Ford Struggling with Overseas Operations

Ford is struggling with its overseas operations as negative economic conditions are weighing down the company’s sales. Ford, which has been doing well with its North American sales, said its international losses will tripple in the second quarter. Losses in Europe will account for a majority of the total with a 159 million dollars loss.

Ford is now left importnant decisions to makover its struggling European operations. Ford’s CFO, Robert Shanks, described the problem as a structural problem, not a cyclical one. Options are being weighed, which include more investment, plant closures and utilizing execss capacity at some of its plants. Ford could follow the same path as General Motors, which has decided to close down a plant in Europe to help its struggling operations there.Butthis can cause capacity problems as work gets shifted to other plants. These plants will need significant investments to allow them to produce to their maximum output.

Mr. Shanks stressed concern over its Europe operation if the econimic situation does not improve. “If theleaders in Europe are not able to come up with a really good plan to satisfy the financial markets, there could be severe consequences.” Ford currently hold an 8% market share in the European market, but but that number will need to increase if Ford hopes to break-even in Europe anytime soon.

In the Asian market, Ford reported a 95 million dollar loss citing struggles of competitive forces and pricing pressures. Ford has been way behind its American sibling General Motors in catching on the the Asian market, particularly in China. Because of its late entry, Ford still faces heavy investment decision to catch up to its rivals in this market.

Do you think that Ford will ever reach point where it can be finically profitable consistently overseas? Or will international competitors continue to stay one step ahead of Ford?

4 thoughts on “Ford Struggling with Overseas Operations

  1. That is unfortunate that Ford is having such large financial difficulties. I was not aware that this was the case. In regards to their operating strategy, this is one of the best examples of how an operations manager can be utilized. The plannning for operating plant reductions is one of the most labor intensive tasks for an operating manger, in my opinion. The task seems to utilize all the skills we have learned about in class, including sales forecasting needed to plan for future inventory or manufacturing, perhaps contrasting plant profitability, and creating a project network for the enormity of the number of tasks this type of project is going to require.

  2. Ford is such a great company I can see them coming back on their feet in the future. It is very unfortunate that they are suffering such a loss at this time. Didn’t General Motors get a large loan from the government? If that is an option for Ford for them to be able to start their company back up, that could be a good idea. I think Ford will have to do a lot of project managing for them to be able to become profitable overseas again. Technology is changing every year and if Ford can keep up with the most recent technologies then they do have a chance.

  3. While Ford questions their viability in the European market, they must make the Asian market a top priority. GM’s joint venture with SAIC has been hugely profitable for them in the China market even while they were hemorrhaging billions of dollars in the US leading up to the bailout. In 2010 China became the largest automotive market in the world after the US held that title for the last century. One of the drivers of GM’s success has been the Buick brand. In the US Buick is synonymous with old people, but in China it is viewed as a high end luxury brand. This is a result of many government officials driving Buicks over the last 30 years. Ford will have to replicate this type of brand recognition in order to be successful in the China market.

  4. I definitely think that this is a management issue. Just the crisis of Nissan, in the year 2000 Nissan had a debt of 20 billion dollars and as soon as the new CEO stepped in he closes factories and cuts jobs; after only one year Nissan announced a profit of 2.3 billion dollars and this shows that minimizing expenses and using resources in the right places will lead to success.

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