The Washington Outsider

Ford Abandons The Car Industry: An Analogy to US Manufacturing’s Crescendoing Woes

4/30/2018

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​Ford has announced plans to move out of the car industry.  Although Ford currently plans to maintain its production of the Mustang and the Focus Active, which is a hatchback more like a SUV than a car or a modern-day version of a station wagon, sedans will no longer be a staple of the Ford brand.  Instead, Ford will be a truck company.  It will focus on trucks and commercial vehicles.  Like the history of Ford, the future of Ford mirrors that of the US economy.  It was Henry Ford and his groundbreaking five-dollar-a-day wage that helped launch the Middle Class, whether Henry’s motivation was an altruistic attempt to turn employees into consumers or a means to lower costly turnover rates is debatable.  Ford was then, of course, part of the Labor Movement, even though it was often on the opposite side of its workers.  Finally, Ford became a symbol of the crescendoing struggles faced by all American manufacturers, Americans workers, and the US economy.
​Not only has Ford and its workers struggled with rising prices and globalized competition, it has had to keep pace with technological and societal changes.  Ford and its contemporaries have not fared well against increased foreign competition from the likes of Toyota and Volkswagen.  Some of it has to do with the competitive edge foreign countries with lower production costs often enjoy and some of it has to with the inefficiencies of American production practices.  Autoworkers within the “Big Three” have also prevented their employers from embracing the same pay practices as their competitors.  Ford’s history shows a large company can both reshape the pay practices of industries for the betterment of workers as well as suffer when competitors are not obliged to match pay rates and benefits.  Another major factor in Ford’s successes and failures come from the quality of its cars and the economic viability of its cars throughout its history.  
 
When Ford makes terrible cars, it will always face a period of decline or even failure.  Ford, GM, and Chrysler have make a lot of crappy cars over the decades that were designed to be replaced.  It is what they did in the 2000s.  In the wake of the Great Recession, a bailout from the US government, which was done to preserve the jobs of American auto workers, gave the Big Three a big opportunity to transform themselves and their industry.  In some ways, they have capitalized on that opportunity to innovate.  In other ways, they are falling into the same old patterns that have continually threatened their existence throughout their histories.  They are also undercutting the American People by undermining the affordability of cars.  Unfortunately, Americans are buying fewer cars from Ford, because they are really expensive and they are not built to last.
 
A successful company is only successful, because it is able to provide for the needs, not necessary the wants, of its customers.  Only by changing along with the changing needs of customers can successful businesses remain successful.  Relative to rising costs and the growing number of expenses faced by Americans, incomes in the US have grown too slow.  Even if car prices have been somewhat suppressed when compared to other products, most Americans cannot afford a brand new car.  They certainly cannot afford a brand new car every few years.  The only reason cars have remained a viable commodity and modern convenience-necessity is due to the existence of a secondary market.  Unfortunately for Ford, the car manufacturing company, it does not make money on the resale of cars, which creates a couple of problems.
 
One, the lack of a direct connection to Ford’s profits and the secondary car market encourages Ford to ignore the need for a secondary market.  Ford is, essentially, encouraged to embrace a false belief that there is no incentive to ensure the longevity of cars.  This, in turn, forces consumers in the primary and secondary markets to spend more on trying to maintain their cards and replacing them more often.  Two, this mentality also encourages Ford to cater to and cultivate consumer preferences that ignore the long-term consequences of Ford’s decision.  Ford does not simply respond to consumer demands.  It shapes them by telling them what options they can have.  Because Ford makes more money with bigger vehicles, Ford has an incentive to push larger vehicles, which it does.  
 
It is, of course, important to recognize preferential trade policies have also contributed to the competitiveness of American trucks, but not cars, thus the economic environment further favors the sale of larger vehicles to primary consumers.  Unfortunately, SUVs and trucks cost more than cars.  Trucks came into existence, because they had a purpose.  They were economically viable, even though they are naturally more expensive than cars, because they helped people do work, i.e. they generated money.  The reason cars came into existence is that people needed transportation, thus they could only exist, because they were relatively inexpensive.  Today, fundamental economics has nothing or little to do with Ford’s product line.  Primary consumer tastes and Ford’s profit margin is what drives Ford’s product lines.  These things, of course, matter, but the fundamentals have to be viable.  They are not.  To make matters worse, many of Ford’s car models suffer from habitual quality issues.  
 
