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Company profile
Ford Motor – Company profile
Summary
• SWOT Analysis
• Company Snapshot
• Industry
• Strategy
• Financial Performance
• IT Needs
• Details
Strengths Weaknesses
Opportunities Threats
Industry
5
Industry – Main trends
Click on picture for more details
Corporate actions:
• High level of M&A and alliances is expected over • Focus on growing in emerging markets.
the coming five years.
Opportunities Threats
• US automakers outsource the IT work onshore or offshore, to • Reduced IT budgets companies will be
areas of the world with lower labor costs or tax savings; look looking to optimize the sourcing mix and
for more flexible outsourcing models; consolidate IT vendors;
• Companies seek to improve PLM capabilities; Details • Low level of security – frequent data loss
incidents;
• Automakers tend to create web presence through social media
and online communities; • Reduce application complexity replace
legacy applications with off the shelf or SaaS;
• Focus on innovation and high technology features;
• Server consolidation, both physical and virtual;
• Implement RFID throughout the entire product lifecycle
including showrooms; Source • Less focus on full time business continuity,
with a careful analysis of applications to
• Companies tend to implement SOA systems.
determine the ones which are suitable for this
• Build Shared Services departments; type of service;
• Companies are looking to increase IT costs transparency; • Postponing of application migration (Vista,
• Analytical CRM – integration of after sale, support, sales force SAP);
and marketing; • Customers will demand more flexible contracts
• MES/ERP – optimization of resource consumption on the shop from vendors.
floor and vertical integration with engineering applications.
Strategy
8
Strategy – Overview (1/2)
Click on picture for more details
Supply chain
Supply
Supply chain
chain
Customer Service • Warranty repair costs decline – quality continues to improve. Source
2009
• Mar 09 – Ford wants to increase its online presence with social media websites; Source
Main
– The Big Three close to wage parity as a result of the renegotiated UAW contracts.
News Source
Financial Performance
11
Financial Performance – Overview (1/2)
Click on picture for more details
Sales growth
Indicator FY08 FY07 Y-o-y -5% Chrysler
-10% GM Ford
Net sales ($m) 146,277 172,455 -15.2% -15%
Source: Company data ; Reuters
Financial Services
Automotive
Net sales ($m) 129,166 154,379 -16.3% 17,111 18,076 -5.3%
Both sectors registered low performances and are expected to continue this trend for the first half of FY09
Fin
Net sales ($m) 25,259 39,373 -35.8% 3,933 4,743 -17.1%
Global crisis and industry seasonality made the last quarter results the lowest of the year.
IT Needs
14
Automotive IT Landscape (1/2)
Click on picture for more details
• Chose SynQuest e-business software to minimize order-to-delivery time and improve supply chain performances;
• Implemented a Wireless Real-Time Locating System (RTLS) provided by WhereNet Corp..
Automotive IT Plans
Engineering Procurement Manufacturing Sales Customer Service
• Apply GPDS • N/A • N/A • N/A • N/A
Engagement Process
to 2011 Engine
programs.
17
Key managers (1/2) Back
Education: University of KS – bachelor and master of science degree in aeronautical and astronautical
engineering; MA Institute of Technology – master in management (1982);
Work experience: Prior to joining Ford, he was executive VP of Boeing Company and President
and CEO of Boeing Commercial Airplanes. Joined Boeing in 1969. Former President of the
American Institute of Aeronautics and Astronautics (AIAA).
Other: Member of the US National Academy of Engineering, fellow of England’s Royal Academy of
Click on picture Engineering.
for more details
Education: Holds MBA from Duke University’s Fuqua School of Business (1999-2001) and BS in
computer science at Massachusetts Institute of Technology (1991-1995);
Work experience: Held several jobs at Ford including those in the areas of IT Security and Controls,
In-Vehicle Software and Vehicle Quality systems. Prior to joining Ford he was consultant at Ernest &
Young LLP and Headstrong.
Click on picture
for more details
Business units
Automotive sector:
• Is engaged in manufacturing and selling of cars and trucks throughout the world.
• The company’s vehicle brands are: Ford, Mercury, Lincoln, Volvo, Jaguar and Land Rover.
• Its US market share followed a decreasing trend in the last five years, in 2008 reaching the lowest
value of 14.2% .
Cars - Cars are classified by small, medium, large and premium segments;
- US market share increased 0.4 p.p. y-o-y to the value of 5% registered in 2008.
Trucks - Trucks are classified by compact pickup, bus/van, full-size pickup, SUV/CUV (sport or
crossover utility vehicles) and medium/heavy segments;
- US market share decreased 0.8 p.p. y-o-y to the value of 9.2% registered in 2008.
Financial Services sector:
• Provides retail and wholesale financing services to customers and dealers of Ford Motor products;;
- Ford Motor Credit Company is also know as captive finance company*;
• In US and Canada, it does business through automotive dealer financing branches;
• Its main automotive financing products are classified as follows:
- Retail financing;
- Wholesale financing;
- Other financing.
*A subsidiary whose purpose is to provide financing to customers buying the parent company's product; term usually used in the automotive industry.
Automotive industry in US
Automotive industry in US
Corporate actions • Highly competitive market, cyclical business US Big Three automakers: General Motors,
Ford and Crysler;
Many companies • Despite increased consolidation of the automotive industry anticipated by analysts, M&A
expected to face activity decreased;
liquidations • Companies expect the rate of bankruptcies to rise (Chapter 7 bankruptcy);
• Tier 1 suppliers will see most bankruptcies;
• After receiving $17.4bn federal aid, GM and Crysler asked for $5bn more; Source
• Nearly 3m layoffs will take place in the first year if the auto industry collapses;
• Toyota requests $2bn loan from Japanese government;
• GM is expected to sell its Hummer brand;
• Crysler plans to sell the Dodge Viper model line.
