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THE CORPORATE
EVOLUTION OF THE FO
MOTORCOMPANY OF CANAD
1904-2004
SARDAR KHAWAR
ADNAN AHMAD
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ABOUT THE COMPANY
Manufactures and distributes automobiles on six continents
Employs approximately 224,000 people and operates 90 plants worldw
Brands include Ford, Lincoln, Mercury, Volvo, Mazda and Ford Motor CCompany (financial service).
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FORDS BRIEF HISTORY
1903Ford Motor Company founded in Michigan
1908Model T introduced
1913first moving automobile assembly line in the world
1956Fords stocks go on sale (10.2 million shares sold the first day)
1987beginning of the acquisitions of other brands
1988Ford Motor Company reached the peek
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THE ERA OF AUTOMOTIVE PIONEERS:
FORD OF CANADAS BIRTH
Ford already lost two companies
In return for granting the use of Ford patents and drawings , the stock
of the Ford Motor Company received 51 percent of Ford-Canada,
according to their original Ford-U.S
By that point, the Company had become the most profitable enterprisworld
Henry Ford and his investors were millionaires
Model T was the most successful car in the industry
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Ford-Canada's operational tone and relationship to the American firm
very early
Company's management acted largely independently of Ford-U.S
The two companies operated as distinct entities
For example, Ford-U.S did not produce a two-door Model T in somwhile the Canadian company produced four-door Model T's
The 1904 agreement granted Ford-Canada the exclusive right to "man
and sell" Ford products in the British Empire
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NOT A BRANCH PLANT: FORD AND THE
POLITICAL ECONOMY OF THE CANADIAN AU
INDUSTRY, 1900-1920
High duties ensured that the Canadian auto sector grew up as a "cre
the tariff,
In 1904, McGregor was keen to provide Canadians with a reliable, w
vehicle, while Ford in Detroit already had the technology, and, most c
the product.
The Canadian venture would cost Ford little beyond sharing his pro
and engineering plans and providing his "services" to the Canadian com
In exchange, Ford would share in any profits that the Canadian c
might generate in the future, and Ford vehicles and the Ford name w
popularized in a neighboring market.
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By 1909, the tariff had not yet come to pass
As the original Canadian automotive "early adapter," McGregor estab
Ford operation in Canada
McGregor was in charge of the Canadian operations, Ford allow his C
counterpart to continue the managerial approach of "one-man leaders
Ford had not allowed any public ownership in the European companie
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THE PROBLEM OF FORDS CANADIAN
OWNERSHIP, 1920-1940
Henry Ford took little interest in the Canadian firm
His only son, Edsel, was keen to bring the company under the paren
control
Campbell proposed that Ford family utilize the unissued voting sha
remained in Ford-Canada's treasury to control a "voting trust
Campbell was in fact keen to see the Ford family have "returned to t
voting control originally contemplated in the 1904 agreement
Campbell did not consider that Ford of Canada's independent sta
harming the Ford family, but he felt that the Canadian company would
served by remaining a Ford-controlled entity
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Campbell admitted, without Ford's ingenuity and the American Ford
successes, the Canadian company would be nothing
"Anyone closely identified with either the American Company or the
Company knows that the Canadian company can only carry on busines
the Canadian company has the full co-operation of the American Cothose associated with it
By 1930, Edsel had purchased another eleven thousand voting share
his control over the voting stock of the Canadian company to 47 percen
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THE ERA OF ORGANIZATION MEN: FORD GA I
MAJORITY OWNERSHIP AND ORGANIZATIONA
CONTROL OF FORD-CANADA , 1945-1965
Edsels ascendance, transformed the Ford Motor Company into a m
professionally managed organization, also had a significant impact
relationship between Ford-U.S
Purchased blocks of shares on the open market and from the Ford
giving the Ford Motor Company 52 percent of the voting shares o
Canada The company expanded the board from five to seven members
The Canadian company was quite receptive to the new arrangement
substantially curtailed its operational independence in a host of areas
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In early 1950 Roberge informed the Canadian management that "un
new relationship agreement dates as of May 1, 1949, it will, of cou
necessary for to supply the Associated Products organization with info
concerning your company's activities
Established Ford International in New York, to "give coordination, adv
assistance to all Ford international activities" and to streamline the cominternational organization and control
Ford-Canada, as a unique entity within the Ford Empire that e
products to its "exclusive territories," did not easily fit into t
organization
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The Canadian company's managers were opposed to this idea
Ford executive offices settled the matter: Ford-Canada would report
headquarters in Dearborn, and the company would remain outside t
International hierarchy
Henry Ford II himself soon became a key player in efforts to integNorth American industry, a move that meant the final end of Ford-C
operational independence.
