Social and Economic history

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Ford Motor Company. Eddie, Steven, Chris, Dave

Social and Economic history

At the turn of the 20th century in 1903, the American economy was going through a radical transition and the industrial technology boom was about to begin. In 1903 Baseball was hosting the very first World Series which featured Pittsburgh and Boston, cocaine was still the key ingredient in Coke-Cola, and the first stock car event was held at the Milwaukee Mile in 1903. You can compare Henry Ford to Steve Jobs, both these gentleman impacted everybody’s life, and created one of the most successful empires in the world. Today will be covering Ford Motors, will be covering the social and economic history of Ford, go over the information pertaining to Fords marketing, accounting, Finance and production history. Also will be covering managements philosophy and ethics. Henry Ford and Ford motors 108 years ago created a legacy and has became one of the most profitable companies in the world.

Henry Ford, the founder of Ford Motor Company, was born in Dearborn, Michigan, in 1863. Henry Ford was very passionate about engineering, in 1890 his engineering background and passion led to the start of his career in the auto industry as an employee for Detroit Edison Company. Their Ford designed and created experimental gasoline engines; in 1892 he developed and completed his first gasoline buggy. When Henry Ford decided to venture off on his own, he quit his position which was consider to be highly lucrative, and became self employed and established the Detroit Automobile company.

Ford was able to obtain private investors to finance the Detroit Automobile company; however he later withdrew from the partnership after a dispute with business associates over the numbers and prices of cars that would be produced. Ford was persistent on a particular business strategy, which combined a lower profit margin for each car created, that would then create greater production volumes, for this he hoped to gain a larger market share and maintain profitability in the auto market. Ford worked independently after he broke off relationships with investors, that same year he developed, two four-cylinder 80 horsepower race cars, called the 999 and arrow. These cars won several races which helped create creditability in the auto market; On June 16, 1903 was the start of Henry Ford and Ford Motors legacy.

In 1908 the economy witness Ford Motors biggest development, the launch of the Model T. The demand for this car was so great, Henry had to develop and enlarge is production facilities overnight. 10,000 Model T’s were produced in 1909, Henry Ford invented the first auto assembly line also, this new innovation radically changes Ford Motors production. It allowed the ability to improve efficiency, also had each workers specialize in one task with one tool, once the car come by on the assembly line and worked on, it was then transported and moved to different station, this development increase production and created the ability to move more cars out of the facilities and onto the market in record time. This improved time astronomically; it went from twelve hours to building a car, to an hour and half to build a new one car by using the assembly line technique. The Model T became one of the most popular cars in the world. Production officially ended in May 1927 after total world production hit 15,458,781.

Going back to when Ford established his company, over fifteen hundred firms had attempted to enter the new struggling automobile industry, but only a few, such as Ransom Els Olds had become competitive with Ford. Ford did face some serious competition, not in the car making business the legal business, Ford fought with copyright of the Selden patent , “which was the legal rights given to a company or person for the sole use, sale, or production of an item for limited period of time, which had been granted on a “road engine” in 1895. Law doesn’t make a lot of sense, but Ford’s building of engines and cars conflicted with the patent, when Ford was denied such a license, he took the case to the supreme court, after eight years of legal action, the courts decided the patent was valid but not violated, allowing Ford to continue manufacturing and conducting business. Henry Ford admirable spirit, ambition, creativeness, and innovated mind made this man and company into one the most successful businesses of our time, his dedication to lower profit margins, heighten production volumes, and desire to gain a larger market share and maintain profitability made Ford Motors into one of the biggest and most profitable companies in the world. Now that we have covered Ford Motors Economic and Social history lets transition into how production, marketing, accounting and finance helped stabilize the foundation of Ford Motors.

Production, Marketing and Finance
Everybody knows about Henry Ford and how he started the first assembly line production, but less known is about Ford and the Rouge factory. In 1915 Ford started buying land along the Rouge River, in total acquiring 2,000 acres, Fords plan for the property was to create a total self-sufficient factory; he wanted to own all resources to produce complete automobiles. Located at the Rouge complex were ore docks, steel furnaces, coke ovens, rolling mills, glass furnaces and plate-glass rollers. Buildings included a tire-making plant, stamping plant, engine casting plant, frame and assembly plant, transmission plant, radiator plant, tool and die plant, and a paper mill. Also to maintain total self-sufficiency the complex housed a massive power plant (which produced enough electricity to light a city the size of Detroit), a soybean conversion plant turned soybeans into plastic auto parts, and a railroad (which add100 miles of track and 16 locomotives). The Rouge, at its peak, had more than 100,000 people working at the complex; to accommodate them the Rouge also had a multi-station fire department, a police force, a fully staffed hospital, and a maintenance crew of 5,000 workers. With increasingly stringent environmental pressures Ford Motor Co. decided to take their “brownfield” manufacturing facilities and replace them with state of the art “greenfield” plants. In 1997 the first efforts to renovate the old Rouge complex started with the engine and fuel tank plant; over the years the Rouge plant would get a environmentally advanced and friendly paint operation, a state of the art power plant, and most notable a living roof. The new Rouge complex, now known as the Rouge center, is Ford’s vision of sustainable manufacturing for the future; it is one of the world’s most flexible manufacturing facilities, capable of building up to nine different models on three different vehicle platforms. The Rouge center also is the home of numerous advanced environmental concepts designed to balance the needs of auto manufacturing with social and environmental concerns, as well as save money.