Restructuring plans
• Main objective – return to profitability in 2011:
• Eliminating bonuses for the second consecutive year;
• Suspend cash compensation for board members;
• The two CEOs announced they will voluntarily take 30% reduction in salary for 2009 and 2010; Source
• Reduce total debt by offering premiums to debt-holders who shift to convertible notes; Source
• Save up to $600m in interest expense;
• Reorganize three North American truck plants to produce small, fuel efficient vehicles – Relocate the production of B-
car and C-car platform vehicles in North American plants; Details
Reduce costs
• Use analytical tools to determine the vehicle’s configuration that best suites customers in different regions – cut back
slow-selling combinations – Vehicles equipped with “Rapid Spec” package;
• Fewer already build combinations – reduce manufacturing costs;
• Continue to produce and ship products within approx. 20 days after a firm order is placed – no backlog;
• Simplify order process;
Differentiation
• Deliver best-in-class with every new vehicle launched – uses EcoBoost engines;
• $14 bn investment in high-technology to improve fuel economy over the next 7 years;
• Launch hybrid vehicles until 2012: plug-in hybrids and battery electric vehicles – At least 4 new electric vehicles to be
launched in the next 4 years;
• Upgrade Ford, Lincoln and Mercury lineup by 2010 and increase safety features;
• Continue to expand the small and medium lineup so that consumer have more alternatives when buying a car;
• Increase entertainment connection features in car that cannot disturb the driver’s attention from the road;
• Continue to invest in “One Ford” product plan;
• Better analyze consumers needs. Details
Relocation
Current plant Current activity Future activity Future plant
SUVs: specific
Global Kentucky
Michigan Track Plant Expedition and
C-car Truck Plant
Navigator
Financial status
Revenues Details
• Results from all operations declined over previous year because of the economic recession. However, cost reductions
managed to partly offset these declines;
• In terms of both profit margin and growth sales, Ford is far below the industry average;
• Of all US Big Three, Chrysler has the highest results; its profit margin follows industry trends and its growth sales are
above industry average;
• Ford, Lincoln and Mercury gained market share for three month consecutively (Oct, Nov, Dec 08), reaching 14.2%.
Income
• Even if it registered a loss of $14.6bn, the worst annual result in 105 years, it considers itself the healthiest company of all
Detroit automakers it is the only company that will finance its operations without federal aid;
• Ford managers said it will need the aid only if one of its two main competitors will go bankrupt;
• It currently has more cash on hand than its competitors, but this is the result of the late 2006 financing actions
- mortgage total assets, including the blue logo;
• It has about $15bn cash in hand.
ROA
• Ford’s ROA fell slightly below the industry average of 1.4% ;
• Chrysler has the highest ROA of all peers, very close to the industry average.
Debt
• The company has sufficient funds to finance business plan and product investments.
Cars 44.50% 28.60% 45.40% 31.50% 47.20% 36.70% 48.20% 31.50% 52.30% 35.10%
Trucks 55.50% 71.40% 54.60% 68.50% 52.8% 63.30% 51.80% 68.50% 47.70% 64.90%
Total 100%
• Prior to 2005, US industry truck sales followed an increasing trend, but in the last years it started to reverse.
• In 2008 Ford’s small car segment sales were larger then the previous year due to the strength of the redesigned Focus model;
• 2009 industry sales are expected to weaken because consumer and business spending has sharply decreased.
Rating
Outlook Negative Stable Negative Negative Negative Negative Negative Negative
Watch Off
IT deals
• 2009 Mar – Together with Beech Daly Technical Center (BDTC), it provides technology tools to accelerate product
development;
• 2009 Mar – Continues agreement with MSC. Software to provide standard simulation tools;
• 2009 Jan – Selected Tellme to provide voice technology to Ford’s new SYNC Traffic technology;
• 2009 Jan – Uses new GPS navigation software from TeleNav;
• 2008 Jul – Chose Quantum3D to build its virtual engineering and safety leadership: upgraded its VIRtual Test Track
EXperiment (VIRTTEX) Driving Simulator;
• 2008 Jul – CNC machine tools provided by Spinner;
• 2008 Jul – It is equipped with computing prototypes (CT), radiography and rapid prototype capabilities;
• 2008 Jan – Chose Wireless Ronin Technologies to implement Ford SYNC technology;
• 2007 Sept – Selected Polk Roadtodata to provide real-time market data and intelligence to all brands within Ford;
• 2007 – Implemented Vehicle Inventory Management System (VIMS) from WhereNet Corp.;
• 2006 Apr – Selected UGS Corp. to deploy in-vehicle software data enables Ford to leverage its global innovation
network;
• 2006 May – FordDirect selected Reynolds and Reynolds to continue its Sales point solution;
• Chooses Siemens PLM Software to provide PLM solutions for in-vehicle software;
• Uses RFID technology;
• SAS platform supports CRM;
• The industry first Paint and Body Technology Center;
• Works with Data Mining Group for close to ten years it has provided Ford with services in the areas of quality,
customer satisfaction and warranty analytics;
• Ford Work Solutions – innovative website of productivity solutions;
• Ford Work Solution from DeWalt uses RFID technology to track tools and equipment.