Ford Motor Company’s struggle to stay afloat during the Great Recession has been well documented: a lucky $23 billion loan saved the company from bankruptcy, allowing it to focus on strengthening its core brand and investing in small cars, fuel-efficient engines, and lightweight, aluminum-bodied trucks.
How did Ford weather the storm of the Great Recession?
Ford Motor Company’s struggle to stay afloat during the Great Recession has been well documented: a lucky $23 billion loan saved the company from bankruptcy, allowing it to focus on strengthening its core brand and investing in small cars, fuel-efficient engines, and lightweight, aluminum-bodied trucks.
Did Ford make it through the Great Depression?
Although Ford Motor Company looks to be faring better than General Motors and Chrysler in the current economic storm, the position was inverted during the Great Depression.
In the 1930s, as Ford lost money and saw its market share shrink, GM and Chrysler were profitable and saw their market share grow. Ford slid to third place in sales during the decade, Chrysler took over second place, and General Motors became the dominating carmaker. They were dubbed the “Big Three.”
While the Big Three grew in size, other carmakers’ market share fell from 25% in 1929 to just 10% in 1939.
During the 1930s, many small automakers went out of business, including Cord, Durant, Franklin, Peerless, Pierce-Arrow, and Stutz. Others, such as Graham-Paige, Hudson, Nash, Packard, Studebaker, and Willys-Overland, survived the Depression but were so badly damaged that they finally went out of business.
Vehicle output in Canada and the United States fell from 5.6 million to around 1.4 million between 1929 and 1932.
Following a profit of $40 million in 1930, Ford lost $88 million from 1932 to 1933. Ford laid off a large number of employees and ceased much of its advertising.
Despite the fact that Henry’s son, Edsel Ford, was president of the firm, Henry essentially governed it, often overruling his son’s judgments.
Author David L. Lewis writes in his book The Public Image of Henry Ford, ” “No one had done more to concentrate industrial power and speed up output than Henry Ford. No industry leader, however, had held more tenaciously to an archaic administrative system wholly inadequate to the demands of the new period. As a result, the Ford Company had to battle not just its competitors, but also its own leader’s antiquated business practices.”
Ford was no longer the dominant player it had been in the teens and early 1920s by the 1930s; it was just one of the Big Three.
GM and Chrysler had a difficult time in the 1930s, despite increasing their market share.
In North America, GM output fell from 1.9 million units in 1929 to 526,000 units in 1932.
From 1923 through 1946, Alfred Sloan was the president of General Motors. Sloan writes in his autobiography, My Years with General Motors, that “Our market share climbed from 34% in 1929 to 38% in 1932, the depression’s trough year. From around $248 million in 1929 to $165,000 in 1932, our profits plummeted.”
The Marquette, Oakland, and Viking were among the models dropped by GM. According to author David Farber’s book Sloan Rules, GM was able to turn a profit by drastically decreasing costs.
“GM had laid off half of its workforce by late 1932. Those who stayed were subjected to two ten-percentage-point salary cuts each. Their weekly hours had been reduced from an average of roughly 45 hours in 1929 to around 31 hours in 1932.”
Chevy and Pontiac manufacturing were consolidated to save money, as were the Buick, Oldsmobile, and Pontiac sales divisions.
GM of Canada made changes in the 1930s as well. GM lay off some senior executives in Oshawa and closed a Regina assembly plant that had been operational since 1928.
Chrysler flourished and succeeded as well, passing Ford for second place in sales.
The success was largely due to the Chrysler lineup’s best-selling product, the Plymouth.
In 1924, Walter Chrysler founded the firm that bears his name. In July 1928, the Plymouth was debuted as a 1929 model to compete with Ford and Chevrolet. About 50,000 Plymouths were sold in its debut year, compared to 500,000 Fords and 1 million Chevrolets. With slightly over 186,000 sold in 1932, Plymouth was one of the “low-priced three,” compared to around 210,000 Fords and 313,000 Chevrolets. By the end of 1932, Plymouth had climbed to third place in sales, and one out of every four vehicles sold in the United States was a Plymouth.
Chrysler was able to pay off a large debt in addition to being successful throughout the Great Depression. In 1927, Chrysler took out a $60 million loan to purchase the Dodge Brothers Company. Walter Chrysler made it a priority to pay off the debt, and every year a portion of the revenues went toward it. By 1935, Chrysler was debt-free.
In order to be profitable in the early 1930s, Chrysler had to take some severe measures. Walter Chrysler writes in his 1937 autobiography Life of an American Workman, ” “During the years 1931, 1932, and 1933, the Chrysler Corporation had to decrease costs. In practically every area, we had to slash salaries, restrict operations, and retrench.”