To transition into Marketing, with the decline in sales and popularity of American vehicles, Ford Motor Co. needed to find a new way to reach the consumers; modern consumers were through with having large corporations talk at them and under-deliver on the promises made, modern consumers demanded authenticity in communications. Authenticity that was personal, casual, and plain in dialogue. Ford Motor Co. is embracing this new style of marketing with their new spokesperson, Mike Rowe, and an innovative new way of having potential customers tell other potential customers why they should buy a Ford vehicle. Paired with Mike Rowe, host of the popular Discovery channel show Dirty Jobs and the fourth most trusted celebrity(Reuters), Ford reinvented its public image by having a spokesperson that is likeable and trust worthy, this was important in Fords new marketing campaign to make the second part work. With a new trustworthy face to the company, and a new car on the market, the Fiesta, Ford set out to connect with customers in a way that had never been tried before. Ford gave 100 Fiestas to people for 6 months to live with the vehicles and market the vehicle themselves through social media such as Twitter, Facebook, YouTube, Flicker, and personal blogs. With real people telling personal accounts of the vehicle, Fords marketing campaign was able to be sincere and truthful; which led to more sales and a better public opinion of the company.

Another big part of Ford is the Financial situation Ford has dealt with, the start of the decline of the American auto industry started in 2006, when Toyotas sales surpassed Fords for the first time. In 2006 Ford had reported a loss of $12.6 billion, later that year Ford announced a restructuring plan called “The Way Forward” which involved shedding 30,000 hourly jobs and 14,000 salary jobs; part of this plan also included Ford borrowing against its most cherished North American assets, including the Ford logo; as well as selling Volvo, Aston Martin, Jaguar, and Land Rover (all of which were acquired in 1999). Because of the sales of the subsidiaries and borrowing money against their own assets Ford raised a total of $25 billion. In July of 2007 Ford announced a profit of $750 million, its first quarterly profit in two years. 2008 marked the steepest decline of profits for the auto industry across the board, and also prompted the US government to assist the industry with bailouts. Because of “The Way Forward” plan ford did not ask for any of the government money, ford did lobby for assistance for its competitors (GM, and Chrysler), arguing that collapse of either GM or Chrysler could put its suppliers out of stock. Ford was the first of the “Big Three” (Ford, GM, Chrysler) to show a profitable quarter, which happened in 2009. Profits have been steadily increasing for Ford, and in 2011 Ford had made more money in the first six months than the previous five years combined.

Management Philosophy and Practice

Henry Ford had a very unique way of managing his employees and his business. Henry Ford was a strongly opinionated man with an extreme personality. It is said that many of the company's struggles were caused by his stubborn management style. Ford was anti-union and absolutely refused to unionize with the United Automobile Workers. Ford went to the extreme of hiring spies, company police and using workplace violence to prevent his employees from doing so well. When work became too monotonous and employee turnover rates plummeted, Ford announced that it would pay workers a minimum wage of $5 a day. This was double the average for the industry at that time, Ford also reduced the working day from nine hours to eight, keeping the plant operating 24 hours a day with a three shift system. This bought back employee loyalty and increased productivity; it was an offer to hard for the average person to refuse.

This method would later become known as “Fordism,” which refers to winning the loyalty of workers to profit from a high wage economy. It produced for the masses as inexpensively as possible by the application of assembly line techniques. It was this process that helped bring the United States to be a dominant capitalist power by the end of World War II. However, there were flaws in this approach, its success depended solely on the loyalty of workers, there were no opportunities for employees, they had no say, there was no room for innovation, and no advancement opportunities. It was all based on uniformity. (Marxism) To move to our time, Alan Mulally is the current president and chief executive officer of Ford Motor Company. He’s also a member of the company’s Board of Directors. (Ford) The leadership team has been in place since September 2006. Since Mulally took over, he has restructured the business, beginning with the company motto “One Team, One Goal!” Mulally says, “At today’s Ford Motor Company, we are truly driving change. In the past few years, we have restructured and revitalized the Company under extremely challenging economic conditions. Throughout the global recession, we never lost sight of the environmental and social goals that are key elements of our business strategy. Indeed, our focus on those goals was an important factor in our financial recovery, by delivering cars that are greener, safer and smarter, we enhanced our competitiveness and built stronger relationships with our customers.” Many believe that Alan Mulally actually saved Ford from meltdown. His focus on management, innovation and standardization eliminated all the dysfunction that had Ford heading in a downward spiral.