Ford cannot sell cars, because its consumer-choice, non-economic model is impractical.  Even if Ford was a luxury brand, its survival would still require higher quality cars with longer durability and greater reliability.  Ford will struggle even as it transitions to currently more profitable product lines, because Ford is trying to appeal to the highly varied, shifting tastes of a narrowing consumer base instead of working on the long-term economic viability of its products.  Should Ford ever have to face real competition in the truck and commercial market, it will start to falter.  Ford will never make as much on more durable and/or smaller vehicles, even if it perfects the models.  In the broader picture, however, more durable and smaller vehicles are needed to maintain the viability of the auto market.  As an analogy, Ford’s struggle to remake itself, along with its failure to do it over and over against, is the same struggle all American manufactures and other businesses face for the same reasons.
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      • Justice for All: The Case for Legal, Social, Economic, and Personal Justice
      • Why Hardliner Thinking in the NSA and CIA is Doing Damage
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      • What Modern Day Revolutionaries Need to Learn from Leader's like Mandela
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      • Perceptions of the United States
      • How Honesty Relates to the Great Recession
      • Why the Middle Class and Rich Need to Support Their Long-term Interests
      • The Aristocratic Republic of the United States of America
      • Discussing the Need for Community Support
      • Why New Forms of Capitalism and Socialism Will Compliment Each Other
      • The Reason We Need to Understand What it is to Be Poor in America
      • Why the World Needs to Reinvest in America
      • Why Are We Against Terrorism?
      • Why Does Terrorism Exist?
      • US Influence: The Value of American Citizenship Around the World
      • Responding to "the Soldier as Sacrficial Victim"
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        • Is Suicide a Cowardly Way Out?
      • Defense Against the Dark Arts of Manipulators
      • Defining Abuse >
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        • How to Understand Abuse Victims
        • Recognizing Abuse
      • The Role of Substitution in Decision Making
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        • Mental Illness is Not the Cause of Anger and Violence >
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          • Getting into the Twisted Mind of the Tucson Murder
      • Describing the Mind as Modes of Thought >
        • It’s Just Sex?
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      • Understanding the Effects of Groupthink in the Workplace
      • Relating Circular, Inductive, and Deductive Reasoning to the Scientific Method and Religion
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      • The Need for Greater Economic Leverage >
        • Evaluating NAFTA and TPP
        • Undercutting Logistics with the Underpaid Independent Contractor
        • Unions: Hindrance or Essential to Free Markets
        • Eminent Domain Used Against Banks
        • Haitians Sue the UN for Failure to Help With Cholera
        • Looking at How Corn-based Ethanol and Other Alternative Energy Subsidies Stack Up
      • Empowering the Sovereign Nation-State by Rethinking Trade Policy >
        • Irish Sovereignty Lost Before Bailout
        • Why Sudan's Greatest Long-Term Hurdle is Our Lowest-bidder Economy
        • Reduce US Imports by Buying American Made Products
      • Ending the need for government support and tackling poverty
      • Income inequality: understanding the limitations and psychology of disadvantage
      • Looking at the Future of American Jobs >
        • On Questioning the Need to Address Economic Disparity
        • Minimum Wage is Not the Problem
        • Responding to the "Blip"
        • Why Education Is Not The Civil Rights Issue Of The Twenty-First Century
      • Considering the Impact of the Capital Gains Tax Deduction
      • Embracing a Capitalist Mindset >
        • Capitalism Versus Socialism
        • The Negatives of Socialism
      • Stealing Intellectual Property
      • Changing Business Models: From Enduring Entities to Cash Cows
      • Consumer and Investor Evolution in the Great Recession of 2008-09
      • Dealing with the Issues Surrounding the Patenting of Self-replicating Technologies
      • Is Technology Threatening Jobs?
    • Education >
      • The Role of Education in Creating a More Dynamic Workforce