Chrysler, on the other hand, believed in foresight, stating, “I never cut a single penny from our research department’s budget, no matter how bleak the forecast. We became more daring in our study as the depression worsened and people became more pessimistic. The advancements that were produced in the laboratories during those dismal days are what drove a robust demand for automobiles in 1936 and 1937.”
Workers were first represented by unions. The number of miles of paved highways in the United States has doubled. Drive-in theaters and parking meters were established.
Every automaker released smaller, less expensive versions with fewer features and lower power. Ironically, the 1930s saw the introduction of some of the world’s largest and most opulent automobiles, powered by V12 and V16 engines.
While the Great Depression took many lives in the automobile industry, it also spurred survivors to adjust and adapt in ways they could never have anticipated.
Is it true that Ford was bailed out in 2008?
When the economy tanked in 2008, Ford and other major automakers (both foreign and domestic) received tens of billions of dollars in federal bailout money.
The identities of organizations and the sums of loans given out during the 2008 financial crisis were revealed by the federal government yesterday in order to keep credit flowing when credit dried up everywhere. A lot of the businesses were automakers’ lending operations.
Blog about automobiles Ford Credit, which borrowed $15.9 billion, topped the list of automotive loan companies that received the most support, according to Jalopnik. GMAC, GM’s lending arm that issued auto loans to people who didn’t own a GM vehicle, received $13.9 billion. BMW received $6.2 billion. $4.9 billion for Chrysler and $4.6 billion for Toyota.
The GM and Chrysler loans were unrelated to the government-backed bankruptcies of those two firms.
While the facts and statistics aren’t shocking payments to automotive lending businesses totaled barely $57.9 billion out of $3.3 trillion in TARP funds it may tarnish Ford’s image as the sole Detroit-based corporation that didn’t require government assistance during the financial crisis.
That’s a perception the corporation has perpetuated by making pronouncements about how refusing to take a “bailout” has aided its recent turnaround. We recognize that the two deals are vastly different, and that this loan was not intended to be a bailout.
Has Ford ever received a bailout?
Ford Motor Company is still paying off a large government loan created at the onset of the Great Recession to help manufacturers with factory projects, more than a decade after the last economic crisis.
During the car crisis that ravaged the industry between 2008 and 2010, critics concentrated on GM and Chrysler, which both declared bankruptcy and accepted government bailout funding under the US Treasury Department’s Troubled Asset Relief Program (TARP) to reorganize. Ford, on the other hand, chose a different course.
Ford entered into an arrangement with the Department of Energy in September 2009 to borrow $5.9 billion as part of a loan program meant to help vehicles made in the United States satisfy greater mileage requirements and reduce the country’s reliance on foreign oil.
On the Advanced Technology Vehicles Manufacturing (ATVM) loan program website, the company is one of three auto grantees currently listed.
While critics of government help, including Ford executives, continue to focus on the bailouts, few have addressed in recent years the loan program that provided money to automakers during the same time period.
Because Ford was in difficulty before everyone else and took action before anybody else, then-CEO Alan Mulally is hailed for having the foresight to mortgage everything immediately prior to the crisis, even the Blue Oval.
Why was Ford on the verge of bankruptcy?
Henry Ford, the renowned vehicle innovator and entrepreneur, is a name we’ve all heard. Many people are unaware that Henry Ford was a debtor who filed for bankruptcy twice before becoming famous for his automobile and $5 workday.
Henry Ford worked as a machinist before becoming an engineer. During his time off, he labored feverishly to develop a vehicle, and in 1896 he succeeded, inventing the Quadricycle. Ford abandoned his day job and founded the Detroit Automobile Company, convinced that he was onto something big. However, the gifted engineer was unable to keep his company’s finances in order while still experimenting with the mechanics of his automobiles. He was forced to declare bankruptcy after he was unable to repay his investors.
Ford was undeterred, and a few years later relaunched his company under the name Henry Ford Company. Regrettably, he failed to adequately brand and advertise his vehicles, resulting in financial ruin. Ford’s invention was misunderstood by the public, and his sales plummeted. Henry Ford filed for bankruptcy for the second time, unable to pay his bills. This is when the story takes a turn for the better, especially for today’s bankruptcy filers. Ford did not let two bankruptcies stop him; in fact, they only strengthened his resolve to succeed.
Taking advantage of the second chance provided by bankruptcy, Henry Ford relaunches his company for the third time, renaming it the Ford Motor Companyand the rest is history. Ford eventually succeeded in developing a car that he could be proud of and that the rest of the world respected after two bankruptcy.
You don’t have to be Henry Ford to use your bankruptcy files as a driving force in your life. Take advantage of the second chance that bankruptcy provides and create the life you’ve always wanted.
How did Ford contribute to World War II?