Ford Motors is not the only company of the big three that did not accept the government funded bailout, nor did they file for chapter 11 bankruptcy protection. To keep the company successful they did had to downsize, over 120,000 workers were laid off in 2006. However, due to Mulally’s leadership, management style and excellent leadership he has built around him, the company has started to show profit for final earnings.

There website says, “Working as One, Ford's diverse global talent continues the legacy of excellence that began with the first Ford Model T, we’ve grown as a market leader thanks to our skilled and motivated team.” The company also ranked first in the Human Rights category in Corporate Responsibility Magazine’s 100 Best Corporate Citizens list. This is a dramatic shift in comparison to the Scientific Management style used in the earlier years. (Ford)

Ford now uses a Transparent Management style. Transparent management is used to drastically improve the people side of business. Some of the benefits are:

  • Increase productivity

  • Eliminate useless interaction

  • Improve employee engagement

  • Leadership development

  • Parallel thinking for innovation

  • Team problem solving

  • Develops high functioning teams

  • Management and employee relationship enhancing

  • Develops people experts

  • Promotes diversity and individuality

Transparent means you can see through it. That is exactly how transparent management is. It is open, no secrets, there is a freedom of information and communication is key. (Brown)

Henry Ford said, “Whether you think you can, or you think you can't. You're right.” With the commitment and buy in of the Ford Motors workforce, Upper management believes they can. Obliviously Ford Motors philosophies and management style has changed, but one thing that has remain consistent is the Ethics of the business.


Now what does “Ethics” mean? If one looks in the dictionary they will find that it describes a system of moral principles, that branch of philosophy dealing with values relating to human conduct, with respect to the rightness and wrongness of certain actions and to the goodness and badness of the motives and ends of such actions. Henry Ford once said, “There is a most intimate connection between decency and good business.” Ford motor company not only is one of the largest global companies throughout the world but has one of the largest policy on Business Ethics. This involves its employees in social responsibility efforts, corporate governance and business practices, we will find that through decades of carrying out what Henry Ford once foresaw has turned into an example for not only Ford motor employees but also other companies worldwide, it has created and emulated the standards and principles that are both taught and practiced.

One of the major factors of Ford’s success is through their code of conduct handbook. This handbook is a compilation of the most important and relevant Policy letters, Directives and standards for Ford Employees. Since Ford has over 198,000 employees and over 90 plants worldwide this book is issued in 14 different languages which obviously states by publishing the book in such a manor carries high importance throughout the company. In 2007 the Handbook underwent major revisions to make it easier to understand and also use as a manual for referencing. The Handbook outlines requirements for employees and or any person who has involvement working on behalf of the company. These business related situations include:

    • The workplace environment

    • Gifts, favors and conflicts of interest

    • Use of Company assets and data safeguarding

    • Integrity of financial records

    • Product quality, safety and environmental matters

    • Intellectual property

    • Working with governments (political activities)

    • Competition and antitrust laws

    • International business practices

All salary employees and most contracted personnel around the world required to show certification that they have reviewed the new handbook and understand the rules. Ford’s method of reinforcing this was by introduced in 2009 a new mandatory online training course that focused on these points. Allen Mulally, President and CEO of Ford Motor Company is quoted as saying the following about their Code of Conduct Handbook, “By reading this Handbook and following its guidelines you will help us enhance our reputation as an outstanding corporate citizen. This is not only the right thing to do – it is the best thing to do to secure the future success of our Company.”

Bill Ford, the Executive Chairman of Ford Motor Company is quoted as saying, “ I believe the distinction between a good company and a great company is this: a good company delivers excellent product and services; a great one delivers excellent products and services and strives to make the world a better place.” It is clear that Ford Motor Company has realized the clear connection between high ethical standards and success. Their Code of Ethics and Code of Conduct both have hit the nail on the head when it comes to defining what is acceptable and what is unacceptable. In 2011, Ford Motor Company was nominated by Ethisphere Institute as one of the World’s Most Ethical Companies for 2010. This award is chosen from thousands of companies in more than 100 countries and 36 industries, Alex Brigham executive director of the Ethisphere institute said, “Ford’s promotion of a sound ethical environment shines within its industry and shows a clear understanding that operating under the highest standards for business behavior goes beyond goodwill and lip service and is intimately linked to performance and profitability.” By Encouraging its employees and enforcing these values Ford Motor Company has fulfilled and will continue to carry out what once was the vision of Henry Ford.

Ford Motors is the epitome of what a true American Company is; Ford Motors has remained defiant and strong through 20th century. Has continued to change and cross boundaries that no other auto company can imagine, and has remained competitive and loyal in the worst economies.


History of Ford Motor Company

Ford Motor Company

Timeline of Ford Motor Company

Model T

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A Second Act: Alan Mulally, CEO of Ford Motor Co.
Alan Mulally

Encyclopedia of Marxism

Ford Motor Company

Transparent Management

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