      • Primary Education in America and the Changing Needs of Society
      • The Greatness of the American Education System
      • Ideas for Improving the United States Education System
      • Are Teachers Treated as Professionals?
      • Is Engaging Parents in Their Children's Education a Major Factor in Turning Around Low-performing Schools?
      • Should Grants Be Awarded to School Districts that Try Innovative Methods to Improve Student Achievement?
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      • On Reading the US Constitution
      • The Senate should not do more to limit the powers of the Judicial Branch
      • On the DOJ Justifying the “targeted Killings” of US Citizens
      • Corporations Do Not Have the Same Rights as US Citizens >
        • Corporate America Pleads the First
      • Discussing the Constitutionality of Per Capita Taxes
      • Was the California Supreme Court Right in Legalizing Gay Marriage?
      • Should the Bible Continue to Be Used for Swearing-in Ceremonies and in Courtrooms?
      • Should Religious Student Clubs Be Allowed in Public Schools?
      • Should the Government Control Talk Radio to Make it More "balanced"?
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        • Are We Losing Our Second Amendment Rights
      • Eminent Domain Used Against Banks
      • Should a Woman Have the Right to Choose Abortion? >
        • Should Fathers Be Able to Opt Out of Parenthood?
      • Should Smoking Be Allowed in Public Places?
      • Is Teen Driving a Right or a Privilege?
      • Should US Companies Be Required to Provide Equal Pay to Women and Men?
      • Is eighteen too young to vote?
      • First Amendment Rights: The Priviledge of The Press
      • Do Mandatory Seat Belt Laws Violate Individual Rights?
      • Should cell phone use be banned while driving?
      • Dealing with the link between video game violence and children's behavior
      • Should police have to submit to routine drug and alcohol testing?
      • Public schools should not impose mandatory drug testing on students
      • Are High Taxes on Cigarettes Proper?
      • Should pharmacists be required to violate their religious beliefs and dispense the "Morning After Pill?"
      • Should school counselors uphold patient privacy or report students who become unstable?
  • For the record
    • Ongoing Issues >
      • Red Dawn in Ukraine: Understanding the Actions of Russia >
        • On Russia’s Coercion of Ukraine
        • The Russian Annexation of Crimea in the Eyes of the World
        • Putin Has Overplayed His Hand With Crimea
        • Ukraine in Terms of Resovereignization
        • Avoiding a Conflict Between America and Russia Over Ukraine
        • What Drives the World’s Interest in Russia’s Actions in Ukraine
      • China’s Aggressive Pursuit of Interests Demands a Global Response
      • Iran Makes a Deal: A Start to a Long-term Diplomatic Effort to Denuclearize Iran >
        • On the Future of a Nuclear Negotiations with Iran
      • America's Sphere of Influence: Retaking South-East Asia >
        • Power in Asia: Looking at the Power Shift in Japan
        • The China Paradox: Why America is Worried About China
      • Assessing US Support of Israel >
        • Tread Softly Israel for a Heavy Step May Be Your Undoing
      • Understanding the Dysfunctional Nature of the US-Pakistani Relationship
      • Recognizing the True Threat Behind the Current Unrest in the Middle East >
        • Reacting to the Escalating Crackdown in Syria
      • Assessing the Threat of North Korea >
        • Answering North Korea's Call for Food Aid: Breaking the Vicious Cycle Forced Upon Us by a Warring Nation
        • Dealing with the Restarting of the Korean War
        • North Korea Attacks South Korea
      • Dealing with the Ill-effects of Climate Change
      • Racial Inequality and Oppression Do Truly Exist in Today's Society
      • Should energy independence be a high priority in the US?
      • An overview of world wide Human Rights violations
      • Nuclear Threat from Pakistan
      • Return of The Cold War?
    • World >
      • Coverage of FIFA World Cup is a Chance to Focus on Poverty >
        • The FIFA World Cup Offers Benefits for More Than Brazilian Soccer Fans
        • FIFA Can Bring Brazilians Together as a Nation
      • Being Prepared for Any Potential Dangers at the FIFA World Cup Games
      • Treading Softly on the Politicizing of the 2014 Sochi Olympics Over Gay Rights
      • Why NATO Operations in Libya Lack a Well-defined Mission
      • China Hijacks the Web
      • Lessons from the Great Japanese Earthquake of 2011
