The “Big Three” in the US auto industry are well known to be GM, Ford, and Chrysler. Each company spans multiple generations and has had many memorable vehicles throughout the years. In 2008-2009, however, in the midst of a struggling US auto industry, GM and Chrysler accepted money from the government to try and save their businesses. These “bailouts” were intended to keep the companies from going bankrupt. The true utility of the bailouts was proven when both GM and Chrysler went bankrupt by the end of the 2009.
Ford had initially also been seeking secured loans, but eventually decided that there were too many strings attached. Instead, under the leadership of CEO Alan Mulally (formerly of Boeing), Ford raised massive amounts of capital, partially by using the famous “blue oval” as collateral. While this was risky, Mulally thought that Ford would be able to survive if it could restructure its business, unite as a company, and focus on producing quality vehicles. Ford had planned to return to profitability by 2010, but due to this ambitious plan, Ford became profitable a year early, in 2009.
After GM and Chrysler went bankrupt, the government basically took over the reorganization of the companies. As it stands right now, Chrysler is officially no longer owned by the US government. The federal government’s final shares in Chrysler were sold to the Italian automaker Fiat in May of this year. Contrary to what President Obama said, however, Chrysler did not pay back all of the bailout money it received. The US government does not expect to recover about $1.9 billion from Chrysler, which is now an Italian-owned company that happens to operate in the US.
As for GM, the federal government still owns about a third of the company. At the IPO of GM stock after the bankruptcy, the shares sold for around $33. If the government is to recover all of the bailout money it gave to GM, the share price must rise to about $50 before it can sell its remainder of the stock. The problem is that GM’s stock has been falling constantly since the IPO, and is currently at right around $20 a share. Unless things change drastically for GM, the federal government will be losing quite a bit of money from GM just as it did from Chrysler.
Understandably so, the employees and customers of Ford are pleased that the last bastion of American auto-manufacturing did not have to rely on the federal government, nor is it adding billions to the national debt through failed bailouts that are not paid back. In a recent ad campaign, Ford surprised a real F-150 driver with a news conference, asking him why he drove Ford. When asked about whether the bailout situation impacted his decision, he had this to say:
“I wasn’t going to buy another car that was bailed out by our government. I was going to buy from a manufacturer that’s standing on their own: win, lose, or draw… Ford is that company for me.”
Over the summer, I was privileged to be able to work at Ford in Dearborn, Michigan, as an IT intern. My project, although it was focused on a rather technical aspect of some IT applications, did have a direct impact on Ford’s core business, which is manufacturing vehicles. While this focus on Ford’s awesome new vehicles definitely motivated me, I was surprised at how many of Ford’s employees (at least the 60 or so with whom I worked) were passionate about Ford vehicles as well. Just like me, they were motivated by how their work tied directly to Ford’s core competency.
As I learned more about the history of Ford, I became proud of how Ford was able to admit its mistakes of the past and move forward. No one would have expected that the Ford of the 80’s, when people thought it stood for “Found On Road Dead”, would now become a quality leader worldwide. The newest lineup of Ford vehicles has incredible technology and sophistication built in, and this is evidenced by increased quality and customer satisfaction surveys. In fact, the only major blip in recent quality surveys for Ford has been in the implementation of MyFordTouch. This advanced piece of software combines the voice-controlled communications capabilities of Sync with customizable displays and many new features. Not surprisingly, Ford is facing all the problems of an auto maker combined with all the problems of a software company. But, as they continue to fine-tune their Sync and MyFordTouch installations, Ford will be far ahead of competition that has yet to tackle such projects.
I was incredibly grateful to be able to work this summer at a company that still stands for its original principles. I was very impressed by the passion of the employees at all levels of the company. As the US auto industry slowly recovers, I hope people stop and realize that there is more at stake than simply a nameplate when choosing to buy a car. Only Ford can say they are an American company, run from America, owned by Americans and not the US government or a foreign company. It is my hope that in the upcoming years, Americans will reward Ford with brand loyalty for standing on their own and for continuing to be America’s true car company.