During World War II, Ford Motor Company adapted its assembly lines to fulfill military industrial needs. The massive Willow Run Plant was created to produce B-24 Liberator bombers on a one-mile-long assembly line.
What automobile firms made it through the Great Depression?
It was the greatest of times and the worst of times at the same moment. While I concede to plagiarizing the first phrase of Charles Dickens’ A Tale of Two Cities, there is no better way to depict the United States in the days leading up to and immediately after Black Tuesday.
On this day ninety years ago, anxious Wall Street speculators traded 16 million shares on the New York Stock Exchange in a single day on October 29, 1929. The unthinkable happened two months after rampant speculation pushed the market to its peak in August ’29, and less than one week after stock prices began to fall: the market crashed.
Hundreds of billions of dollars were squandered. Individuals and businesses were on the verge of bankruptcy. The Great Depression lasted over a decade and was the biggest economic downturn in the history of the civilized world.
No American was spared, and no industrialized country was spared. The automotive industry was particularly heavily struck, coming so soon after its ascension to global prominence.
Kevin Hillstrom and Laurier Collier Hillstrom’s book The Industrial Revolution in America (2006) claims that “By the end of the 1920s, the United States had nearly one automobile for every six inhabitants. More than 5.3 million passenger vehicles, buses, and trucks were sold across the country in 1929, roughly one million more than the previous year. These data not only verified the car industry as a major force in American business and culture in and of itself, but they also demonstrated the centrality of the sector to other industries.”
To be sure, the auto industry’s success or failure impacted people and businesses in a wide range of industries, including oil, rubber, steel, glass, leather, hardwood, tool and die operations, and service stations, as well as every business that catered to workers in those industries, from financial institutions to local restaurants and pubs. The Depression also halted the rapid construction of highways, commercial development, and residential housing, as the Hillstroms remind out.
Automobile sales plummeted by two million in 1930 compared to the previous year, and by another two million in 1932. Because unemployed people do not buy automobiles, the workers who produced them soon found themselves in the same predicament. For example, the Ford Motor Company employed 128,000 employees in the spring of 1929, but only 37,000 individuals remained by August 1931. During those tough years, carmakers were driven to cut corners everywhere they could, which meant longer working hours and lower compensation. Many Ford workers, feeling undervalued, campaigned for unionization, which enraged Henry Ford. He was so adamant about his opposition that he hired a lawyer “He created a “security squad” to intimidate the unhappy employees, whom he believed should be grateful for having a job at all. The United Car Workers was created in May 1935, after Ford and the auto industry had lost the struggle.
Despite lower auto output, some historians marvel at how effectively the industry withstood the storm. “In his book Wheels Within Wheels: A Short History of American Motor Car Manufacturing, Philip Smith stated, “Perhaps the most amazing fact is that so many were sold” (1968). “The average per capita income had been nearly halved. Hundreds of thousands of individuals who had employment didn’t know if they’d have them tomorrow. Few people were willing to risk their money on a new car. For a long time, prosperity had been ‘just around the corner,’ and there was general concern that the distance to the corner was lengthening, which it was.”
Of course, small automakers were the hardest hit, as they had limited money and little room for error. Peerless (1931), Cunningham (1931), Doble (1931), Durant (1932), De Vaux (1932), Marmon (1933), Franklin (1934), Auburn-Cord-Dusenberg (1937), Pierce-Arrow (1938), Stutz (1939), and Hupmobile (1939) were among the car manufacturers who fell to the Great Depression (1939).
Only the most powerful companies survived, including GM, Ford, and Chrysler, as well as Hudson, Nash-Kelvinator, Packard, Studebaker, and Crosley. None of the non-Big Three car companies are still in business today. Pontiac (19262010), DeSoto (192861), and Plymouth (19282001) were all born in the late 1920s and managed to stay afloat in the 1930s, but they all folded decades later.
Most of us are more familiar with Black Friday than Black Tuesday these days, and with good reason: the day after Thanksgiving is considered the unofficial start of the holiday season in the United States. On the other hand, the unofficial start of a decade of misery in the auto industry and beyond was October 29, 1929.
Ford laid off workers?
“Eligible employees who elect to, and are approved to, resign from the Company under the voluntary separation program get a lump-sum cash severance payment and some benefits continuations,” the spokesman stated.
Ford cut vehicle manufacturing across North America in June due to a semiconductor chip shortage. The manufacturer halted or reduced production at eight sites, lay off workers on a temporary basis, and predicted that it would lose roughly half of its vehicle production in the second quarter.
Is Ford going to go bankrupt in 2021?
Due to the continued semiconductor chip scarcity, Ford is expected to lose about 700,000 units of production in 2021, costing the global automobile sector hundreds of billions of dollars.