ford is eager to increase their production due to what other companies are doing and because of their recent growth. However, in the automobile industry, bad forecasting can be very costly for many reasons. For example, if revenue drops for the next year or two, then the company is stuck with a large number of vehicles in their storage centers. No company wants to report new hiring and then go downhill with reported job cuts and firings after.
In Ford’s case, is it too soon to increase this production capacity and plan on new hires? Does one good fiscal year call for changes in operational management for next year? And quite frankly, can Ford compete with the innovation that General Motors is adding to their portfolio?