Ford offers redundancy terms to its entire workforce in North America, as part of aligning its capacity there to its collapsing market share. How can such an American icon have come to this?
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Twenty-seven years ago, the US endured fuel shortages, as the result of Ayatollah Khomeini’s revolution shutting down Iran’s oil exports for several months.
The US government wanted to reduce the country’s dependence on oil imports. A key objective was to reduce consumption by cars. Lacking the political will or courage to tax petrol sufficiently, it resorted to imposing the CAFE (Corporate Average Fuel Economy) standards on Detroit.
US passenger cars were downsized, resulting in unattractive products and opening the door to the Japanese.
Light trucks and SUVs were treated far more leniently. As fuel supplies and prices returned to normal, the American public voted with its wallet and these vehicles ended up with 50% of the US light vehicle market.
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By GlobalDataFord in particular leapt on the bandwagon and by 2000 was already building fewer conventional passenger cars worldwide than the VW group. It was a rational move at the time, from which Ford profited greatly. But now the market pendulum has swung back, Ford is particularly exposed and is reacting as it has to.
We always thought they were in greater danger than GM, which is relatively far less dependent on light trucks and SUVs.
More serious, though, is the way Uncle Sam has effectively painted his domestic vehicle industry into a corner by inadvertently making it concentrate its efforts on crude gas guzzlers that no-one wants outside its home market.
Eighty percent of the global SUV market is in North America but North American SUVs have achieved only very limited penetration overseas.
The world standard for vehicles is set by the Europeans (the passenger car market in Europe is twice that in the US) and the Japanese, who are now on an almost unstoppable second rampage through the US. And we have the Chinese and Indians waiting to come on stage.
John Wormald, Autopolis