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THE ERA OF CONTINENTAL INTEGRATION:
FORD-CANADA AND THE AUTO-PACT REGIME
1965-1975
The Canadian negotiators understood that unrestricted free trade cou
out Canadian production in an industry already over 90 percent ow
American interests
Instead, the two governments and the industry came to a comprom
Canadians succeeded in having local content, investment, and output
that guaranteed certain levels of Canadian production in the American
The auto pact provided a new departure for the company's North A
operations
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Henry Ford being an advocate of free trade, although had often
tongue on the issue of Canadian Ford company, which neede
protection in order to avoid being overwhelmed by American imports
Trade treaty, reduced Canadian auto tariffs, prompted Campbell to
Edsel Ford to tell Washington that the Big Three auto companies wer
favor of this measure, as it would impact their Canadian subsidiaries Ford II's Canadian officials had kept him informed of the latest develo
on the negotiations between the industry and the Canadian governme
The new arrangement allowed to import parts and autos duty free, as
they maintained a minimum 50 percent North American content
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Ford officials had explained that they foresaw difficulties meet
Canadian value-added requirement, due to rationalizing engine produ
Canadian-made vehicles would no longer contain Canadian-built engin
The president of Ford-Canada, now reported to the head of the sale
for North American operations, while the director of the Canadian O
Group was responsible to the parent company's executive vice prescharge of overseas operations.
Formerly an independent company with its own hierarchy and structu
of Canada had become a mere division within Ford's North A
operations.
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FORD OF CANADA IN THE NORTH AMERICAN
AUTO INDUSTRY,
1975-2004 North American industry faced dramatic challenges as the Big Three respo
the oil embargo and energy crisis, the flood of Japanese imports, the restruc
the industry in the late 1970's and early 1980's, the arrival of foreign trans
both the United States and Canada, and the creation of the 1989 Canad
States Free Trade and 1993 North American Free Trade agreements
In response the Big Three shifted a greater percentage of their North A
assembly operations to Canada in an effort to take advantage of lower c
good productivity and quality results at its Canadian facilities
In 1965, Canadian production was 7 percent of the continental marketplac
the 1990s,Canadian production consistently outpaced that of North Ameri
percent.
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For Ford, this meant that, by the 1980s and 1990s, its Canadian plants
the sole production source for its Windstar/Freestar minivan and its
important Crown Victoria and Grand Marquis midsized cars, which form
significant element of fleet sales and are used throughout North Amer
police vehicles and taxi cabs
Ford had reorganized its North American concerns into the North AmeAutomotive Operations (NAAO), consolidating the United States, Cana
Mexico in 1972
By 1984 the parent company, had gobbled up all but 11 percent of its
Canadian subsidiary
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In April 1995, Ford announced that as part of this global "Ford 2000" s
the company would buy out the remaining 1,250 Ford-Canada shareho
$150 per share and take the company private
The plan was to cost the company C$76.6 million and end Ford-Canadadecades as a publicly traded company
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SWOT ANALYSIS
Strengths
Strong and globally positioned brand
names
Large employee base with highly educated
engineers and good R&D department
One of the largest automotive
manufacturer (along with a long history)
1285% increase in net cash
Huge increase in total equity
Weaknesses
A lot of time spent to actually put
product on the market
Recording continuous losses (net i
from 2006
Low quality of new products (reca
causing losing customers)
Lack of management of the compa
EPS very badin negative number
(unattractive for the investors)
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SWOT ANALYSIS CONTINUE
Opportunities
Consumers demand hybrid and fuel
efficient vehicles
Increase in consumer spending trends
Consumers demand more innovative
vehicles
Global expansion
Industry experiences slow and steady
growth
Threats
Weak USD
Increase in steel and resin pricing
Increasing gasoline prices
Stricter CO2 emission standards
Increasing mortgage rates
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NEW OBJECTIVES
Reduce manufacturing expenses by 15-20%
Introduce new small fuel efficient vehicles
Enter Latin American and Asian market with hybrid vehicles
Develop affordable electric car for US market
Increase market share
Build up strong financials (increase net income and EPS by 15%)
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RECOMMENDATIONS
Manufacturing of new small fuel-efficient vehicle
Entering the Latin American and Asian market with hybrids
Implementation of electric car in the US market
Manufacturing units in Asia and China zone for lower cost
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THANKS!