Bad times at Ford. But is this cultural?

[Dinner]

Ford's North American business is going through a rough time. This is largely the fault of poor management decisions as the management starved its car business in order to chase the profits which came from large trucks and SUVs. Dispite years of being told that it was badly under investing in its car line the management kept on ignoring the warnings. Now 30,000 workers in the US and Canada will lose their jobs because managers were to stupid to make decisions which were in the long term interests of the company instead of just maximizing the profits for the next quarter. That is a massive 21% of its North American work force.

http://news.bbc.co.uk/2/hi/business/5263866.stm

The topic I would like to debate deals with the culture of American corporate executives and how they relate to the stock market. In Japan investors tend to take a very long view in which they want their money to be safe so they demand that the companies they invest in be set up for long term growth and investment to gain long term positioning for a company's profits. To compare in the US stock investors tend to jump around between stocks on a regular basis. They want profits RIGHT NOW and they aren't interested in investing for 2,5, or 10 years into the future because they don't intend to stay invested in a stock for that long. As a result there is tremendous pressure on CEOs and CFOs to do what ever it take to maximize profits RIGHT NOW!

Which approach is better over the long run? Does the combined totals of increased short term gains of thousands of companies out weight the lower, but less risky, Japanese approach for long term gain?

[Kuciwalker]

Asher will tell you why Ford's having problems

[MRT144]

theyre riddled with anectdotes?

[Odin]

Re: Bad times at Ford. But is this cultural?

Originally posted by Oerdin
Ford's North American business is going through a rough time. This is largely the fault of poor management decisions as the management starved its car business in order to chase the profits which came from large trucks and SUVs. Dispite years of being told that it was badly under investing in its car line the management kept on ignoring the warnings. Now 30,000 workers in the US and Canada will lose their jobs because managers were to stupid to make decisions which were in the long term interests of the company instead of just maximizing the profits for the next quarter. That is a massive 21% of its North American work force.

http://news.bbc.co.uk/2/hi/business/5263866.stm

The topic I would like to debate deals with the culture of American corporate executives and how they relate to the stock market. In Japan investors tend to take a very long view in which they want their money to be safe so they demand that the companies they invest in be set up for long term growth and investment to gain long term positioning for a company's profits. To compare in the US stock investors tend to jump around between stocks on a regular basis. They want profits RIGHT NOW and they aren't interested in investing for 2,5, or 10 years into the future because they don't intend to stay invested in a stock for that long. As a result there is tremendous pressure on CEOs and CFOs to do what ever it take to maximize profits RIGHT NOW!

Which approach is better over the long run? Does the combined totals of increased short term gains of thousands of companies out weight the lower, but less risky, Japanese approach for long term gain?

The Japanese aproach is obviously better, short term pain becomes long-term gain and all that. US companies are so obsessed with this quarter's profits above what is in the long-term intrests of the business and the economy as a whole that everyone ends up screwed. There's a saying out there I rember hearing that goes that East Asians plan for the next generation, we plan for next quarter.

[Bosh]

The Japanese aproach is obviously better

Definately! Just look how well their economy has been doing these past years! Now if that isn't something to emulate, I don't know what is.

[Dinner]

I guess that is the major difference. One wants to take less return in order to get a slow but steady increase over time while the other seeks to take greater risk in order to get maximum profits as quickly as possible. Both has its ups and downs.

I can easily see why the US economy is more dynamic then the Japanese economy just based upon investment philosophy. It just matters if you are willing to trade away a higher return in order to get greater security, I guess. In the long run the companies are safer but less profitable. If I wanted to hold a company for years then I think I would prefer a Japanese company but if I wanted to make the most money as quickly as possible then I'd invest in an American company. The question which I find most interesting, and which I do not have an anwser to, is which investment philosphy manages to make more money for a country over the long term. Is it Japan's slow and steady approach or is it America's do what ever it takes to get a buck approach. I could easily see Japan steady racking up gains but I wonder if the extra dynamism of the US way ends up generating more money over all abet at the cost of more companies going bust.

