Marketing in Action Case Real Choices at Ford Ford Motor Company has committed t
ID: 2337273 • Letter: M
Question
Marketing in Action Case Real Choices at Ford Ford Motor Company has committed to investing $1.6 billion company facilities." Over the past 90 years Ford has provided to construct a small car plant in the San Luis Potosi State in more than $8 billion to build and develop its production capa- will result in the creation of more than 2,800 jobs bilities in the country. Currently, Ford has two assembly plants in the country. The Center for Automotive Research states that two stamping plants, and an engine plant in Mexico. Increas U.S. automotive labor costs average around $30 per hour and ing production output in the country is consistent with Ford's Mexico. This are substantially higher than those in Mexico which average long-term manufacturing plans around $5 per hour. This means that moving production to The additional investment in Mexico is not without its crit- Mexico will allow Ford to lower its cost for small cars and make ics. The issue of jobs leaving the country has always been a part Ford more competitive in the global auto marketplace. The of political debate in Washington, D.C. The announcement of move will, in turn, allow Ford to reallocate its U.S. facilities to Ford's plans was made during the most recent presidential ward larger vehidles with higher profit margins, like SUVs and campaign and created dissent among the candidates One can- F-Series trucks. Furthermore, Mexico has the necessary trans- didate called for increased tariffs and penalties for U.S. firms portation infrastructure to efficiently export the cars back to like Ford, that choose to relocate manufacturing to foreign markets to lower costs. Ford has reacted with a vigorous de- Mexico has been a part of Ford's manufacturing history fense of its business practices. As per CEO Mark Fields,-more since 1925 when the company became the first automobile than 80 percent of our North American investment annually is manufacturer in the country. According to Gabriel Lopez, presin the U.S, and 97 percent of our North American engineering the U.S. and other markets dent and CEO of Ford of Mexico, "Ford of Mexico is the fourth is conducted in the U.S" largest producer of vehicles, the fourth largest producer of en- gines and the second country in the global auto parts supply Dennis Williams, President of the United Auto Work ers (UAW) union, is another voice of dissent to the moveExplanation / Answer
2-35) Ford is facing the decision whether to continue expanding their production to Mexico, or to produce their vehicles in the United States.
2-36) The Ford Motor Company has poured billions of dollars into the construction of small car plants in Mexico due to the cheaper labor costs. In the United States, Ford would have to pay each employee $30 per hour for their work as opposed to Mexico’s $5 per hour. This massive deduction of payment cost allows Ford to lower its cost for small vehicles, making the company more competitive in the global auto marketplace. In the long run, Ford Motors would be making more profit. Mexico has been producing vehicles for Ford for over 90 years, making Mexico one of the largest producers for cars in the world. If Ford were to relocate their small car plants to the United States, Mexico would lose their reputation as a global leader in vehicle production; however, the relocation would also provide thousands of jobs to Americans.
2-37) A clear alternative is moving the small car plants to the United States, where it would create many jobs for Americans. Considering Ford Motors is an American company, it makes sense why politicians are pushing for a true Made in the USA approach to manufacturing. Ford could also continue production in Mexico and push for expansion in countries like Spain, Germany, and China. Because 97% of Ford’s engineering is already done in the United States, I don’t think that it is unreasonable to continue production in Mexico and possibly other nations as well. Why spend billions of dollars relocating to make up for the 3% of engineering done outside of the US.
2-38) recommend option is continuing production in Mexico. The profit margin is too great to relocate to the United States. I would rather see an American company make billions more dollars by expanding abroad than create roughly 8,500 jobs for Americans. Also, Mexico already has the necessary transportation infrastructure to efficiently export cars back into the United States. Ford Motors has had a successful business partnership with Mexico since 1925 , changing their method of production now would just result in animosity and loss of money.
2-39) The best way to implement my recommendation is to keep building a strong business relationship with Mexico. Ford Motors wouldn’t be nearly as successful without the help of assembly plants, stamping plants, and engine plants in Mexico. On the other hand, Mexico wouldn’t be one of the dominating forces of vehicle production if it wasn’t for the Ford Company expanding into their territory. I believe it’s important for both parties to understand that they need each other to be profitable. The next step is expanding to countries in Europe, Africa, and Asia. If Ford could make similar profit margins in those Continents to the ones they make in Mexico, it is potentially an untapped market.
Note:this are my recommendations , you can come up with your own and elaborate where you feel like