      • A Modernizing Cuba Offers an Opportunity for Capitalists
      • The Seeds of Democracy Take Root in the Middle East
      • The Rebirth of Democracy in Tunisia
      • What May Come from the Hurt Revolution in Libya
      • Responding to the Violence of Qaddafi and Other Besieged Leaders
      • Embracing the Rise of a Democratic Egypt
      • Protests in Afghanistan Turn Deadly for Coalition Forces and UN Personnel
      • Haiti: Another Failing Humanitarian Investment
      • What Karzai Can Learn from Calderon
      • START II: A Necessary, Easy Success that Nearly Failed
      • Why Does the U.S. Government Support Independence for the Breakaway Serb Territory of Kosovo but Oppose Independence for the Breakaway Georgian Territories of Abkhazia and South Ossetia?
      • Iraq's Electric Issues: When Human Wants Trump Economic Sense
      • The International Community Reacts to Wikileaks: We May Be Moving Toward a Third World War in Cyberspace
      • On Climate Gate
      • Assessing Obama's Afghanistan War strategy
      • 2009 Iranian Presidential Election: The Fallout
      • Resolving Sri Lankan Conflict through Free Media
      • What are the Global Consequences of Russia's Invasion of Georgia
      • The War in Iraq: an assessment of President Bush's surge strategy
      • Drug War: Actions of Venezuela, Columbia, Ecuador in terms of Resovereignization
      • Is the Iraq Refugee Crisis America's Responsibility?
      • US support for a united Kosovo, Abkhazia, and South Ossetia: why?
      • Should the US withdraw from Iraq?
      • Setting a Timetable for Troop Withdrawal from Iraq is a Terrible Mistake
      • War on Terrorism is needed
    • Law and Order >
      • Rape in the US Military
      • Ethics of Force-feeding Guantanamo Bay Detainees
      • Reacting to the Aftermath of the Tucson Massacre
    • Economy >
      • Affordability Drives Fear of Obamacare and the Individual Mandate
      • Is the Economy Built for a Job's Recovery?
      • Gutting Healthcare Reform of the Individual Mandate
      • Arizona Budget Cuts Lead to Lethal Healthcare Rationing:
      • Shameful Collection Practices of American Banks
      • The Fed Reveals it Actually Undertook an International Bailout
      • Thoughts on French Budgetary Reforms
      • Seniors Start Businesses
      • The Case for Slimming Down the US Military to Make it Better
      • Looking at the Obama Administration's New Approach to Economic Policy
      • Should the Government Regulate the Credit Card Industry?
      • The Big Three's Big Chance
      • The Unhealthy Tone of the Healthcare Reform Debate
      • Should the federal government offer a bailout for home owners?
      • Environmentalists: Do They Do More Good Than More Harm?
      • Responding to Scott Walker's Contribution to the War on Unions
    • US Government >
      • America Needs to Focus on the Impending Fiscal Crisis
      • Reacting to the Bush Era-tax Cut Extension Deal
      • Quitting the Obama Revolution: The Fickle Nature of American Politics
      • John Boehner's Circus
      • Is the Fed Putting Itself in Jeopardy?
      • Wikileaks Goes After the US State Department
      • Discussing the Political Environment Surrounding the 2011 Budget Debate
      • What the Democrats Can Do to Ensure a GOP Year in 2012
      • What the 2010 Midterm Actually Said
      • Congresswoman Kathy Dahlkemper
      • Democrats Minus Nancy Pelosi Equals Opportunity
      • Terrorists Go Postal: The Terrorism Threat Reexamined
      • Victory in the 2008 Election: Reaction to Barack Obama'a Win >
        • Expectations for Barack Obama
      • President Obama's first one hundred days
      • John McCain's Negative Campaign
      • Reasons People did not Elect John Mccain
      • History judges the George W. Bush Administration
      • Should the next US President focus on domestic issues?
      • President Bush, should he resign or be impeached
      • Should the Ban on Government Sponsored Assassinations be Repealed
    • Off Topic >
      • A Face of America’s Greatest Generation
      • A Story About a Man Who Made the World a Better Place
      • Making the World a Better Place
      • The Bipolar Ethical Nature of Google
      • Learning Computer Plays Jeopardy
      • Verifying Medicine is the Real Thing
      • Taking a Practical Step Forward in Optical Computing Using Slow Light
      • Scientists Take a Closer Look at How Lithium Batteries Work
      • Remarking on the First Blizzard of the 2010-2011 Winter Season
      • Driving in the Snow: Acceleration is the Key
      • How People in Northwest PA Are Coping with the Increasing Cost of Oil
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