[Spec]

It all depends on your goals. Do you plan to buy a house in the next year and want to increase your cash down, or would you rather sttle for an early retirement?

It all depends on what you plan tto do, long term or short, Both investment are good imo. It all depends on the goals of the buyer and his stress management.

Spec.

[Asher]

Bad products, bad sales -- what is the solution!!!!

OH I KNOW, FINANCING SPECIALS TO PEOPLE WHO CAN'T AFFORD VEHICLES!#@$#@

why are american car companies so screwed? I've no idea! Let's keep making cheap crap and wonder this aloud.

[Dinner]

That sounds a bout right. If I was a pensioner then I don't want to lose my money because I need that income to survive on but if I'm a young guy who has years to make more if I lose money then taking risks to make that nest egg wouldn't be to bad.

[Dinner]

Originally posted by Asher
Bad products, bad sales -- what is the solution!!!!

OH I KNOW, FINANCING SPECIALS TO PEOPLE WHO CAN'T AFFORD VEHICLES!#@$#@

why are american car companies so screwed? I've no idea! Let's keep making cheap crap and wonder this aloud.

The problem with your version is it doesn't stack up to reality. You always quote a completely nonscientific "study" which doesn't even attempt to take a statistical sampling. The funny part is the places which do take statistical samplings all say you are wrong.

Go figure.

[Dinner]

Getting back on topic, Ford's current problems are not quality related and instead have to do with short term design decisions. Ford sold crap loads of vehicles but they intentionally biased their production line up towards gas guzzling trucks and SUVs which made huge profits. They ignored their car line up so they could roll out yet more SUVs because the managers wanted the higher margins SUVs were commanding.

That works great as long as people want gas guzzling SUVs. But now gas prices are high and Ford has found people don't want 18 mpg trucks any more. They didn't bother to invest in the long run safe position of having a full line up which was competitive. That has cost them, for the umteenth time, because they have once agian been caught flat footed as market conditions changed and they didn't have new cars to fill the hottest market segments.

To compare Toyota will spend big to keep their full line up fully updated at all times. So when market conditions change Toyota always as cars suited for market conditions. The trade off Toyota has made is that the company makes less profits when any one segment goes gang busters as recently occured in SUVs. Ford just cashed in on SUVs and gave the money to investors who in return loved, loved, loved Ford's stock. Toyota didn't have the big profits for investors because they continually reinvested into less profitable line ups just in case market conditions changed. This is, once again, a difference in management style between safe but low returning and high return but higher risk. The question is which is better over the long run?

Economist, will you chime in?

[LordShiva]

It's impossible to say which is better, since it's impossible to forecast the future.

[Asher]

Originally posted by Oerdin
The problem with your version is it doesn't stack up to reality. You always quote a completely nonscientific "study" which doesn't even attempt to take a statistical sampling. The funny part is the places which do take statistical samplings all say you are wrong.

Go figure.

If you think Fords are remarkably reliable vehicles, that's your own problem. Strong anecdotal evidence, an uncle who is a Ford quality assurance manager at an Ontario factory, and non-biased non-profit studies all tell us Fords are not reliable vehicles compared to their major imported competitors.

You continue to wave your hand and spew nonsense -- frequently completely incorrect. The last time we had a thread I completely and totally debunked your nonsense claims (which you pulled out of your ass), bumped it several times to get your response which never came.

[Asher]

Here's a fun site: http://www.fordlemon.com/menu4.html

Some quotes from Ford assembly line workers:

“same ol' ****....different day. this has to be the worst managed company i have ever seen in my entire life. uaw members try to build quality trucks but management wont let us. when we use the stop button to try and correct a problem, bosses turn the line back on b4 they even know what the problem is....they give the same ol' answer, ship it ---someone else will catch it. thats 100% right, the customer is catching it and thats part of why ppl are defecting to toyotas and nissans. fords management has gotten themselves into the boat they're in now but its always the blue collar worker that suffers..... through layoffs, pay cuts, benefit losses, ect. we only go to work and build it like we are told, its not our fault that engineering is a joke as well as 1/2 the crappy parts that come from mexican vendors. been a ford person my whole life and want to see the company turn around as bad as anyone, but dont see it happening until management cant take some responsibility as well”

“I'm gonna tell you that the rear end in the f-150 is most likely bad. The only thing that management is concerned with at Sterling Axle is QUANTITY. Don't take it, don't make it, and don't pass it on. UAW quality tell us to keep the assembly lines and plants running all the time at whatever cost. Management agrees of course. So in 2 or 3 years when GM and Toyota steal our bread and butter don't scratch your head and wonder why. We are not allowed to blow whistles, only toot horns!”

“im not dogging our product, but i work in trim as well, and i see every day management ripping peoples asses for shutting the line off. delta jobs dont mean **** here. quaNity is what matters here. keep the line running and get 770 trucks and go to the house, worry bout tommorow when it gets here, thats managements perspective. thats 1/2 the reason fomoco is in the boat its in right now“

“Interesting posts re the conditions on the assembly line and how the local management just wants to get the cars out the door to the customers or should I say ex customers!

I purchased a 2006 Montego after evaluating what else was out there.

Wrote to the Chicago plant manager after exhausting other avenues and never received a response about the issues below:
Took delivery in October and since then had the following problems:
ABS sensor came on at 500 miles repaired,

At 2500 miles Main Airbag warning light came on. Light goes off when turned off. Dealer could not find code. It came on again and dealer still did not find code. Took car to another dealer at the suggestion of Ford customer service and a code was found relating to Occupant Classification System. Took car back to selling dealer(name will be provided on request) and suddenly they found same code.

Arranged with dealer to return car on Feb 27 for service only to be told that FORD is aware of the problem and is working on the problem.(Ford Techhotline)

Airbag light came on 2 months ago while driving alone and I immediately took it to my dealer and the code was the same refering to the occupant classification system.

Have been informed that there is to be a software update issued in May that should fix issue.
In early May they replaced toe Occupant Classifaction Module and yes the problem reoccured while driving after finally getting my wife to go back in the car

In addition the the 2 items above the following are also issues that I am/have had; GPS not recognizing address, struts and springs were already replaced(grinding banging when at slow speed-parking, there is a rattle in the passenger compartment that they do not hear, front seat leather is rippled and was replaced and ripples appear in the same spot( like maybe something underneath are causing the ripples),
brakes make excessive noise and more pressure when car is left overnight(told that brakes can be noisy on first application of brakes due to rust buildup on rotors overnignt) then the oval dash clock stopped working.

I am now waiting for the paperwork to make it to the dealer level as FORD will be buying back the car.

“Hello KTP69! I work at MTP on the assembly line. Saw the subject of piss poor management and couldn't agree more! QAS?? HaHaHa!!! The big reply from supervisors on a red light is "We'll catch in on the fly. Turn it on." I'm on a delta job. Should crossthreads, spinners, missing clips, etc. be caught on the fly??? This is public safety we're talking about here. Quality Job 1?? HaHaHa! And something else that wasn't mentioned by you or anyone that replied to you: A supervisor or anyone else who turns the line back on without asking what is wrong is seriously endangering other employees. What if someones foot was stuck in the line?? When are these people going to get a clue? Safety? Ha!!! Also, did you guys read about MTP emplyees taking 40 minute bathroom breaks?? It was in the newspapers, local tv news, as well as CNN!! How disrespectful is that???”

[:) Smiley]

Car manufacturing is a mature industry - we are nearing the 100th anniversary of the Model T Ford. As such, the long term approach works better.

The high risk approach works best in emerging industries. That's why Silicon Valley is in America.