The automobile industry is fragile, volatile, and competitive during normal economic conditions, and this intensifies significantly during economic downturns. The recession that began in 2008/2009 crippled the automobile industry on a global scale. The global economy, including the United States, has improved steadily starting late 2010 and continuing until present day. In fact, the output of United States motor vehicles manufacturing is forecast to grow at an annual compounded rate of six percent between 2012 and 2016. The Interindustry Economic Research Find, Inc (IERF) funded this forecasting and research project.
Data from the Automobile research provided the chart below – published September 2012 Automobile Manufacturing Growth Fluctuates Table 1: Industry Forecast (Data Published September 2012) Ford Motor began mass-producing manufactured automobiles on assembly lines in the early 20th century. Today, Ford is one of the world’s largest, and most recognizable, automakers. With the brands Ford and Lincoln, Mercury ceased production in 2010. Today, Ford Motor Company is a global powerhouse in the automotive industry, and despite a shaky global consumer confidence (figure 1), Ford maintains its promising forecast for profitability.
Fords financial stability is sound. In 2012, Ford was #9 the FORBES 500 and FORBES 100, on the S&P 500, and #151 in FT Global 500. Ford has a very popular vehicle line-up that includes the “Ford Mustang, F-Series pickup trucks, and the fuel-efficient Focus” (Company, Ford Motor Company Annual Reports, 2008 – 2011, 2008 – 2011). Popular and attractive models are only one factor leading to steadily increasing sales since the beginning of the 2008 recession as shown in tables 1 and 2.
The official 2012 volume numbers are not available, therefore, the 2012 number listed below is an estimate calculated using the CPI (Consumer Price Index) methods. Table 2: Worldwide wholesale unit volumes by sector (in thousands) (Company, Ford Motor Company Annual Reports, 2008 – 2011, 2008 – 2011) Table 3: Worldwide wholesale unit volumes by sector (in thousands) (text) Two factors that have direct impacts on the types of vehicles in demand are employment and fuel cost. Some believe government officials control fuel prices, and go on to accuse specific individuals of raising gas prices in hope of cheating taxpayers.
The fact is the laws of supply and demand are the primary movers of fuel oil prices, followed by corporate greed. Indexes show gas prices constantly move, and tend to shift with inflation and the economy. Manufactured automobiles are consumable items and consumers demand a reasonable amount of quality embedded into products they purchase. Ford has a solid record for quality; this quality starts at the factory and carries over to the post-warranty life of the car when most of the inherited repair expenditures become consumers’ responsibility.
Automotive repair cost were relatively high when at the beginning of the recession in 2008, average costs to repair an automobile was approximately $101. Mechanics and repair cost drop from $101 to $95 in 2009. Automobile repair cost is rising as the economy improves. Using the CPI calculation, automobile repair cost rose from $97 (in 2010) to $100 (in 2011), and again from the 2011 estimated cost of $100 to the 2012 calculated $102. Table 3 and 4 illustrate, in chart and graph form, automotive repair costs between 2008 and 2012. Table 4: Automotive Repair Costs, 2008 – 2012
Repair costs are not the only factors that effect automotive sales, overpriced vehicles can deter consumers from buying, therefore Ford must continue building high quality automobiles from quality raw materials like steel, aluminum, and resins while implementing new innovations like the bio-based soy form used in seat cushions, and backs. “All Ford North American-built vehicles use bio-based foam in seat cushions and backs. Ford’s use of bio-based foam has helped the company reduce its petroleum oil usage by more than 3 million pounds annually and carbon dioxide emissions by more than 15 million pounds” (Company, Head’s Up, 2011).
Ford get its bio-based soy form from Lear Corp, and as a result must be mindful of Lear Corps’ financial stability (as well as its other suppliers). The text index shows Lear Corp, Ford’s bio-based foam provide, has been stable over the past several years and show no reasons for future concern. Materials used in manufacturing are vulnerable to global markets as well as supply and demand. Automakers are dependent on certain materials like steel and aluminum. Until different, non-metal, materials begin getting used in auto manufacturing, the industry will maintain its dependence on metallic materials.
The index below (Table 5 and Table 6) depicts Producer Price Index cost numbers for Aluminum sheet, plate, foil, and steel manufacturing for the past four years (2008 – 2012) along with the trend line indicating the upward slope of projected future costs. This index shows Ford Motor Company is stable, secure, expanding, and poised to continue progressing forward. The recent few years sales and production is forecast to maintain modest profit margins and the company’s treatment toward its employees will maintain the high moral usually coupled to successful companies.
During the past six years, the number of Ford volunteers participating in Ford Global Week of Caring has grown from 1,200 to more than 12,000. In the United States, more than 1,000 Ford volunteers in 19 states stepped away from their desks and workstations, and stepped into dozens of community building projects on a Ford Accelerated Action Day. For the sixth straight year, Ford volunteers picked up paintbrushes and hammers, shovels, and wheelbarrows to tackle 237 community projects. Indexes indicate Ford Motor Company will continue as one of the world’s largest, and most recognizable, automakers.
This trend will continue with forecast new green innovations. Notwithstanding, global economic conditions could derail current trends, but Ford’s tradition of high quality, loyal consumer base, and faithful employees are valuable benefactors to Fords future success. References Nielson Consumer Confidence Index. (2011). Retrieved from http://nielsen. com: http://www. nielsen. com/content/dam/corporate/us/en/reports-downloads/2011-Reports/GlobalConsumerConfidenceReport_Q42010. pdf? wwparam=1319752536 Company, F. M. (2008 – 2011). Ford Motor Company Annual Reports, 2008 – 2011. Dearborn: