FORD MOTOR COMPANY

Ford Motor Company is the largest manufacturer of trucks in the world and the second largest manufacturer of automobiles, behind only General Motors Corporation (GM). Headquartered in Dearborn, Michigan, Ford has plants in 19 countries and facilities in more than 100 others. The company markets vehicles under the brand names of Ford, Lincoln, Mercury, Jaguar, and Aston Martin. Ford owns a controlling interest in Japanese automaker Mazda Motor Corporation and in the Hertz Corporation, the world's number one rental-car company. Ford Credit, one of the company's subsidiaries, is the world's leading provider of automotive financing.

Henry Ford (1863–1947) founded the Ford Motor Company on June 16, 1903. The company was launched from a small converted wagon factory in Detroit, and its assets initially consisted of tools, appliances, machinery, blueprints, patents, and a few models. Henry Ford experimented with a number of early automobile designs during the 1890s, developing a reputation as a pioneer in the area. This reputation grew with Ford's release of the Model A, a two-cylinder, eight-horse-power design that sold 1,708 models in the company's first year of operation. Over the next five years Ford engineers feverishly developed 19 different models, designating each by a letter between B and S. Some models succeeded, some failed, and some never left the plant. The most successful of the group was the Model N, a small four-cylinder car that sold for $500. The biggest failure was the Model K. At $2,500 it priced most consumers out of the market.

The Model K's failure fueled Ford's desire to design an inexpensive and reliable car that could be mass produced. The 1908 Model T was the answer. Affectionately dubbed the "Lizzy" by U.S. car buyers, Ford's Model T came to symbolize low-cost, and durable transportation. The four-cylinder vehicle, which could travel at a top speed of 45 miles per hour, sold 10,660 units in its first year. As demand climbed, Ford invented the world's first moving automobile assembly line in 1913. Henry Ford believed that automobile production would become more efficient if all employees were assigned one place to work, where they could focus on a specific task to accomplish in a diligent manner.

Within 12 months of the invention, Ford workers had reduced the time during which a chassis could be assembled from 12 hours and eight minutes to one hour and 33 minutes. Ford manufactured 308,162 cars in 1914, more than all 299 other car manufacturers combined. The Model T's success and the use of the assembly line allowed Ford Motor Company to drop its price from the original sticker of $850 to $350. It could also double its employees' minimum wage to five dollars and open new factories in the United States, Canada, Europe, Australia, South America, and Japan. It also provided Ford with revenue to purchase luxury carmaker Lincoln Motor Company in 1922.

Consumer interests gradually shifted in the 1920s. Competitors began rolling out more powerful and stylish cars. To stem dwindling profits Ford discontinued production of the Model T in 1927 and closed plants around the country so the company could retool. When Ford opened its doors six months later it unveiled a vastly improved Model A. Featuring hydraulic shock absorbers, automatic windshield wipers, a gas gauge, and a speedometer, the Model A sold more than 4.5 million units in four years. Now refusing to sit idle in face of increasing competition, Ford pushed aside the Model A in 1932, introducing the world's first V-8 engine block that was cast in a single piece. Six years later Ford introduced the Lincoln Continental and a new line of Mercury automobiles.

The 1930s and 1940s also marked a time of transition for the automaker. Ford's market share slipped behind those of GM and the Chrysler Corporation. An avowed opponent of labor unions, Ford was forced to recognize the United Automobile Workers of America (UAW) as the collective bargaining representative for all of the company's workers. In 1941 Ford shut down its civilian automobile production to manufacture B-24 bombers, aircraft engines, tanks, jeeps, trucks, munitions, and equipment for the Allies during the balance of World War II (1939–1945). When the war ended, most of Ford's contracts with the government terminated, and the car company soon started suffering losses of $10 million per month. In 1947 founder Henry Ford died, four years after the premature death of his 49-year-old son Edsel, who had succeeded his father as the company's president in 1918.

Henry Ford II, Edsel's eldest son, took over as president in 1945. For the next three decades he helped modernize Ford and return it to profitability. In 1955 Ford introduced the Thunderbird. The sleek and sporty two-seat roadster sold more than 16,000 units in its first year, while Chevrolet sold comparatively meager 657 Corvettes. In 1956 Ford Motor Company went public. In the largest stock sale ever at the time, Ford sold 10.2 million shares to 250,000 investors for $657 million, or 20 percent of the family's business. In 1956 Ford created an aerospace division, and two years later the company announced its entry into the heavy and extra-heavy truck market. In 1963 Ford debuted the highly successful Mustang sports coupe, which remains one of the company's most popular muscle cars.

The reign of Henry Ford II as president was not one of uninterrupted success. In 1958 the company released the Edsel, a 410-horsepower, 17-foot sedan that generated losses of $250 million in just two years. During the 1960s Ford's management fought bitterly over the company's direction, changing executives throughout the decade. In the 1970s Ford Motor Co. was named as a defendant in a series of wrongful death lawsuits stemming from numerous incidents when the gas tanks on its subcompact Bobcat and Pinto models exploded during rear-collisions. The OPEC oil embargo of the 1970s also made Ford's bigger, gas-guzzling vehicles a liability, and many U.S. citizens started turning to smaller, more fuel-efficient Japanese vehicles.

The 1980s brought downsizing to Ford. After losing $3.2 billion from 1980 to 1982, the company reduced its workforce by one-third and closed 15 plants. Ford diversified during this period as well. Its 1986 purchase of the Sperry Corporation's New Holland tractor division helped Ford become the world's third largest maker of agricultural equipment. Ford also purchased First Nationwide Financial Corporation and U.S. Leasing in the mid-1980s. On December 26, 1985, Ford introduced the Taurus, an affordable mid-size vehicle that was named car of the year in 1986. By 1987 the Taurus was outselling every other car in the United States. The Ford F-Series pickup truck and subcompact Escort were also gaining in popularity as the decade ended, when Ford was reporting record profits.

Ford continued restructuring in 1990s. It gradually dropped out of the heavy-truck business during this period and consolidated its operations in North America and Europe. In 1994 Ford introduced its year 2000 initiative, under which the entire Ford family of enterprises would be organized into a single operation by the beginning of the next millennium. Ford also announced a plan to make all of its vehicles more environmentally safe before the twenty-first century. Emissions for sport utility vehicles (SUVs) would be reduced to levels required for new cars, while new car emissions would be decreased by 70 percent. In 1999 Ford teamed with DaimlerChrysler AG and the state of California to test zero emission cars powered by fuel cells that produce electricity through the chemical reaction of hydrogen and oxygen. At the same time Ford announced its plan to purchase auto junkyards over the Internet and to recycle undamaged car parts to mechanics.

These announcements, however, were tempered by Ford's plans to roll out the industry's biggest SUV to date. A 3.5-ton, six-door, 19-foot long colossus was scheduled to go on sale for about $50,000 in the fall of 2000. The environmental group, the Sierra Club, described the SUV as a "tanker" that will "guzzle enough gas to make Saddam Hussein smile." Such criticism has concerned the Ford family, which still owns a controlling interest in the company. But the family also recognize that the company's success has always been linked to meeting consumer demands.

FORD MOTOR COMPANY

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