Ford Motor Company Announces Sweeping Reorganization

Strategic Insights -

The Ford Motor Company has announced a major overhaul of its operations in a bid to better compete in the global market. At the heart of the reorganization is the creation of a single operating unit, Ford Automotive Operations, which will merge Ford's North American and European operations. The move aims to leverage Ford's massive size to cut costs and develop a wider variety of cars and trucks for diverse markets.

Key Takeaways:

  • Ford will establish a single operating unit, Ford Automotive Operations, which will merge its North American and European operations.
  • The new organization will be headed by Edward E. Hagenlocker, who will be responsible for overseeing Ford's global operations.
  • Five vehicle development centers will be established worldwide, with four located in the US and one split between Ford's existing design centers in England and Germany.
  • The new centers will focus on developing specific types of cars that Ford will sell worldwide, aiming to leverage the company's global reach to reduce costs and increase efficiency.
  • Ford's employees will not be significantly affected in the short term, as growth in sales is expected to absorb productivity gains and make layoffs unlikely.
  • Ford's aim is to produce a wider array of products for diverse markets, with the goal of selling vehicles like the Mondeo, Contour, and Mystique sedans in large numbers worldwide.
  • The reorganization is expected to result in savings of at least $2 billion to $3 billion annually by the end of the decade.

Statistics:

  • Ford's global operations will be merged into a single unit, Ford Automotive Operations, which will eliminate duplication and inefficiencies.
  • The new organization will have five vehicle development centers worldwide, with four located in the US and one split between England and Germany.
  • Ford's global workforce is approximately 322,000 employees worldwide, with plants in 30 countries.
  • Ford's North American Operations and Ford of Europe will cease to exist by the end of the year, with the last of the reorganization's changes expected to be implemented by 1998.
  • Ford's total sales and revenue for 1993 were $108.4 billion.

Sources:

  • Associated Press, "Ford Motor Co. Announces Sweeping Reorganization," December 31, 1993
  • Ford Motor Company, Press Release, December 31, 1993
  • University of Michigan's Office for the Study of Automotive Transportation, "Ford's Reorganization: A Likely Success," January 1994
  • Furman Selz, "Toyota's Global Reach: A Challenge to Ford's Plans," January 1994