Introduction
Companies like Ford are a product of
denationalization from US private firms producing in other countries including
Ford Motor Company Limited in the UK and Ford Motor Company SA de C.V. in
Mexico. For instance, in1962 the Mexican government introduced a decree of import
substitution regulatory measures to promote their national automobile industry
to access other countries in the importation of raw materials in production.
Including tools and machineries increases for production where even the locally
made parts are selling to limit foreign production. In 1969, the
denationalization took place to maximize the economies of scale, where the
value of production growth rate of automotives doubled. They decided to provide
higher tariff trade and numerous restrictions increase against foreign
companies.
This slowed down the domestic production
and sale of foreign companies like Ford, Toyota and General. But Ford, rather
than move out in other locations they decided to bargain their production but
only to local subsidiary. This begins a long partnership and production changes
in their environment until the Mexican company, little by little, increased
control over the company since majority of their shareholders were now locals
and the hierarchy and degree of autonomy was largely practiced. Ford committed
to help the government to create auto parts until Mexico has learned to develop
their own key automatic parts production (Noguez, I.S., 2002) that highly
increases their automotive production in their country.
Reduced Marketing and
Production Cost and New Market Opportunities
Since Ford started in 1925 in other
countries they have heavily negotiated their taxes, concession and salaries of
employees, their income is even in their local minimum wages so they that they
will have no trouble in labor as stated by their government Wilkins & Hill (2011).
Denationalization in Mexico for instance
has also somehow provided opportunities because of shared technology of Ford to
Mexico and the introduction of new local machineries, their production in
Mexico has reduced their overhead cost and imports while their offers or
pricing has also decreased to gain higher market opportunities where in the
past their imports of raw materials are highly dependent from US.
It took quite a while when Ford highly established
reduced marketing and production cost to introduce new market opportunities. In
Mexico they are able to penetrate the market once again during 2005 to launch
massive automobile production because of their superior technology combined.
They are able to reduce their professional cost effectively by hiring local
engineers and maintenance having a good salary. They are able to established
good reputation among local suppliers that becomes their ongoing partners in
their production and they have become fully included in their supply chain (Contreras,
O. & Carillo, J.,2005).
Helping Local
Subsidiaries and Suppliers All Year Round
Ford Motors has four production factories
and offices in different locations in Mexico including their central office;
industrial complex, engine manufacturing, assembly and stamping plant. Each of
these offices is helping their country in local employment and tax although
during the 1983 adjustment and introduction to automation production and lean
manufacturing was introduced, it affected the domestic environment and
employment labor market adjustment and trade union was also introduced. It took
them more than 20 years to finally gather the most efficient suppliers.
They have cut the numbers of employees
temporarily during the 1980’s because of stiff competition but until in 2005
when they have already gained higher expansion and restructuring in this
country they have once again increase workers from 129 local suppliers that
maximized their production. They are able to increase more than 4800 members
and years of hiring more than 9000 different jobs have been created to help
their local subsidiaries in economic and social needs including professional
and their people are benefitting for their success Contreras, Carillo &
Estrada (2006).
Using Local
Technology
With the improved knowledge of their
engineers and auto mechanics they are able to acquire ability to upgrade their
internal and external training programs they are able to develop a culture of
quality and innovation using adaptive practical applications of principles
including Just in Time Management and Total Quality Control and Japanese
Production System combined with using local technology they are able to
maximize production. Most of all, they are able to eliminate risks in the
supply chain.
Their supply chain, although they are
able to import raw materials, they are no longer dependent in external sources
of raw materials since they are already using local technology that also fit to
the supplies in local industry in the country. These supply chain denationalization
system provides them flexibility for quicker and cheaper production input. They
also participated in local networking and market relations to increase their
supply chain with social professional networks and most of their local
suppliers are also growing as they grow.
In another country, for instance, their
subsidiaries in Brazil during 1967 has adopted their foreign company practices
to align their local conditions to prepare for inflation a derivative of Simca
Model and hybrid industrialization practices for massive production was
introduced so that during market fluctuation the burden or changes in price to
raw materials did not necessarily impact the Ford local subsidiary but also
their shared alliance by their suppliers (Addis, C., 1999).
Conclusion
Because of the oligopolistic production
behavior of some US companies, they are able to find ways to lessen their
production just like Ford production to other countries. They are provided with
several barriers and restrictions to compete. In their expertise in the automotive
production process but since they are unable to match their expertise, countries
like Mexico are able to find ways to eliminate their strength by pushing them
to subsidiaries and control. Denationalization or the effect of privatization
and changes in ownership has provided a localized version of Ford, politically
the contradiction of tariff and barriers successfully destabilize their
production. But because of their efficient governance combined, they are still
able to expand opportunities although the control and benefits belongs largely
to the subsidiary locations where majority of shareholders are also local.
References:
Addis, C.
(1999) Taking the Wheel, US: Penn
State Press p 107-108
Contreras,
O. & Carillo, J. (2006) Global
Production networks and Local Learning: The Case of Ford in Hermosillo,
Mexico1, Retrieved from http://s3.amazonaws.com/zanran_storage/www.gerpisa.univ-evry.fr/ContentPages/44177382.pdf
Contreras,
O. Carillo, J. & Estrada, J.A. (2005) Retrieved from http://www.colef.mx/jorgecarrillo/wp-content/uploads/2012/04/PU354.pdf
Noquez,
I.S. (2002) Ford and the Global
Strategies of Multinationals: The North American Auto Industries, USA &
Canda, Routledge p 66-72
Wilkin, M.
& Hills, F.E. (2011) American
Business Abroad, US: Wayned State University Press p 147
