Ford Motor Company Expands Partnership Talks with VW

The Ford Motor Company is a multinational company based in the United States. It is responsible for engineering various large-scale car production methods. Owned and established by the Ford family, the company is the world's fifth-largest automotive company and has been included in the New York Stock Exchange list. They maintain a high profile by keeping stakes in a variety of automotive companies, participating in sports car competitions, and producing high-quality cars.

The person behind the Ford Motor Company was Henry Ford, an aspiring businessman who started the company in 1903 at a small factory in Detroit, Michigan. His first model car, the Ford Model T, became a national hit as it was one of the first widely affordable and dependable automobiles of the time. These hand-assembled cars were all-American, and the company even remains family-run to this day.

From Henry Ford's initial success came further accomplishments. When the Great Depression hit America, the Ford Motor Company survived while dozens of other companies closed their doors forever. Through proactive strategies, financial revision, and better production policies, Ford was able to survive their losses at least until 2008 hit. At the bottom of a recession, Ford and other automobile companies sought government help. However, Ford Motor Company eventually denied a government bailout and managed to accrue sales and success all on its own. Today, it is one of the most successful automotive companies.

Ford recently reached a trading stock near a 6-year low. Ford's CEO, Jim Hackett, called for a meeting with the company's top 300 executives. That is a lot of people. Therefore we know it must be something important. Hackett's message to the executives was, "Ford must put in motion plans to restructure its business now to secure promised cost savings" (Klayman 2018). The main part of that plan is to save money, which calls for Ford to deepen partnerships with other automakers around the world to share factory floor capacity and develop vehicles together.

Ford is trying to join forces with Volkswagen, a German automaker founded on May 28, 1937, by the German Labor Front under Adolf Hitler, and Mahindra, an Indian multinational car manufacturing corporation in India. Joining forces with these two top international automotive companies will help Ford reduce its cost of production. The twin efforts are meant to help remake Ford in conjunction with the $11 billion restructuring it outlined for the next three to five years. Ford needs to improve profitability because it is investing billions of dollars in developing electric and self-driving vehicles and gearing up for a major rollout of products over the next two years.

Cost-sharing deals with Volkswagen and Mahindra could allow Ford to reduce the number of vehicles being built and shrink engineering and purchasing costs. Fewer vehicle architectures, combined with increased numbers of electric vehicles, would also help Ford reduce the number of plants and employees it needs for that work over the next several years. These are some benefits Ford will receive. Do you think Ford is making the right choice by trying to partner with these companies? I'm all for it. I think they should go ahead; it's going to help them out in the long run, but it won't only help them; it would also help VW and Mahindra, as they will also benefit from partnering.

Hackett, who recently spoke with the heads of Volkswagen and Mahindra, told Reuters the alliance talks are going well and hold a lot of promise for Ford. The moves are aimed at helping Ford hit its goal of doubling global pre-tax profit margins to 8 percent by 2020, up from 4.3 percent in the second quarter of this year. Ford and Volkswagen said in June that they were discussing whether to jointly develop and build a range of commercial vehicles, including vans. The commercial vehicle deal is a "quick win," and more will follow with VW, said Hau Thai-Tang, Ford's executive vice president in charge of Ford's product development. "If you look on paper, we complement each other really well," he said regarding Ford and Volkswagen. "There are opportunities for some synergies without us stepping on each other."

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